In the October edition of the Hardman Monthly newsletter, Chief Executive, Keith Hiscock analyses the much misunderstood – but highly important – issue of stock liquidity. In particular, he focuses on the lower echelons of the Main Market and of AIM.
The conclusions are very revealing – and very relevant to Chief Executives and Finance Directors of such companies, who fret over the apparent low market rating accorded to their company’s stock.
- The introduction of the apparently obscure MiFID II in January 2018 will have far-reaching market-related consequences;
- Hardman’s analysis indicated that the commission ‘pot’ is set to plunge by up to 75%;
- As such, it will broadly only be commercially viable for house brokers – or a specialise research house, like Hardman – to analyse those Main Market company’s capitalised at less that £500m;
- In terms of AIM listed stocks, the threshold, calculated by Hardman, is slightly higher – at £700m;
- Consequently, Executives of every quoted company with a capitalisation below £700m need to address – as a matter of urgency – how they will respond to the expected seachange in investment research availability.