Latin American Capital Markets

404 HANNESTAKACS AND KINGA KORCSMAROS• Maintain the commercial viability of stock exchanges in order to survive longtermeconomic and market cycles and allow businesses to raise capital continuouslyby trading their shares.Types of MarketsSome exchanges have established more than one SME stock market using either sectoror market gap divisions with the intention of separating them by riskThe HelsinkiStock Exchange, for instance, separates its SME market by sectors: the New MarketList is for young, fast-growing, and small high-tech companies; and the Investors' List(previously the OTC List and Brokers' List) is for other SMEsThe main purpose is todistinguish between higher- and slower-growing sectors.This solution usually attractsinvestor attention to the young, high-risk, but fast-growing companies, and so in somecases it can be rather disadvantageous for those companies that are listed on theother market, which might be neglected by investors. A market division by marketcapitalization usually serves to help investors distinguish between micro, early-stage,high-risk companies and established, small and medium-size, lower-risk companies.An interesting solution for a subdivided SME market is the Deutsche Bourse'sexample, which represents a hybrid segmentation of both sector and market capitalization:• SMAX, established in 1999, is a small-cap segment for micro blue chips.• Neuer Markt (New Market), established in March 1997, is an IPO segmentfor high-growth companies involving admission according to the rules of theregulated market, but offering trading in the third segment (the regulated unofficialmarket).Another interesting example is the Australian Stock Exchange, which, on onehand, allows the listing of small-cap stocks on its main exchange and, on the otherhand, created a so-called Enterprise Market as a seed funding market in 1998. In termsof company size, it is probably one of the smallest SME markets and in many respectsmight not even be considered a proper market because companies do not officiallylist or trade on it. It is an Internet-based market that brings together companies offeringinvestment opportunities, potential investors, and a business network of advisors.Here companies need a prospectus and operate without securities commissionregulation. These businesses do not list; they simply publish their investment oppor-Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub