Strategy & Operations » Leadership & Management » Business Matters: Pumping up liquidity for quoted companies – AIM shares in ISAs?

Over the past few months, the Quoted Companies Alliance has been beefing up our campaign to allow alternative investment market (AIM) shares to be included into individual savings accounts (ISAs) as part of our continued effort to improve the liquidity and marketability of AIM company shares.

The profile of this issue has been raised significantly over the past few weeks. Lord Lee of Trafford posed a question in the House of Lords on 20 December querying why AIM shares could not be included in ISAs and the Financial Times recently published an article by David Blackwell on this subject, both of which mentioned our efforts alongside those of the London Stock Exchange and other industry bodies.

On 10 January 2011, the Financial Times also published my letter on allowing AIM shares in ISAs in response to all this, where I pointed out the inconsistencies inherent in the exclusion of AIM shares from this key tax-exempt savings product. For example, shares traded on recognised stock exchanges are allowed to be included in ISAs, which includes the Athens Stock Exchange (including the derivatives market), the Korea Stock Exchange, the Gem market in Ireland and the alternative market in Cyprus. Yet, those traded on AIM, the UK’s predominant growth market, can’t.

The Quoted Companies Alliance is highlighting that the overarching issue is to improve liquidity and trading in the sector that currently has the best opportunity to grow and create jobs – small and mid-cap quoted companies – and including AIM shares in ISAs is one way to make this happen.

Mark Hoban MP, financial secretary to HM Treasury, has recently expressed his view against this proposal in a speech at the Tax Incentivised Savings Association (TISA) conference and also in responding to a question in the House of Commons from James Wharton MP. His view is that allowing exchange-regulated shares into ISAs may damage the brand as these companies are “riskier”. Riskier than every share in Korea, from a UK investor’s point of view?

We will plan to include the proposal in our budget representations to the chancellor and we urge you to write to Mark Hoban at the Treasury, to show your support.

Tim Ward is chief executive of the Quoted Companies Alliance, the membership organisation of the small and mid-cap quoted sector. His past roles have included head of issuer services and head of marketing at the London Stock Exchange and finance director at FTSE, the index company.