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  • Writer's pictureMark Watson-Mitchell

Aquis Exchange - now ready for exciting growth

In late September this £120m group announced that it had made its first profit since it was established way back in 2012 – some companies do take a long time to come good, especially in the ‘fintech sector’.


And this one, I feel, will certainly come ‘very good’ in the next couple of years.


The AIM-listed Aquis Exchange (LON: AQX) is basically a technology-driven exchange services group, with three main operating divisions.


The Aquis Exchange, which operates Pan-European equity trading exchange businesses.


The Aquis Stock Exchange, that offers regulated primary and growth company market platforms.


While Aquis Technologies develops and licenses superior exchange trading software technology to third party customers. It creates and licenses cutting-edge, cost-effective matching engine and trade surveillance technology for banks, brokers, investment firms and exchanges.


The basis of what founder and boss Alasdair Haynes wants to do is offer investors greater transparency and competitive pricing when trading. He established the company as part of a vision to introduce both competition and innovation to the securities trading market.


Through using its own technologies the company currently has some 1,700 of the biggest stocks and exchange traded funds across 14 European markets. And those numbers will be increasing significantly over the next few years, if Haynes has anything to do with it – his attention is totally fixed upon its growth.


Haynes has declared that “Our strategic goal is to become one of the leading exchange services groups through delivering ‘best in class’ exchange trading opportunities, underpinned by our commitment to first class client service”.


Aquis operates a ‘lit order book’ and does not allow aggressive non-client proprietary trading, which has resulted in lower toxicity and signalling risk on Aquis than on other trading venues in Europe.


The term ‘lit order book’ refers to an electronic list of buy and sell orders for a specific security or financial instrument organised by price level. An order book lists the number of shares being bid on or offered at each price point, or market depth.


And ‘lit’ refers to the visibility that the Aquis system offers – for investors that means that they can see when prices are being moved against their orders.


The highly influential LiquidMetrix, which provides transaction cost analysis, execution quality and market surveillance tools, states that "Aquis frequently has the best price on its own, the deepest liquidity, the lowest cost of trading and the fastest technology, making it an essential venue for brokers’ best execution requirements."


Because Aquis applies a subscription pricing model, which works by charging users according to the message traffic they generate, rather than a percentage of the value of each security that they execute, it has the ability to significantly reduce the cost of trading for its users. The highest subscription tier allows unlimited trading. The company now has 31 members as subscribers.


Aquis Exchange is the first European trading venue to introduce and operate wholly on a subscription pricing model. In today’s world ‘subscriptions’ is the big business mover, just look at Amazon, Microsoft, Netflix and the other global players.


It has taken some time for Aquis Exchange to gather more market share of its Pan-European trading but it is now beginning to gather pace. In the first half of this year it has taken a 4.51% overall share, against just 3.56% at the same time last year.


It is now the seventh largest in Europe.


A 10% market share is an early aim by the group. As it grows its subscriptions will mount up exponentially (and you all know what I feel about recurring revenues).


But Aquis is not just about the bigger traded markets.


The announcement earlier this year that it had acquired NEX was a game changer, as far as I am concerned.


My leaning is always towards the entrepreneurial smaller companies that seek development capital and continued investor support as they grow.


Taking over the NEX market was a clever move by Haynes. Through his Aquis Stock Exchange division he offers a primary and a secondary market for equity and debt securities.


It is a ‘Recognised Investment Exchange’ under the FCA rules and that allows it to operate a regulated listings venue and to compete for IPO’s.


At the time Haynes was quoted as saying that “Underpinned by the group's proven technology and a track record of transparency and innovation, the Board believes that Aquis' experience in building new businesses in the exchange industry and increasing liquidity, means it has the ability to transform the old NEX Exchange business at a time when MiFID II implications and other factors make the IPO industry ripe for innovation.”


An AQSE quotation helps companies access new sources of capital to achieve their growth ambitions. Providing a clear, independent valuation and visible share price facilitates and encourages liquidity whilst its low free float requirement enables management to retain control.



The Aquis Growth Market (AQSE) is a market for earlier stage, entrepreneurial companies seeking access to growth capital. Its regulatory framework is specifically designed to meet the needs of smaller companies. The simple admission criteria and ongoing obligations allow management to focus on running their business and generating returns for shareholders, whilst still protecting investors.


The AQSE market has around 75 companies listed, including Adnams, Arbuthnot Banking, British Honey Company, Chapel Down, Daniel Thwaites, Hydro Hotel Eastbourne, Incanthera, Mears, National Milk Records, Newbury Racecourse, Sativa, Shepherd Neame, Western Selection and many others.


Haynes recently stated that the “AQSE has been successfully integrated into the business and we are in the process of building it into a quality home for growth companies”.


Despite challenging market conditions Aquis in its first half of the current year generated an after-tax profit of £16,000 against a loss of £0.62m, on the back of a 42% increase in revenues from £3.4m to £4.9m.


The company’s cash at end June was £11.2m (30 June 2019: £11.2m), demonstrating its continued focus on careful cash management.


Liberum Capital, the company’s brokers, suggest that full year revenues will rise from £6.9m to £10.9m, with an adjusted pre-tax loss of £0.3m (£0.7m).


Going into next year they go for £15.6m of revenues and an impressive £2.4m in pre-tax profits, worth 8.8p per share in earnings.


There are 27.2m shares in issue. Large holders include XTX Markets (9.6%), Gaudenzio Roveda (9.4%), Richard Ricci (7.9%), Canaccord Genuity Wealth Management (5.9%), Alasdair Haynes (5.5%), Kendall Capital Markets (5.0%), Schroders Investment Management (4.3%), Rathbone Investment Management (4.1%), Chelverton Investment Management (3.7%) and JO Hambro (3.6%).


Because this group is still in its developing stages, looking upon its shares is not about todays profits but instead by looking upon them as an investment in the future. If Haynes achieves his ambitions for the group, then his shareholders will be big gainers.


That is probably why Liberum rates the shares, now 435p, as a ‘buy’ and has set a 606p price objective.

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