A number of Europe’s largest exchanges, including Euronext and Deutsche Börse, are exploring ways to ensure smaller companies make themselves — and information about themselves — more readily available to investors. The move comes as worries intensify over the potential fallout from a new requirement, part of Europe’s sprawling MiFID II legislation, for asset managers to pay for investment research separately from executing trades with banks and brokers. The rules have sowed predictions that spending on analyst research will be slashed, forcing brokers to cut their corporate services for less popular and thinly traded small and mid-cap companies. Brokers typically produce expert research on companies — but also help to arrange meetings and roadshows for their clients with investors. But less research under the changes, which came into force earlier this year, could knock liquidity, increase volatility or even cause trading to dry up in some smaller stocks, experts warn.
But not all exchanges are intervening. Mr Stuttard of London’s Aim market says he was confident that similar measures were not needed on his exchange, citing the capital’s well-developed network of small-cap brokers and advisers.
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