In 2019, London-based Aquis Exchange announced it had purchased NEX Exchange from CME Group. At the time, Aquis CEO Alasdair Haynes told WatersTechnology that “we will not be taking their technology; we will be implementing our own technology solution.”

Now, 13 months later, that migration is nearing completion.

The NEX market is now known as the Aquis Stock Exchange, or AQSE. Since the acquisition was finalized in March, AQSE has migrated to the matching engine, surveillance platform, and data distribution technologies all developed by the Aquis Technologies team.

Haynes says that some of the platforms acquired in the deal were “out of date” and even “sort of terrible,” so Aquis officials knew from the get-go that they would move everything over to the Aquis tech stack. While there are still “a combination of proprietary systems” from NEX running in parallel with the Aquis technology deployed on AQSE, those legacy systems will be phased out completely in the coming months.

“We will run on one platform; I do not want to run on two different platforms,” Haynes says. “That would be a massive mistake.”

Like the large-cap Aquis Exchange equities trading venue, AQSE—which is geared toward small-cap stocks—will start multicasting data to clients in the future. Currently, AQSE relies on FIX messaging over TCP/IP, rather than the one-to-many data distribution model that multicast offers.  

As for future upgrades, Haynes says Aquis will examine connectivity tools and APIs that will allow AQSE to better interact with the major trading platforms in the small-cap space.

“The market makers tend to use two systems: They either have their proprietary system, as in the case of [brokerage] Winterflood Securities, or they use Ion, which is the old Fidessa system,” Haynes says. “We have to be able to connect to those so that these market makers can continue to trade the way that they have always traded, and that is quite a lot of technology change. All this is down to getting better connectivity.”

Shaking up The Exchange Model 

AQSE is one of only four equities-focused Recognized Investment Exchanges (RIEs) in the UK—a license that confers certain regulatory exemptions. NEX’s RIE status was a key factor in Aquis’ decision to buy the exchange.

AQSE has taken the approach of segmenting the exchange into its Main market and its Growth markets. The Growth market—which will look to compete with LSEG’s AIM growth market—is divided into two segments: Access and Apex. Access is for companies with less than £10 million market cap and a free-float market cap greater than 10%. Apex is for companies with a market cap of between £30 million and £60 million, and will have its own set of listing and trading requirements. Haynes describes this market as AQSE’s “sweet spot”.

The Main market is for larger companies with a track record of three years or longer, as well as other issuers who are able to comply with the more demanding requirements of UK regulatory requirements. Like Aquis Exchange, AQSE will operate on a subscription model, charging users per their messaging traffic, rather than by a percentage of the value of the stock they trade.

“One of the things we are going to focus on is making quite certain that execution-only brokers in retail, as well as wholesale investors, will have easy access through technology to make certain that they have the data, they have the information, and they have the capability of trading on these stocks,” he says.

Aquis is also considering automating the documentation processes for new companies listing on AQSE, creating templates for the admissions documents and growth prospectuses that are required for listing.

“That should make things cheaper, more efficient, and faster for companies that are looking for capital,” Haynes says, adding that automating these processes would allow companies to sidestep middlemen like nominated advisors and their fees. He says the exchange will be working with lawyers to have an automated method ready for the end of the year.