The low market capitalisation and the poor liquidity of many stocks together with the impact of the financial crisis on the economics of the sell-side brokers caused a serious depletion in the companies coverage, especially of those belonging to the S&M Caps segment. Yet, today many companies, are not covered by fundamental research or are followed by just a broker; thus affecting the efficiency of the whole market and the level of information available for investors. AIAF has proposed to introduce and regulate a new figure: the “Research Provider”, publishing pure fundamental research notes on companies with a market capitalisation and/or a stock liquidity below certain levels, which today are not covered by any analyst or are covered by just one broker. The intervention of the Research Provider would not be mandatory but “highly recommended” by the market Authority for those companies.
The second part of its proposal, AIAF promoted a “systemic” and “coordinated” approach by all the main stakeholders (domestic Stock Exchange, Regulators, Issuers, Association of Fund Managers, Public Authorities, etc.) to split the cost of the Research Provider for those companies that require its intervention. Finally AIAF is evaluating the opportunity to create and support a team of independent analysts writing fundamental research on uncovered stocks. This would give a working opportunity for those analysts who lost their job and wish to remain in the sector and for the people attending the AIAF courses willing to start the career of a financial analyst.
