For the most part, the Alternative Investment Market has more flexible regulations compared to the main market. It is often viewed as self-regulated. For this reason, it is used by smaller companies, which may be riskier, to access capital from the public market. The companies found on the AIM also tend to be highly speculative and small-cap. The regulatory system of the Alternative Investment Market is largely overseen and processed by the AIM nomads.
Nomads, also known as nominee advisors, play an essential role in the AIM regulatory process. Nomads are expected to advise companies before an initial public offering (IPO). Nominee advisors are also expected to keep up with and oversee regulatory compliance. AIM nomads also face specific criticisms in light of the AIM’s light-touch regulation. Some point to cases of nomads who have failed to complete these tasks. It can also be noted that nomads profit in fees from the companies that they list.
What is the LSE?
The AIM, as previously discussed, is a sub-market of the London Stock Exchange (LSE). The London Stock Exchange is the primary stock exchange in the United Kingdom. It is also one of the largest markets in Europe. Internationally, it is a focal point for trade, insurance, and banking. The LSE also has a long history.
It originated in 1698 when local broker John Castaing began posting prices of commodities and stocks. In the 19th century, as the exchange continued to grow, it also took on more regulation efforts. In 2007, what was previously known only as the London Stock Exchange merged with the Borsa Italiana and the Milan Stock Exchange to form the London Stock Exchange Group (LSEG). The Financial Times Stock Exchange 100 is the dominant index for the LSE. It contains 100 of the top blue-chip stocks.
One of the most critical moments in the London Stock Exchange’s regulatory history was an event known as the “Big Bang.” In 1986, the UK government ushered in major waves of deregulation. The deregulation included a switch from a traditional open outcry trading system to a screen-based electronic system. It also got rid of fixed commission charges. Many of these deregulation efforts opened the LSE up to global traders and allowed it to compete with other major markets.