The review was done to enable timely adjustments to be made where necessary in the light of early experience. Matters receiving special attention included:
- the progress of cooperation within Euro.NM
- whether the image of the market and the companies listed on it satisfy the original requirements
- whether the quality of the market is adequate in respect of both regulations and tradeability
- whether intermediaries are sufficiently active in bringing the new platform to the attention of target companies, and
- the performance of the various stocks.
The development of NMAX is generally going according to plan and there is nothing to suggest that radical measures need to be taken to change the present setup. Currently this sector of the market handles five companies; another five listings are expected to be announced shortly.
Progress of Euro.NM
In the last six mondis important progress has been made in the extension of the Euro.NM concept. Still to be realised this year are the joint data feed and Euro.NM's programme of international roadshows. Cross-membership is being built up in phases, with NMAX due to join in the second quarter of 1998. Finally, a start is shortly to be made on a joint index. This progress makes Euro.NM one of the first successful forms of international cooperation between Europe's exchanges.
Image
It is to be expected that the further development of Euro.NM will contribute to the improvement of NMAX's image. This exchange sector continues to encounter a stubborn 'parallel market syndrome'. So far the process of getting across the message that NMAX, in terms of image and investor protection, is the most appropriate platform for the listing and trading of young, fast-growing companies, has met with insufficient success. Yet there is a clear distinction, particularly as regards sponsoring and lock-up. Apart from that, the name of the - established Official Market creates the impression that NMAX is in some way inferior. The way the official market is referred to is to be adjusted with this in mind.
Fresh capital
A much heard point of criticism is the limited extent to which NMAX has raised fresh capital for companies. In qualification it should be noted that two of the companies currently listed had already raised fresh capital through the Alternative Investment Market in London immediately before coming on to the exchange in Amsterdam. The project tern feels that perfectly legitimate considerations might underlie the decision to go over to a listing on NMAX without immediately going on to raise fresh capital. But the growth aims of the company need to justify the expectation that this will happen at some stage in the future. Companies are examined on this point before being admitted to NMAX. Measures are however envisaged in the adjusted 'lock-up' rule to emphasise NMAX's financing function for companies without a track record.
Tightening up the lock-up rule
On the basis of present experience, it has been decided to make a number of refinements to the rules, particularly to tighten up of the so-called 'lock-up' rule. An essential element here is NMAX's financing function, previously mentioned, for companies without a track record of profit and the way it offers investors complete transparency on the continued involvement of major shareholders, and in particular the management, in the company's ups and downs.
Trading performance
The turnover in NMAX stocks is small, which should not be too surprising given the size of the stocks concerned. The rate of turnover differs neither positively nor negatively from the stock exchange as a whole. The role of the sponsor gives the investor a guarantee that he will always be able to find a counterpart, but is obviously in no position to ensure an active market. It is expected that the further intensification of cooperation within the framework of Euro.NM will stimulate investors' interest in stocks listed on this market. Efforts will be made to improve the daily presentation of NMAX data in the Dutch press.
Attitude of intermediaries
Originally there was a certain hesitation on the part of issuing houses about this new market's chance of success, particularly in the light of the minimum cost level of an exchange introduction. Moreover there is no question that in the present fruitful exchange climate the capacity available to provide guidance for exchange introductions is limited. It is clearly a matter of vital concern for the development of NMAX that sufficient corporate finance capacity can be mobilised. For this reason accounting firms specialising in the corporate finance field will be given the opportunity to play a role in this field (as 'NMAX corporate adviser').
Amsterdam Exchanges management is confident that given a fair chance NMAX will increasingly manage to attract young, fast-growing companies. NMAX is emphatically not intended as a market purely for smaller companies. It can also be the best platform for listing and trading larger companies at a particular stage in their lives and at a particular level of ambition.
For further information contact Thom Hoedemakers, Amsterdam Exchanges AEX Amsterdam: 00 31 20 550 4540 or Paddy Manning, St James Corporate Communications London: 44 171 436 4101.
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