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The Australian Securities Exchange (ASX) has announced a new program to subsidise broker research into smaller listed companies, designed to increase liquidity at the lower end of the market.
The three proposed levels of research are:
Basic level – Fact sheet for companies, published on ASX website, for companies capitalised below $50 million (no recommendation)
Middle level – Retail broker report for companies worth between $50 – $200 million (no recommendation
Top level – Institutional research report on companies worth between $200 million and $1 billion, provided by a broker to their clients
The basic and middle levels of research will not include recommendations, while the top level will produce a formal recommendation.
The Australian reports that brokers will apply to the fund for assistance in initiating coverage. The fund manager will then review research published on the stock.