1 F:\Monash_Docs\Courses\AFF2701\Alternative Capital Markets.docxThank you Cameron. I feel almost at home, having qualified as an engineer here when it was Caulfield Tech. Forty-something years ago … !That should leave time for some questions, which I look forward to. Slide 12So … the territory I’m going to cover:Why have a Small-cap exchange? Capital market segments Market Functions NSX/BSX Government and the Law Micro-cap: theSMEboard Private Equity What I’ll be talking about is some things that fill the gap in the capital market infrastructure that the Australian Stock Exchange, the ASX, leaves alone: a market for the securities offered by companies that have less than the 500 shareholders ASX requires. The jargon calls them Small-caps and SMEs. We sometimes even hear talk of Micro-caps. You probably can guess what I mean by Small-cap, but let me just reiterate: the capitalization of a company is the number you get when you multiply the company’s share price by its number of shareson the share register (including those that it still holds). So a company with 10 million shares that are worth a dollar has a capitalization of $10 million. There’s no hard and fast rule about what’s Small-cap –but anything less than $10 million just about qualifies. The main thing to know is that Small-caps are companies that are just beginning to deal with the capital market. And that can either be because they’re raising capital or because their shareholders expect to manage their investments on what the Corporations Act calls a fair, orderly and transparent market. Or because ASIC has tapped them on the shoulder because there’s a government Policy Document that says that any company with more than 100 share trades -or more than $500,000 worth of share trades in any given year, must be listed on a public stock exchange –or run its own Low Volume Financial Market. Government has always been keen to support emerging businesses, especially those that are commercializing Australia’s intellectual effort, its researchers. On the other hand, the government has been keen to regulate the crooks out of the market by imposing extremely strict rules about who can offer shares to the public –and how they can offer them.
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