Aquis tackles unbundling conundrum with research expansion for top stocks

Research on Aquis Stock Exchange’s Apex stocks will be produced and published by Fregnan and Research Tree and available on AQSE’s website under latest scheme.

The Aquis Stock Exchange (AQSE) has set out plans to offer free access to research on its Apex stocks in a bid to resolve issues relating to research unbundling for SMEs.

As part of the new scheme, quantitative research on AQSE’s Apex stocks will be provided by machine learning and artificial intelligence analytics FinTech, Fregnan, and published on the AQSE website.

Additional fundamental research on Apex stocks will be also available through a new research portal in partnership with research aggregation platform, Research Tree.

“The plans we are unveiling today for expanding the research provided on AQSE-quoted stocks fulfils yet another of the promises we made when we bought this business and takes us further along the journey of making AQSE into the most appropriate and best home for growth companies,” said Alasdair Haynes, chief executive of Aquis Exchange. 

Research unbundling, which came into force with MiFID II in 2018, has been at the forefront of significant debate recently amid claims it has caused a significant decline in research into SMEs leading to a subsequent drop-in investment in them by asset managers. 

UK and EU regulators have made bids in recent months to alleviate liquidity pressures put on SMEs through unbundling, with Europe offering firms with a market cap below €1 billion over 36 months exemption from the ruling as part of its COVID-19 package in March.

The UK followed suit in April, offering SMEs with a market cap below £200 million an exemption from the unbundling requirement.

However, recent research by Liquidnet suggested that re-bundling and traditional research as a standalone product are unlikely to counter the decline in SME investment as insights required by asset managers to make an investment decision have evolved thanks to regulation changes and the pandemic.

Liquidnet claimed that better SME data access – like the initiative Aquis has developed – standardisation of non-financial data, and tax incentives for SMEs looking to list in the UK and Europe would improve their chances.

The expanded research for Apex stocks at AQSE is the latest scheme from Aquis recently. In November, the exchange confirmed plans for an incentive scheme that awards top performing market makers with equity in a bid to narrow spreads on stocks in the Apex segment of the AQSE growth market.