GXG Markets

GXG Markets was a Danish securities-market operator focused on small and medium-sized enterprises, early-stage issuers, international companies, and other businesses seeking an alternative to larger European exchanges. It operated from Horsens and became notable for offering a relatively low-cost route to market through a three-tier structure designed for professional investors. The organization originated in 1998 as Dansk Autoriseret Markedsplads. It was the first organization approved by the Danish Financial Supervisory Authority to operate an authorized marketplace in Denmark. In August 2010, it was acquired by Sweden-based GXG Global Exchange Group and adopted the GXG Markets identity. The parent group supplied the proprietary GXG Tellus electronic trading platform used by the market. GXG Markets divided its venue into three segments. GXG First Quote was an over-the-counter information and trading platform for professional investors. GXG Main Quote was a multilateral trading facility, or MTF. GXG Official List was the regulated market segment. The segments had the market identifier codes GXGF, GXGM, and GXGR respectively, as recognized in market-identification references associated with ISO 10383 and the European Securities and Markets Authority. The market relied on two principal categories of participants. Corporate Advisors helped companies obtain admission and remain compliant with market requirements. Official Broker Dealers could establish trading accounts and conduct or arrange trading and clearing in shares and debt instruments on the MTF and regulated segments. The model was intended to reduce the combined cost of exchange, adviser, legal, and reporting requirements compared with better-known junior markets. Because trading was restricted to professional investors, GXG presented itself as a venue where sophisticated participants could assess issuers without every form of retail-market disclosure used by larger public exchanges. This positioning attracted very small companies, overseas issuers without an effective domestic exchange, early-stage businesses lacking the operating history required by established markets, and speculative issuers. GXG was particularly visible in the United Kingdom, where its London operation used the European financial-services passporting framework then available to firms based in EU member states. Its overall admission costs could be substantially below those associated with established UK junior markets such as AIM and the market formerly known as PLUS. The lower-cost proposition made GXG a potential competitor to traditional UK junior-market venues and to the professional advisers whose fees formed part of the conventional listing process. The market expanded rapidly after the acquisition. Its number of listings increased from 12 in September 2012 to more than 100 by the middle of 2014. In 2013, HM Revenue & Customs added GXG Official List and GXG Main Quote to its list of designated recognized stock exchanges. The rapid expansion also exposed weaknesses in issuer screening, adviser quality, compliance execution, and the communication of GXG's regulatory model. Critics questioned the quality of some listed companies, while GXG subsequently tightened its requirements and required existing issuers to provide additional due-diligence information or face removal from the market. In May 2015, the Danish Financial Supervisory Authority concluded that GXG had repeatedly and seriously failed to follow its own rules and internal procedures. The regulator considered the market's operation inadequate and stated that the deficiencies were incompatible with continued authorization. GXG stopped accepting new listings on June 29, 2015. On July 6 it announced that it would close, with final trading scheduled for August 18. A proposed acquisition by the Channel Islands Securities Exchange was announced in July but abandoned after due diligence. GXG Markets ceased operations on August 18, 2015, bringing its short-lived experiment in a low-cost, professional-investor-focused European market to an end.

GXG Markets began in 1998 as Dansk Autoriseret Markedsplads, a Danish authorized marketplace. It was the first organization approved by the Danish Financial Supervisory Authority to operate an authorized marketplace in Denmark. The business was designed to provide a formal securities venue for smaller companies and investors while avoiding some of the cost and procedural burden associated with larger exchanges. In August 2010, Swedish GXG Global Exchange Group acquired the company. Carl-Johan Hogbom, a former chief executive of the OMX Stockholm Exchange, remained associated with the group as chairman, while Peter Almberg served as chief executive. The parent group introduced its GXG Markets identity and used the proprietary GXG Tellus electronic trading platform to support trading and market operations. GXG developed a three-level market structure. GXG First Quote was an over-the-counter information and trading platform for professional investors. GXG Main Quote operated as a multilateral trading facility. GXG Official List was the regulated-market segment. Their market identifier codes were GXGF, GXGM, and GXGR. The structure allowed GXG to offer different levels of admission and trading access while keeping the market focused on professional participants rather than the general retail public. The business model emphasized a low total cost of admission. GXG sought to reduce exchange and advisory expenses and imposed a reporting framework that was less burdensome than those of many comparable European markets. Its intended users included very small companies, international issuers without a functioning local exchange, early-stage companies with limited operating histories, and speculative businesses willing to accept professional-investor restrictions. Corporate Advisors were responsible for assisting companies with admission and ongoing obligations, while approved Broker Dealers handled trading accounts and trading and clearing functions on the MTF and regulated segments. GXG's London operation promoted the market under the European Union's financial-services passporting arrangements, which were available while the United Kingdom was an EU member. The venue could be considerably cheaper than UK junior markets such as AIM or PLUS. That cost advantage gave GXG visibility among issuers and advisers, but it also created friction with UK and Danish regulatory authorities. The market's professional-investor design and its reduced disclosure burden were not always clearly communicated, and the distinction between a lower-cost professional market and a retail-oriented public market was frequently blurred in criticism of listed issuers. Growth accelerated after the acquisition. The number of GXG listings rose from 12 in September 2012 to more than 100 by mid-2014. In 2013, HM Revenue & Customs recognized GXG Official List and GXG Main Quote as designated recognized stock exchanges. Rapid expansion nevertheless placed pressure on GXG's internal controls. Concerns emerged about the screening of prospective issuers, the quality of some Corporate Advisors, and the ability of a fast-growing venue to enforce its own requirements. GXG responded by tightening admission and compliance procedures and requiring existing companies to provide additional due-diligence information or risk delisting. The regulatory situation reached a crisis in May 2015. The Danish Financial Supervisory Authority stated that GXG had repeatedly and seriously neglected its own rules and internal guidelines. It concluded that the market had not been operated in an adequate and appropriate manner and assessed that the deficiencies were incompatible with continued licenses. The precise roles of the Danish regulator and the United Kingdom's Financial Conduct Authority in the market's eventual failure were not fully explained in the supplied account; a UK Freedom of Information request was reportedly refused. GXG stopped accepting new listings on June 29, 2015. On July 6 it announced that it would close, setting August 18 as the last trading date. The Channel Islands Securities Exchange, whose chairman was Jon Moulton, announced an offer for the market on July 22, but withdrew on July 31 after due diligence. GXG Markets closed on August 18, 2015. Subsequent reporting described legal claims against GXG and its chairman, including an allegation of approximately €50 million in direct losses. The supplied material does not establish the final outcome of those claims.

