ISDX – ICAP Securities & Derivatives Exchange
ICAP Securities & Derivatives Exchange (ISDX) provides a choice of 2 markets helping growing companies raise funding to fuel growth and achieve their ambitions regardless of size. The ISDX Main Board is an EU Regulated Market for companies and other issuers looking for a cost-effective admission to trading through the UKLA’s Official List, or other European Competent Authority. The ISDX Growth Market is a market for smaller growing companies.
The ISDX Growth Market
The ISDX Growth Market is designed specifically to help smaller and medium sized companies from across all industry sectors to raise equity funding. It is particularly attractive to younger, earlier stage, growing companies without prior knowledge or experience of Stock Markets. Its flexible regulatory system is considered to be less demanding than other Stock Markets.
Benefits of the ISDX Growth Market
- Straight forward admission process Because there is no requirement for companies to issue a full prospectus to join ISDX, the market offers companies a simple and straight forward route to joining the market.
- Lower joining costs ISDX is, for some companies, a cost effective flotation venue which compares favourably with other Stock Markets such as AIM.
- Tax incentives Investors in ISDX companies benefit from a range of tax advantages as ISDX is an unquoted market for tax purposes.
- A potential exit route for existing Shareholders ISDX provides existing shareholders in the company with a potential exit or part exit route if required, either at the time of the flotation or at a later time of their choosing.
The drawbacks of the ISDX Growth Market
- Liquidity In its former guise as PLUS-SX, market commentators were critical of the lack of liquidity in shares on the market. ICAP now have 3 market makers signed up to make continuous 2 way prices which may improve liquidity issues in future.
- Profile of the market Floating a company on ISDX may be less expensive than floating on The AIM Stock Market, however most ISDX companies command neither the profile nor the valuation multiples that AIM companies benefit from.
The profile of ISDX Growth Market companies
Although there are currently less than 200 companies listed on ISDX Stock Market, it remains the third largest equity stock market in the UK by number of companies, behind The London Stock Exchange’s two stock markets, AIM and The Main Market. ISDX has a broad range of sectors of companies from computer software and retail, to mining and media.
How to join The ISDX Growth Market
The admission process and on-going regulation for the market are designed to meet the needs of smaller companies, allowing those who run the companies to focus more on running their business, rather than be distracted by unnecessary red tape.
To join the ISDX Growth Market, companies are required to meet the following admission criteria:
- Demonstrate appropriate levels of corporate governance including having at least one independent non-executive director
- Have published audited financial reports no more than nine months prior to the date of admission to trading
- Have at least 12 months’ working capital
- Have no restrictions on the transferability of shares
- Issue shares which are eligible for electronic settlement
Companies must also publish an ISDX Growth Market Admission Document. This is considerably less onerous and less expensive than publishing a full prospectus.
For companies looking to raise more than €5 million, it may be necessary to publish a full prospectus for approval by the UK Listing Authority (UKLA).
There is a fast track admission procedure available to applicants from ‘Qualifying Markets’, currently AIM and the Access Market of the Munich Stock Exchange are identified as ‘Qualifying Markets’. Those companies that qualify as fast-track applicants are not required to publish an ISDX Growth Market Admission Document in most circumstances.
The ISDX Main Board
To join the ISDX Main Board, companies are required to produce a prospectus approved by the UKLA or other EU competent authority under the Prospectus Directive. The Application for Admission to the ISDX Main Board is made at the same time as application to the UKLA (or other EU competent authority for listing) for admission to the Official List under a Premium or Standard Listing.
As with joining any Stock Market, it is prudent to assess the viability of a flotation on ISDX before deciding to go ahead with a flotation, and certainly prior to incurring significant advisor fees. A feasibility exercise should be undertaken confidentially to provide your senior management team with an accurate, impartial assessment as to relative benefits and drawbacks for your company’s particular circumstances. Once this is completed, your management team will be able to make a firm decision about if, and when to proceed with a flotation on The ISDX Growth Market.