Trading on The Aquis Stock Exchange – The Future “NASDAQ of London”

By Anna Farley

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There are plenty of ideas floating around when it comes to the Aquis Stock Exchange (“AQSE”).

But by far the hardest myth to shake is that it’s difficult to trade shares on the London exchange.

While most want to support a rival market, some would-be investors are put off by rumours that it’s difficult to buy and sell.

It’s an idea that’s still going strong in parts of Twitter.

But is it really as difficult as some people think to trade on this up-and-coming exchange?

Here, we ask a range of experts how easy it would be to buy shares in AQSE-listed companies.

Waking a “sleeping giant” – could AQSE revive a lacklustre London?

Before getting to the how of buying AQSE shares, there is the question of why.

Let’s start with a look at what AQSE is and why it has so many people excited.

AQSE is a division of London-listed company Aquis Exchange (LON: AQX), which has set out to challenge the London Stock Exchange (“LSE”).

Of the five regulated investment exchange licences in London, London Stock Exchange Group (LON: LSEG) owns four.

However, as VSA Capital chief executive Andrew Monk says, “there has always been a fifth”. Previous fifth licence owners include NEX Exchange and PLUS Markets Group.

Monk points out that, unlike previous challengers, Aquis Exchange came to London with an established reputation.

In fact, Aquis Exchange is currently doing more than 6% of all trade in Europe. That makes it one of the continent’s biggest exchanges.

Another point in Aquis Exchange’s favour is that it is, as Monk notes, “owned by the institutions, and they want it to be successful”. These institutions, he says, “are actively encouraging companies to list on AQSE”.

And when it comes to getting a company to list, London as a whole has been struggling in recent years

Indeed, in 2006, shares in London were worth 10.4% of the worldwide equity market. Today they’re worth a paltry 3.6%.

Not only that but, in 2005, 20% of companies opting for an initial public offering (“IPO”) picked the London Stock Exchange (“LSE”). In comparison, that figure is a measly 4% today.

Monk attributes this decline to the LSE’s transformation into “a sleeping giant”, due to a lack of competition.

But Monk believes AQSE can offer a solution. It challenges London Stock Exchange Group’s dominance in the same way the NASDAQ did to the New York Stock Exchange.

Says Monk:

“Every other major financial area has competitive exchanges. In America, you’ve got the New York Stock Exchange and NASDAQ. In Canada, you’ve got the CVS and the TSX. Andn China, you have the Shanghai Exchange and the Shenzen exchange – in fact, they’re bringing in a third Beijing exchange.

“London is basically the only major financial area that doesn’t have a competitive exchange. And that is why it actually is vital that we have one and that AQSE becomes what I call the NASDAQ of London.”

Despite the potential to invest in a genuine LSE competitor, perhaps for the first time, there’s been a surprising reluctance to get involved.

Let’s explore where that reluctance comes from, and see if it’s justified.

Buying AQSE shares – just how straightforward is it?

Nick Emerson, Head of Corporate Broking at SI Capital, says the underlying struggle for AQSE has been that “retail platforms, up until relatively recently, have not allowed electronic trading”.

But the idea that it’s impossible to buy AQSE shares online in 2021—which seems to be shared by many—is a myth.

For example, AJ Bell added AQSE to its online trading platform back in April – joining Barclays and Jarvis.

In other words, it’s already possible to buy shares in the likes of mining and exploration-focused investment issuer Evrima (AQSE: EVA) or life sciences, technology, and natural resources investment issuer IAMFIRE (AQSE: FIRE) on the exchange.

The same goes for Oscillate(AQSE: MUSH), an investment issuer focusing on the natural resource sector, medicinal cannabis & special situations.

Monk says that:

“Slowly but surely, all the big platforms are moving so you can trade AQSE shares electronically.”

While, historically, you had to phone your broker to make a trade, that isn’t essential for AQSE trading any more.

However, if that is indeed your preferred approach, then contacting a broker is also quite easy. In fact, it even has advantages over electronic trading.

Samir Lakha at telephone-based broker First Equity notes that “somebody can set up an account in a matter of days” and get a dedicated broker.

Explains Lakha:

“If you were to send us your documents on Monday, we’d probably have the account open by Wednesday or Thursday. Thereafter, as soon as the account’s open and it’s funded, we can trade.”

And while First Equity is phone-based, it’s possible to email your broker as well.

Asked what the process would be like for an investor looking to buy or sell shares through SI Capital, Emerson said it was “absolutely no different to trading on AIM or Main Market”.

And Monk, too, says:

“You need to think of it as exactly the same as buying a stock on the stock exchange or NASDAQ or TSX. It’s really no different at all.”

While some we spoke to acknowledge issues with some of the smaller AQSE companies when it comes to liquidity and volume, they also note the push from Aquis Exchange to bring in liquidity.

Concerns about liquidity are hardly unique to AQSE, though. As Lakha notes, this is a defining feature of AIM and other growth markets.

“People who deal in AIM will realise that when you're dealing with illiquid stocks a lot of them are quite news driven. Sometimes, in between periods of news flow, the volumes can die down and it can be a little bit trickier to buy and sell. It's one of those things in growth markets. Having said that, if the right catalyst comes in and the volume follows suit, then actually it's no harder for us to deal than it is in any other growth market.”

Having a broker can help when it comes to liquidity, says Lakha, since brokers like First Equity “have visibility and relationships with the actual market, so we will know the best way of going about and executing a trade”.

Brokers like Lakha can also offer advice when it comes to buying and selling AQSE shares, based on experience, making it even easier for those new to this exciting market.

What’s next for AQSE and would-be investors?

As established by now, it’s really not difficult at all to invest in AQSE shares. This makes the barrier to entry much lower than some would have assumed.

Everyone we spoke to said the process for buying shares on AQSE is the same any other kind of deal on a growth exchange.

And, as discussed, platforms like As Bell and Barclays already now offer online AQSE trading for anyone particularly troubled by phone calls.

There are many quality firms on AQSE, already attracting plenty of investor interest.

So, as electronic trading becomes easier, and liquidity improves, the opportunity to get in on AQSE at such an affordable stage might not stick around.

With more and more quality firms – like Evrima, IAMFIRE, and Oscillate – choosing AQSE, the time for change could be just around the corner.

After all, as Monk says:

“NASDAQ was actually, when it started, an over-the-counter market in America that no one took any notice of…until Microsoft listed on it in 1986.”

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Consumer Finance
Financial Services
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Financials

Author: Anna Farley

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Anna Farley does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Anna Farley has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.

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