Earlier in 2017, The World Federation of Exchanges (WFE) released their report highlighting major barriers of entry to equity market financing for Small and Medium Enterprises (SMEs). In conjunction with a survey infrastructure supported by the Milken Institute, the WFE made three key recommendations to securities market regulators and exchanges:
- The complexity, cost and scale of listing, and maintaining a listing, should be reduced, to incentivize the use of equity markets by SMEs.
- The quality, not the quantity, of information available about SMEs should be enhanced. This includes information that SMEs disclose for regulatory compliance as well as that from third-parties.
- Mechanisms should be introduced to enhance secondary market liquidity in SME stocks and on SME markets, such as: dedicated market makers; expanding and diversifying the investor base; and exploring alternative secondary market trading models such as a quote-driven market.
When I read the WFE report, I couldn’t help but draw parallels between these findings and the unique public market framework we have built at OTC Markets Group to help smaller public companies succeed.