Aquis Stock Exchange Market Consultation Paper

On 1 May 2020, Aquis Stock Exchange (AQSE) (formerly NEX Exchange) published its Market Consultation Paper.

AQSE currently consists of three separate stock markets:

• AQSE Growth Market – designed for smaller and growing companies.
• AQSE Main Market – designed for larger companies and regulated.
• ACSE Trading – designed for secondary trading in securities admitted to other UK and EU markets.

Feedback on the proposed changes is requested by 15 June 2020.

Market Segmentation

AQSE are looking to divide the AQSE Growth Market into two segments, APX and AXS, with a stated aim of improving recognition and understanding that the companies listed vary in their stage of growth.

APX (‘Apex’) – The APX segment is intended to focus on companies already executing on clear growth strategies and thereby falling into the category of later stage growth companies, with a more developed market capital and track record.

The APX segment will require new applicants to:

• have a trading history of at least two years
• have no fewer than 25 shareholders
• maintain 35% or more of their securities in public hands
• maintain a market capitalisation of £10million or more
• maintain a minimum of two market makers
• comply with either the QCA Corporate Governance Code or the UK Corporate Governance Code
• publish a Growth Prospectus prepared in accordance with the Prospectus Regulation and approved by the FCA to help foster broader public participation in SME IPOs, albeit such prospectus is less complex than those of a full prospectus
• actively engage with AQSE and participate in new and innovative initiatives that assist market analysis and the provision of quantitative research involving data analytics.

Companies that have reached maturity with a market capital of over £1billion will be encouraged to progress to the AQSE main market.

AXS (‘Access’)

The proposed new AXS segment will focus on earlier stage growth companies that satisfy a majority of the existing eligibility criteria, including the need to maintain at least one market maker and have 10% or more of their securities in public hands, except that:

• in respect of investment vehicles, or companies without a two-year trading history, AQSE proposes to increase the minimum fund raise on admission from £500,000 to £2million
• the admission document now need only be in a template form.

Companies would be automatically promoted to APX once they satisfied that segment’s criteria.

Corporate Advisors

In order to broaden the choice of advisers available to companies looking at admission to AQSE existing AIM ‘nominated advisers’ will automatically be granted status as an AQSE corporate advisor.

Increase Liquidity

AQSE is keen to encourage an expectation of regular trading in a company’s securities. With this in mind it is proposed that corporate advisors will be required to provide companies with advice on how to develop an investor base that cultivates secondary market liquidity – and, in placings, corporate advisors will be obliged to confirm to AQSE how the allocation of securities is expected to support such liquidity.

AQSE is also seeking to encourage tighter spreads with the APX admission criteria. It is hoped that these will increase the volume of securities available to market makers in the provision of liquidity.

AQSE is also considering rules to prohibit or restrict short selling of securities on both APX and AXS. This would not apply to market makers undertaking market making activities in the securities in which they are registered.