Definition of Main Market
The Main Market is the principal market for trading equities on the London Stock Exchange (LSE). It is characterized by rigorous listing requirements and offers greater liquidity compared to the Alternative Investment Market (AIM). Companies seeking admission to the Main Market must meet strict eligibility criteria, such as having audited financial records for at least five years and placing at least 25% of their share capital in public hands. The Main Market trades in over 2,500 securities, making it a critical component of the UK’s financial landscape.
Examples
Example 1: Company Listing
Company ABC, a tech giant, has a track record of 10 years and decides to list on the Main Market. It meets the listing requirements by showcasing five years of audited financial results and ensuring that 30% of its shares are available to the public.
Example 2: Liquidity Advantage
Firm XYZ, a consumer goods manufacturer, prefers the Main Market due to its high liquidity, allowing investors to easily buy and sell its shares, reflecting a more accurate market value.
Frequently Asked Questions
Q1: What are the benefits of listing on the Main Market?
A1: Benefits include access to a larger pool of investors, enhanced visibility and credibility, higher liquidity, and potentially lower cost of capital.
Q2: What are the listing requirements for the Main Market?
A2: Requirements include having five years of audited financial reports, at least 25% of shares in public hands, adherence to stringent governance and disclosure standards.
Q3: How does the Main Market differ from the AIM?
A3: The Main Market has more stringent listing requirements and offers greater liquidity compared to the AIM, which is geared towards smaller, growing companies.
Q4: Can foreign companies list on the Main Market?
A4: Yes, foreign companies can list on the Main Market if they meet the eligibility criteria and comply with regulatory requirements.
Q5: What types of securities are traded on the Main Market?
A5: The Main Market trades in a variety of securities, including equities, bonds, Exchange-Traded Funds (ETFs), and Global Depositary Receipts (GDRs).
Related Terms
Equities: Instruments representing ownership in a company, granting shareholders rights to assets and earnings.
London Stock Exchange (LSE): One of the world’s largest stock exchanges; it provides a platform for buying and selling stocks and other securities.
Listing Requirements: Criteria that a company must meet to be admitted to a stock exchange; includes financial, governance, disclosure, and regulatory standards.
Alternative Investment Market (AIM): A sub-market of the LSE for smaller, growing companies with more flexible regulatory requirements.
Online References
Suggested Books for Further Studies
- “The Handbook of Financial Market Tools: A Comprehensive Guide to Market Instruments” by Glen Arnold
- “Equity Markets in Action: The Fundamentals of Liquidity, Market Structure & Trading” by Robert A. Schwartz
- “The Corporate Finance Handbook” by Jonathan Reuvid
Accounting Basics: “Main Market” Fundamentals Quiz
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