• 2015

  Danish regulator recommends withdrawal of licenses

  [1]GXG Marketsen.wikipedia.org

  The Danish Financial Supervisory Authority cited repeated failures to follow internal rules and assessed that GXG's market operations were incompatible with continued authorization.

• 2015

  Market closes

  [1]GXG Marketsen.wikipedia.org

  GXG stopped new listings in June, announced closure in July, and ended trading on August 18.

• 2014

  Listings exceed 100

  [1]GXG Marketsen.wikipedia.org

  GXG's listings grew from 12 in September 2012 to more than 100 by the middle of 2014.

• 2013

  UK tax authority recognizes two GXG segments

  [1]GXG Marketsen.wikipedia.org

  HM Revenue & Customs added GXG Official List and GXG Main Quote to its designated recognized-stock-exchange list.

• 2010

  Acquired by GXG Global Exchange Group

  [1]GXG Marketsen.wikipedia.org

  In August, the Danish marketplace was acquired by the Swedish GXG Global Exchange Group and subsequently operated under the GXG Markets identity.

• 1998

  Authorized marketplace established

  [1]GXG Marketsen.wikipedia.org

  The business was established as Dansk Autoriseret Markedsplads and became the first organization approved by the Danish Financial Supervisory Authority to operate an authorized marketplace in Denmark.

A lower-cost European listing and trading venue for small and medium-sized companies, international issuers, early-stage businesses, and professional investors.

• Regulated securities market

  GXG Official List

  GXG Official List was the regulated-market segment of GXG Markets. It provided a formal admission and trading venue for securities issued by smaller and international companies, with trading restricted to professional investors. Its market identifier code was GXGR.

• Multilateral trading facility

  GXG Main Quote

  GXG Main Quote was GXG's multilateral trading facility. It formed the middle tier of the group's market structure and offered professional investors a venue for trading admitted securities under a framework intended to be less costly than larger junior exchanges. Its market identifier code was GXGM.

• Over-the-counter information and trading platform

  GXG First Quote

  GXG First Quote was the OTC segment of GXG Markets. It functioned as an information and trading platform for professional investors and represented the least formal tier in the three-level structure. Its market identifier code was GXGF.

• Electronic trading platform

  GXG Tellus

  GXG Tellus was the proprietary electronic trading platform supplied by GXG Global Exchange Group and used by GXG Markets to support trading across its market infrastructure.

• 2015

  Danish regulatory action over market controls

  The Danish Financial Supervisory Authority alleged that GXG repeatedly and seriously failed to comply with its own rules and internal guidelines. The regulator assessed that GXG had not operated its regulated market and MTF adequately and that its licenses should be withdrawn.

  Source

• 2015

  Claims alleging losses and fraud facilitation

  At least one group reportedly filed legal claims against GXG and chairman Carl-Johan Hogbom, alleging that the market facilitated fraud and seeking compensation for direct losses reported at approximately €50 million. The final legal outcome is not established in the supplied material.

  Source

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• 2015

  GXG tightens issuer and due-diligence requirementsStrategy

  Background

  Concerns about issuer quality, adviser standards, compliance screening, and rapid market growth increased pressure on GXG to strengthen controls.

  Action taken

  GXG required existing listed companies to undertake additional due-diligence reporting and faced issuers with delisting if they did not comply.

  Aftermath

  The measures did not resolve the regulator's concerns, and the Danish Financial Supervisory Authority subsequently assessed that GXG's licenses should be withdrawn.

  Source

• 2015

  GXG stops new listingsStrategy

  Background

  The decision followed the Danish regulator's criticism of GXG's operation and the company's difficulty in maintaining its regulatory position.

  Action taken

  GXG announced on June 29 that it would cease accepting new listings.

  Aftermath

  The announcement was followed by a decision to close the market and end trading in August.

  Source

• 2015

  GXG announces and completes closureOther

  Background

  The Danish regulatory assessment made continuation of GXG's licensed market operations untenable.

  Action taken

  GXG announced closure on July 6 and held its final trading session on August 18.

  Aftermath

  The market ceased operations. A proposed acquisition by the Channel Islands Securities Exchange was abandoned after due diligence.

  • Channel Islands Securities Exchange — The exchange announced an offer in July but withdrew from the proposed transaction after due diligence.

  Source

• 2010

  GXG Global Exchange Group acquires the marketplaceM&A

  Background

  The Danish authorized marketplace was acquired by the Swedish GXG Global Exchange Group as part of an effort to develop a broader European market platform.

  Action taken

  The acquired business was operated under the GXG Markets name and integrated with the parent group's GXG Tellus trading technology.

  Aftermath

  GXG expanded its listing base and developed a three-tier market structure aimed at professional investors.

  Source

1. 1GXG Marketsen.wikipedia.org