The AMEX is looking for some legislative help to create a junior tier (of listed stocks) and take a piece out of the London based AIM:
Amex Eyes AIM Killer
Backs legislation that would create exchange tier for developing companies.
July 3, 2007
By Ken Schachter
In a move to create a domestic alternative to London’s Alternative Investment Market, the American Stock Exchange is promoting legislation that would let U.S. bourses create junior tiers for companies that can’t clear current listing hurdles.
The bill was introduced June 28 by Reps. Gregory Meeks, a Democratic member of the House Financial Services Committee, and Vito Fossella, the chairman of a Republican task force to enhance U.S. capital markets. It would amend the National Securities Markets Improvement Act, allowing the Amex, the Nasdaq, and the New York Stock Exchange to create new listing tiers.
The Amex already has declared its plans to create a second-tier marketplace that could compete with the London Stock Exchange’s AIM and add a new revenue stream to its primary businesses in stock, stock options, and exchange-traded funds. A NYSE spokesman said the bourse had no plans to modify its standards. Nasdaq, meanwhile, owns 30 percent of the AIM’s parent, the London Stock Exchange, but has been rebuffed so far in its merger overtures.
Mark Seetin, Amex’s senior vice president for government affairs, acknowledged that the exchange has been pressing for changes in the law that would permit a junior exchange. Mr. Seetin said the Senate is tracking the bill’s progress in the House. Should a bill pass, the Securities and Exchange Commission as well as state securities regulators would need to approve the changes.
It remains unclear what listing standards the Amex would impose in a second tier market. On its web site, AIM highlights the low barriers to entry: no minimum size of company; no minimum proportion of shares to be in public hands; no trading record requirement.
As of June, AIM had more than 1,600 listed companies, including more than 60 from the United States.
Mr. Seetin said he believed venture capitalists would welcome a domestic junior market. Some VCs, however, have questioned the ability of AIM to provide sufficient liquidity for an exit.
“AIM has a reputation as a source of financing, but not liquidity,” said Jack Biddle, general partner at Novak Biddle Venture Partners. “Raising money is not hard, but providing liquidity to limited partners is hard. AIM is a place where people go to raise capital, but not to provide liquidity to LPs.”
Mr. Biddle said AIM is competing against mezzanine funds and hedge funds to provide late-stage financing to companies. “We prefer a strong IPO with good liquidity for our LPs,” he added.
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