If your shareholders are looking for an exit or you’re seeking some extra liquidity, Sharemark may well be worth a look.
If your shareholders are looking for an exit or you’re seeking some extra liquidity, Sharemark may well be worth a look.
In the small-cap space, chief executives and investors alike have needed strong stomachs of late when checking stock prices and trading volumes.
Sharemark trades different companies’ shares in periodic auctions (daily, weekly, monthly or quarterly) and creates another option for small companies that are looking for additional liquidity in their shares, loan stock or other securities.
Its dual-trading facility gives extra headroom to a company traded on the Alternative Investment Market (AIM) or PLUS-quoted. ‘Auctions in shares of dual-traded companies only take place after the close of AIM or PLUS. The purpose is to increase overall liquidity rather than to divert it from another market,’ says Sophie Douglas (pictured), manager of Sharemark.
It’s a good example of the type of niche service that the market provides for smaller companies. Set up ten years ago, Sharemark has created a platform for public and private companies to trade shares in a way that is much more controlled than in conventional markets. Currently, there are 23 stocks on the market and 923,248 shares were traded last year.
Matched Orders
Douglas explains, ‘The way we work is by removing the need for market-makers. Instead, people enter a limit order. If they are a seller then they set the minimum amount they’re willing to accept, and if they’re a buyer then they state the maximum they’re prepared to pay.’
As the limit orders are entered, Sharemark uses an algorithm that analyses the supply and demand of a particular stock and a price is formulated according to where the two meet, creating an indicative price that is changeable as new orders are entered. ‘Once the auction begins, that indicative price becomes the final traded price,’ says Douglas.
Stakeholder webs
Sharemark has attracted companies that have delisted from AIM and PLUS whose shareholders need a trading facility. For private companies, including those that have a requirement to restrict trading in the shares to a defined user group, the market provides a facility that can provide a bespoke service for complex trading requirements, such as that of Milk Link, a dairy farmer-owned co-operative, and the charitable organisation East London Bond.
Another company, Radio Taxis, joined Sharemark in 2004 after it had restructured and was no longer run as a mutual. It wanted to ensure that existing shareholders and any new drivers joining the company could hold and trade shares.
‘As one of the Sharemark-traded companies that restricts trading in its shares, they have a completely closed off area of the Sharemark website,’ says Douglas. ‘Whereas our standard order books are available to all members of the public, our closed market companies are only available to the members of these groups.’
As the economic recovery gathers momentum, Douglas fully expects trading volumes to pick up and chief execs to bring companies to the market who are considering a future move to the likes of AIM or PLUS: ‘Sharemark is a useful place to get used to some of the rules and regulations you will find if you’re looking to trade on one of the senior markets.’
For more information on Sharemark, call Sophie Douglas on 01296 439432 or email sophie.douglas@share.co.uk
