Institutional Investment and Trading in UK Smaller Quoted Companies

Smaller Quoted Companies (SQCs) are the pinnacle of SME growth and account for over 2,000 companies outside the FTSE 350, comprising some 85% of all UK quoted companies. They employ some 2 million people, accounting for almost 10% of all private sector employment in Britain. They pay £20 billion back into the economy in the form of employee wages and salaries. They also contribute to the UK economy paying £5 billion in employees income tax, £2 billion in corporation tax, £2 billion in employers national insurance contributions plus contributions from rates, VAT and other taxes. Each year several SQCs graduate into the FTSE 250, they are the potential giants of tomorrow. The purpose of this report is to research a problem identified in the Myners Review of the investment industry:Factors encouraging institutional investors to follow industry-standard investment patterns which focus overwhelmingly on quoted equities and gilts and avoid investing in small and medium-sized enterprises and other smaller companies.The specific aim was to establish the trends in institutional investment in SQCs over recent years and to investigate whether the secondary market for trading in the UK might be disadvantageous to SQCs