Fiji considers new stock market format

September 09, 2009 12:48:40 PM

• A⁺ 
• A^-
• |
• 
• |
• 
• |
• 

Moves are underway to explore the establishment of an Alternative Investment Market (AIM) to help small and medium sized enterprises in their search for much needed capital.

The efforts are being spearheaded by the South Pacific Stock Exchange (SPSE), the Capital Markets Development Authority, and the National Centre for Small & Micro-Enterprises Development (NCSMED), with a consultation paper posted on the SPSE website.

“The SPSE currently has only one trading board which is the Official Market. This is reserved to companies that meet the criteria described in the SPSE Listing Rules regarding the financial requirements, shareholders spread, and financial reporting. The current listing rules are not flexible enough for the Small and Medium-sized enterprises (SMEs) and as such SMEs fail to gain access to the public equity markets,” the exchange said.
 
It added that while there were various means of increasing investment opportunities within the local capital markets - such as broadening the range of financial instruments that might be offered - the potential that lies in the SMEs were often overlooked.

“SMEs play a vital role in the development process of any economy and constitute a significant portion of the Fiji economy.  However, they are often locked out of the capital market because of the stringent conditions and high costs of making public offerings or enlisting itself on the stock exchange. The SPSE is an integral element in Fiji’s capital market.  The capital market is intended not only to provide investment opportunities, but more importantly to provide for domestic economic growth in Fiji. Consequently, SPSE in collaboration with CMDA and NCSMED is in the process of developing an Alternative Investment Market board for enterprises that are in growth phase in order to provide incentives and assistance to the capital growth of domestic enterprises in Fiji,” the SPSE said.

The SPSE added it intends to launch the alternative investment market at the beginning of next year and implementation will be subject to the finalisation of the AIM Listing Rules by the SPSE Board and Capital Markets Development Authority.

The AIM will give SMEs another option in raising much needed capital instead of keeping them limited to commercial banks.