Monday's system failure at the LSE has highlighted an important problem for investors in AIM shares.
London Stock Exchange plc still has an anomalous monopoly, protected under UK regulations, in the trading of AIM shares. The UK's regulatory authorities have had this matter under review for some time, since an HM Treasury initiative announced in February 2007.
When the LSE platform failed on Monday, Official List securities were available for trading on other exchanges and trading venues in a post-MiFID competitive trading environment. However, firms were completely unable to trade the most liquid AIM securities, however pressing their clients' needs. Trading in those 90 AIM companies which have elected to be dual-traded on both AIM and PLUS, as is required by the current regulatory regime, did remain open.
As an international centre of equity trading this made London look very parochial and ill-equipped. By comparison, in New York if any particular platform fails, there are several other platforms upon which every type of security can be traded.
PLUS Markets believes that Monday's debacle is a perfect illustration of the need to introduce greater competition in the sphere of AIM and improve business continuity planning for London. It is only a matter of time before there is a similar outage and this underlines the urgency of allowing traders to access alternative platforms in order to execute their AIM business.