London Stock Exchange (LSE) celebrated the 25th anniversary of the launch of the AIM market last week. It has come a long way since its inception with 10 companies valued at £82m, to become one of the world's most successful growth markets with around 850 companies (most of these UK) having a combined market cap of £104bn.
To many retail investors, AIM-listed securities are the preserve of institutional investors only, with the potential liquidity, self-regulation, and a perceived higher risk profile than those companies listed on the main LSE market. However, with the right guidance, advice and expertise, AIM-listed securities offer some real benefits over main market listed securities i.e. they are exempt from stamp duty (unlike cash equities or investment trusts), and if you hold AIM shares in a portfolio for more than 2 years, they are exempt from inheritance tax.
AIM has been the perfect route for fundraising for many companies, including a few in recent years from our platform sector, and is a good way to support the growth of the UK economy but seems to be out of reach to many retail platforms.
Many platforms really struggle to enable investing into UK listed securities, and its not just down to a lack of relevant permissions and market memberships. The underlying platform technology has not been designed to support the standard Delivery-Versus-Payment settlement method, so they need to wait for sell trades to settle to place investments. This model may be acceptable in the collective funds world, but trading on an exchange is instantaneous.
At Hubwise we are a trading member of the London Stock Exchange and we enjoy direct membership of CREST. We can therefore trade and settle in our domestic exchange markets independently, using our connectivity to the network of retail market makers (RSPs) and are therefore not restricted to a single market participant.
Since 2017 we have been enabling our platform customers with easy access to AIM investments – some have constructed model portfolios with up to 40 AIM-listed securities; some have implemented a more balanced approach combining AIM-listed securities with ETFs and funds in the same model. We also support floating or drift-weighted model portfolios and have our own fractional allocation algorithm as part of our standard managed portfolio service for AIM securities.
To cater for all eventualities, we also allow a high degree of autonomy around the investment process, with the ability for investment teams to securely submit proposed orders or confirmed trades into our platform via an API, effectively enabling a bespoke portfolio service. This would not have been possible without owning and controlling our technology.
AIM supports an important tax planning service in our market and with the right partner, this could be accessible to all.