Following the admission of US Oil & Gas shares to the over-the-counter (OTC) level of the platform GXG Markets on April 19, trading in the stock has boomed.
In the year to date around 1.433 million shares in the oil explorer have changed hands and it has been the platform's most liquid stock.
GXG Markets offers a market for small companies. It is based and regulated in Denmark and Proactive Investors went back to its London-based head of markets Simon Kiero-Watson to get the latest news about the exchange having last spoken to him the day USOP shares were listed.
Back then, around 20 stocks were listed on GXG but Kiero-Watson started by saying that figure is expected to go above 30 soon with question-marks hanging over rival PLUS Markets.
SKW: We've got 29 companies on and we've got another two applications which have arrived today and another two were approved yesterday for going on. So it's growing very quickly.
Proactive Investors: What sort of companies are they?
SKW: We've got a whole range of different things. We've got companies that are just cash shells that are sitting there, we've got some start-ups that are in the research and development phase. We've got some that are mining companies in the exploratory phase and then we've got other companies that are already up and trading and doing thing over a range of industries. The most liquid stock is US Oil & Gas, and that's being traded day-in-day-out.
Proactive Investors: Has the high volume of trades of USOP prompted other stocks to join, do you think?
SKW: Possibly, I don't know whether it's a huge factor on that. It's nice to have a company that is being traded in reasonable volumes on there.
Some of the companies are not coming for liquidity necessarily, some are coming for the market cap, some of them are coming for the profile and being able to use Thomson Reuters for the newswire service and get their information out there. It's a range of things. Some are looking at being on the market so they can look at a fundraising. It's very much a mixed bag.
Proactive Investors: Can you give me an example of the sort of trading volumes on the USOP stock?
SKW: So far this morning (May 30) we've had through about 30 different trades, ranging from a handful of shares up to about 5,000 shares. The largest volume we've had through in the last couple of weeks was a couple of trades around the 20,000 share mark, which were at £1.50 a share - so that was £30,000-worth of shares in one trade.
Proactive Investors: Is there a re-launch of the website due soon?
SKW: That will be coming through this month. It's going to make a huge difference in terms of the information we provide. We are looking at having charting showing the trades that have gone through, but also providing investors with the actual order depth that the brokers get to see. So you can see on the website the order depth for buying and selling but also what volumes are available, which is something nobody else is doing. We are looking at really trying to improve the transparency of what's going on out there?
Proactive: Which UK-based brokers can investors use to access the GXG Market?
SKW: There's a great long list on the co.uk website. We've got more brokers joining literally with every passing day. We've just had Daniel Stewart join. We've got in an application for Alexander David. Walker Crips has just joined. We've got a couple of Irish brokers just joined and a company called Xconnect. There's a long list on there.
Proactive Investors: How can investors access the GXG Market?
SKW: Investors can view prices and the best bid and ask prices available (the revised website due in June will show the order depth for each security).
Investors place orders via regulated brokers who have direct market access through our proprietary trading platform Tellus.
Trades are matched off giving the matching order the best execution available and the price is immediately reported back to the market website.
Proactive: In what ways does the GXG Market differ from small-cap markets like AIM or PLUS?
SKW: The system is based on an automated best execution matching platform that does not involve market-makers setting the price.
The price for a stock is the last traded price with the seller receiving the price a buyer pays.
GXG operates a three tier market solution to provide smaller companies with a market quote throughout the different phases of their growth.
GXG Markets operates an EU regulated market as well as their multilateral trading facility (MTF) and OTC market.
Proactive: What does ‘matched trade’ dealing mean? Is it true there is no ‘bid-offer’ spread on GXG?
SKW: The system matches buyer and sellers that are looking to buy/sell at the same or overlapping prices.
Thus the price a buyer pays is the price a seller receives. The system does not rely on an institutional middleman setting one price for sellers and another for buyers.
Proactive: How are the trades settled? Can all trades settle in electronically through CREST or do private investors need paper certificates?
SKW: For the UK facing list i.e. the companies on the .co.uk website, arrangements are in place via Crest.