In his article ‘The benefits of a liquid market’ (11 October, 2007), Tim Stocks describes convincingly the damage to the liquidity of US stocks trading on the Alternative Investment Market (AIM) caused by the old-fashioned, paper-based settlement system widely used to comply with Securities and Exchange Commission (SEC) Regulation S.
There is a solution to this problem, to which Stocks alludes in passing. SIS SegaInterSettle, the Swiss clearing and settlement agency, currently offers in the London market a system that combines the benefits of dematerialised settlement with the capability to comply strictly with Regulation S. This system has proved itself capable of increasing significantly the liquidity of US securities.
