What is the AIM?
Aim (formerly the Alternative Investment Market) was established in June 1995 as a submarket of the London Stock Exchange (LSE) in order to allow smaller companies, usually less viable, to participate in floating shares with wider regulatory flexibility than the main market.
One of the advantages offered by Aim is that it permits newer businesses to gain access to public funds. The entry criteria is way less demanding than those applied to the Official List of the LSE, with no set requirements for capitalisation or the amount of shares issued. Early-stage businesses, venture capital-backed companies and more established businesses may join Aim to help raise the capital necessary for expansion.
At the beginning, Aim encompassed only ten companies, adding up to ÂŁ82.2 million in total value. In 2017, 803 UK and 164 international companies make up the submarket, organised in different lists, each of them with an average of ÂŁ80 million. Due to its low regulation Aim is becoming an international exchange, hosting over 3,600 global companies between 1995 and 2017.
Types of index:
There are three official indexes that measure the Aim, settled by the FTSE Group: FTSE Aim All-Share Index, FTSE Aim 100 Index and FTSE Aim UK 50 Index.
The regulatory model used by Aim is based on a comply-or-explain option, allowing companies to either comply with AIM’s rules or explain why they have not complied with them. Aim’s low-regulatory burden pivots around three figures:
- Nominated Advisers (Nomads): they act as gatekeepers, advisers and regulators of Aim companies. They are also liable, in theory, for damages on behalf of their companies.
- Self-regulation: Aim-listed companies usually are only required to adhere to the corporate governance requirements of their home jurisdiction, which can vary widely.
- Investor base: due to the level of uncertainty of this submarket, Aim’s investor base is largely composed of institutional investors and wealthy individuals.
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Category: Financial Glossary