Aquis Stock Exchange (AQSE) has launched an incentive scheme to award top performing market makers with equity in a bid to narrow spreads and boost liquidity on its market growth stocks.
Expected to begin in January, the scheme will require participating market makers providing two-way prices in retail size to offer tighter spreads no wider than 5%.
The scheme will apply to 50% of stocks in the new Apex segment of the AQSE growth market, which lists companies with a larger market capitalisation.
Market makers that qualify for the scheme will be awarded warrants convertible into AQSE equity. During the three-year term of the scheme, the top five performers can collectively earn up to 19.9% of the AQSE equity up for grabs.
AQSE said a number of market makers have already signed up to the scheme, including Canaccord Genuity, Liberum, Peel Hunt, Short Capital, Stifel, and Winterflood Securities.
“This is an important development in our quest to really transform the AQSE marketplace into the premier destination for both issuers and investors in growth companies,” said Alasdair Haynes, Aquis Exchange chief executive. “Liquidity is the lifeblood of markets and schemes to boost trading by offering narrower spreads, top technology, and alignment of vested interests will lead to a more buoyant marketplace.”
The scheme has been designed to boost liquidity and listings of its recently relaunched market following Aquis Exchange’s £2.7 million acquisition of NEX Exchange from US derivatives group CME this year.
It also comes amid concerns from market participants that MiFID II’s research rules have reduced coverage and liquidity in small- mid-caps stocks across Europe.
“Following the implementation of MiFID II, some small and mid-cap listed companies have experienced a significant reduction in the liquidity of their share, hindering their ability to attract equity investment,” said Iain Morgan, head of execution and trading at Peel Hunt. “We are pleased to be supporting a scheme that seeks to improve trading in these companies, so they can access the investment capital needed for future growth.”
In September, Aquis Exchange recorded its first period of profitability since its launch in 2013 after reporting a 42% increase in revenue in the first half of 2020. Aquis reported £16,000 in profit in the first half of this year, compared to a £623,000 loss in the same period in 2019.