The rise and fall of the penny-share offer: A historical sociology of London’s smaller company markets

This report offers a narrative, ‘historical sociology’ of two markets established
in London in 1995 in response to a series of rule changes at the London Stock
Exchange (LSE). The first, the Alternative Investment Market, or AIM, was
set up by the LSE. It was established as part of LSE chief executive Michael
Lawrence’s ‘seven-point plan’ for the repositioning of the Exchange as an
engine for economic growth focused on the UK regions. AIM was also, in part,
a reactive move allowing the Exchange to deal with competitive threats in
Europe and at home, particularly growing activity under its own Rule 535.
It has acted as a proving ground for many smaller companies and plays
an important role in the political positioning of the LSE. The second, OFEX
(renamed PLUS in 2004) was privately operated and driven by commercial
demand. Originally operated as a trading facility, it achieved legal recognition
as a ‘designated market’ in 2001, and then as a Recognized Investment
Exchange (RIE) in 2007. As OFEX it coexisted with the LSE and rode the
dotcom wave; as PLUS it served as a vehicle for a market rebellion against
the LSE. It struggled to maintain a commitment to its original small company
constituency and to compete as a trading venue of choice against the
Exchange. While AIM has flourished, PLUS faltered after the financial crisis of
2008, and my narrative finishes in 2012 with the sale of the PLUS RIE licence
to ICAP, now NEX.