Investors are missing AIM opportunities

On behalf of execution-only broker, The Share Centre, benchmarking, competitor analysis and research services specialist Compeer, has released striking information showing the extent of trading in AIM shares by self-directed investors in comparison to investors with brokers.  During Q4 2010, the monthly total of trades averaged 451,000 by execution-only brokers, compared to 57,000 with private client brokers - over 7 times the volume - the value of these nearly 3 times as high.

Gavin Oldham, Chief Executive at The Share Centre, commented: "In light of this research, we feel that Nomads and AIM corporate brokers are failing their corporate clients by not addressing this vibrant market.  When placings - either as new or secondary issues - are made for AIM companies, the advisers invariably direct their attention to institutional investors and private client brokers, but do not make their offerings available to the substantial execution-only market.

"The findings call for a fresh look at the way placings are made, as it is the investors themselves who make the decision as to whether to take up the offer.  Because most investors operate via the internet, the timescale in which they make their decision can easily fit within the typical offer schedule.

"These findings are also significant to Government policy.  Growth in the SME market is critical to the private sector recovery and the generation of new jobs.  A strong secondary market is essential for encouraging investment into SMEs, and further attention needs to be given to:

including AIM shares (and those traded on other junior markets) in ISAs, where many personal investors now base their investment in shares

exempting SME purchases in the secondary market from stamp duty

re-balancing the tax treatment of exiting entrepreneurs so as to remove the bias towards trade sales, which normally result in significant loss of employment.

"Corporate advisers in the City should take urgent note of the strength of self-directed trading in AIM companies through execution-only firms such as The Share Centre, and discuss with us how to make their share placings accessible.  These findings lay bare the inadequacy of current arrangements, and SMEs seeking retail investors should contact us directly if they are not getting satisfactory answers from their corporate advisers.