Largest retail platforms in talks to offer Aquis link

March 17, 2021

Exclusive: Trading in AQSE shares could soon feature on IG, AJ Bell and Hargreaves Lansdown platforms

  • Electronic links to Aquis Stock Exchange expected in coming months
  • Talks come amid rising retail investor appeals for access to growth companies

Retail investor platform giants Hargreaves Lansdown, AJ Bell and IG Group are in talks to establish live electronic trading in a second UK-based stock market, in a major potential coup for Aim-listed Aquis Exchange (AQX).

Aquis, chiefly known for its pan-European equities trading business, has sought to mount a challenge to the LSE’s Alternative Investment Market (Aim) since it acquired growth company-focused market NEX Exchange from CME Group last year.

The equity and debt securities trading venue, since rebranded as Aquis Stock Exchange (AQSE), has been pitched to small and medium-sized companies as a cheaper listing alternative to both Aim and private equity ownership, while providing both retail and institutional investors exposure to early-stage growth companies.

Listed names on the larger company segment of AQSE’s market include private bank Arbuthnot Banking, Kent-based winery Chapel Down, and breweries Shepherd Neame and Daniel Thwaites. Last Friday, ecommerce technology firm Samarkand became the latest company to float after raising £17m in a placing that saw strong individual investor demand.

Until now, though the largest retail brokers have offered phone dealing in AQSE shares, electronic trading has been largely confined to a handful of brokers including Barclays Smart Invest, Jarvis and The Share Centre, which was acquired by Interactive Investor last year.

Hargreaves, the largest share broker by volume, charges between £20 and £50 per trade executed over by phone, compared to between £5.95 to £11.95 online."

News that Aquis is in talks to extend this electronic coverage to Hargreaves, IG and AJ Bell could therefore serve as a major liquidity boost to the growth market, as it connects to hundreds of thousands of new retail investor accounts.

“It means an awful lot for us, though I also think it will be very good news for the platforms,” said Aquis founder and chief executive Alasdair Haynes. “I am a massive proponent of getting the public back into public markets, and retail is a key part of that.”

Haynes pointed to retail investors’ mandatory participation in initial public offerings on the Apex segment of AQSE, as well as the use of FCA-approved growth prospectuses, as evidence of the market’s competitive edge against Aim.

Last month, the chief executives of Hargreaves, interactive investor and AJ Bell wrote a joint letter to the Treasury requesting a consultation so access to new flotations on the LSE might be established among private investors.

For its own part, Aquis cites a recent survey conducted with ShareSoc which found that more than half of individual investors polled felt they “don’t have, or aren’t sure they have, good access to growth companies”. Around half of the 450 ShareSoc members surveyed said they wanted more access to IPOs and fundraises.

The degree to which Aquis can plug this apparent gap remains to be seen, though one of the attractions of AQSE – as with Aim – is its designation as a Recognised Growth Market, meaning trades executed in UK companies on the market are exempt from UK Stamp Duty and Stamp Duty Reserve Tax. Investor demand for access is therefore only likely to grow.

“I would be massively disappointed if it takes until the end of the year,” said Haynes when asked when he expects the links to be established. “I’m a very pushy man, and I see there’s absolutely no excuse why they shouldn’t do it very quickly.”

A spokesperson for AJ Bell confirmed that the platform was working with Aquis “to facilitate trading through their exchange on our platform” and was waiting on several procedures to complete.

Hargreaves said it was in the process of setting up an online trading link, in response to increased demand “for a number of the more liquid stocks listed” on AQSE. “As demand increases, we’ll continue to develop our capabilities and will add more stocks to our platform in the near future, along with straight-through trading,” a spokesperson added.

IG did not respond to a request for comment, though Haynes said he expected a link to be set up in the summer.

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