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The role of the stockbroker

Stockbrokers have two roles to play on AIM in that they can act for companies which are quoted on AIM or they can act for investors who wish to deal in AIM securities.  

All companies on AIM must also have a broker and this will be a member firm of the Stock Exchange.  If there is no registered market maker then the role of the broker will include using its best endeavours to find matching business.  However, generally speaking, the role of the broker will be more wide ranging than this and will include the publication of research on the company, dealing in the company’s shares on behalf of institutional and private investors, raising finance from investors and providing corporate finance advice.  

Many companies on AIM actually appoint more than one broker as different brokers have different areas of expertise.  Most brokers appointed to AIM companies are predominantly orientated towards institutional investors.  Some AIM companies therefore have secondary brokers to raise awareness among private investors and to broaden the shareholder base.  This also helps to improve the liquidity in a company’s shares as the shares tend to be traded more regularly.  More actively traded shares tend to have narrower spreads between buying and selling price and this, in turn, makes the shares more attractive to investors.

Information supplied by Redmayne-Bentley