PLUS Markets: the chaos continues

Malcolm Basing, Interim (because they haven’t found anybody else) Chairman of PLUS Markets Group said:

“The sale of PLUS-SX to ICAP, the world’s leading interdealer broker, is the best option for our shareholders and secures the future of the PLUS-quoted market.”

Shareholders are receiving one pound.

But let’s look at the details:

1)  Under the Financial Services and Markets Act 2000 the deal represents a change of control and therefore requires the permission of the Financial Services Authority (“FSA”).

2)  The transaction is a disposal under AIM rules (PLUS Market shares are traded on AIM) and therefore requires shareholder approval. This involves the preparation of a circular and a general meeting: no timings have been given.

3)  The purchaser, Michael Spencer’s Icap, has, as yet, made no statement as to its plans for the market. I can’t imagine that they are not eying the £5,694m trading loses that they’ll get.

So what now happens to the 145 companies still trading their shares on PLUS Markets? There is chaos in the market place.

a) GXG Markets are actively courting some of the better companies and have been flooded with enquiries. Their Swedish owners are heavily involved in the situation.

b) BritDAQ is an impressive newcomer which is also received increasing attention. Its additional service of helping with company secretarial requirements could be attractive to smaller companies. It is an appointed representative of Walker Crips stockbrokers.

c) Rivington Street has sold its service to The Share Centre.

d) Andy Stewart, the founder of Collins Stewart, who now runs Cenkos Channel Islands, is trying to use the situation to promote the Guernsey based stock exchange.

Companies and their advisers are is complete disarray.

During the week I received the following from Roger Hardman, the respected small-cap researcher:

“On PLUS, I am far less concerned than you. Very few companies have managed to raise new money, selling shares in any quantity has been impossible…this market has been effectively dead for years and surviving on the inertia of its quoted customers who paid listing fees year after year…”

But Roger, is that the market or is it reflective of the quality of the management?

Answers please to PLUS Market shareholders, the Financial Services Authority, the Governor of the Bank of England who thinks he’s running our financial services, The Chancellor of the Exchequer whose re-organisation of the regulatory system could end in chaos, the corporate advisers who try to earn a living from the markets and the 145 companies which trade their shares on PLUS Market and wish that they had never bothered.

Editor’s note: Tony is chairman of Ford Eagle Group whose shares are traded on PLUS Markets.

Please leave a comment - we all like them

  1. The real killer for Plus and previous to that with Ofex has been the regulatory burden for PCIAM’s effectively preventing discretionary and advisory advisers from participating in Plus stocks because of risk and suitability. The liquidity issue is something seperate. Just like with AIM stocks the market makers have had it too easy for too long. There are countless multi-million Mkt Cap businesses on AIM & Plus where the market size is less than a few thousand pounds. The other day I purchased around £20,000 of shares in an AIM stock and moved the Mkt Cap upwards to the tune of about £20m. I think any experienced market practitioner whether a stockbroker, market-maker or new age wealth manager can see the travesty in this. The London Stock Exchange itself is in crisis but the numbers don’t reflect this. There is no market leadership, no heart and very little character any longer. The LSE and FSA are mainly the culprits here. Unfortunately RDR is going to make matters worse and I’m very surprised that iCap are even considering entering the Plus universe. What is needed is an exchange that can foster new agency and market making firms on a much lower capital threshold than currently engineered by Basle I 11 & 111 which don’t appear to have UK or indeed market interests at ‘heart’. A minimum screen price of £10,000 (half the price of a motor car if you like) per AIM/Plus stock would be a start with minimum 3 mm’s per stock. With RDR looming micro-cap investing is going to get crucified because 100’s of brokers are getting extinguished. This is NOT democratic, this is NOT positive for capitalism and is NOt good for any company which is already paying for absurd listing charges. On AIM can I be the only one who sees no sense in the Nominated Broker/Nominated Adviser split. It doubles the charges and causes chaos for disciplined corporate response when required. A simplified Lead Broker role with at least one Broker Analyst role would suffice much better and create better visibility pertaining to market transparency of data and information. Ironically it seems that even Plus is more transparent than AIM in many ways. Until we have exchanges run and managed again by practitioners though I see little change to the current unsatisfactory regime. PLEASE SEE MY BLOG FOR FURTHER COMMENTS ON THIS DEBATE.