The London Stock Exchange has published its draft rulebook for the High Growth Segment, a new section of its main market for high growth companies that it plans to launch in March. It is inviting comment on the rulebook from market participants until 8 March.
The new segment is designed to meet the needs of fast-growing companies aspiring to be included in the Premium segment of the UK Listing Authority's Official List. As part of the main market, the High Growth Segment sits alongside premium and standard listings and, unlike AIM, will not constitute a separate market in its own right. The two main distinguishing requirements to join the segment are a CAGR of 20% over three years and 10% free float rather than the 25% required for a full listing.
The new segment is seen as a transitional option for companies admitted to it. "It is a 'stepping stone' to a full listing," said an LSE spokesman. "While there is no specific, universal time frame for companies, they will be required to set out their plans to move to the Official List, over time, in their prospectus."
The draft rules mandate a key adviser role to companies in the new segment. "Firms wishing to act as key advisers will need to be approved by the Exchange, though the approval conditions are based on those for sponsors in the premium market," added the spokesman.
"Ensuring that the UK's fastest growing and most dynamic companies have access to equity capital is a priority for London Stock Exchange," says Alexander Justham, CEO, London Stock Exchange.
While the new segment is likely to attract technology companies in the main, it is not linked directly to the LSE's techMARK initiative, a specialist segment of the main market. "techMARK is specifically for premium listed companies," says the spokesman. "While a company is on the High Growth Segment, it won't be eligible for techMARK inclusion, though once it has graduated to a full listing, it may join thereafter."
BATS targets retail trading with RIE status
Meanwhile, BATS Trading is meanwhile awaiting the outcome of an assessment by the UK Office of Fair Trading (OFT) of its application to the Financial Services Authority (FSA) to become a Recognised Information Exchange (RIE).
The main attraction for BATS in achieving RIE status is believed to be its accessibility by retail brokers and institutional customers whose mandates restrict their engagement with trading venues that do not have investment exchange status. RIE status would, however, also allow BATS to develop activities in the equity listings and derivatives space.
The OFT is now in the midst of a consultation period on the BATS application, which ends on 12 March. Once completed, the OFT and FSA will provide advice to the Treasury, which will make the ultimate decision. Assuming no impediments, BATS is hoping for final approval of its application by Q2, 2013.
Reporting by Richard Schwartz