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Mar 29, 2020

From trading venues to meeting venues: stock exchanges focus on corporate access

Amid declining support from brokers, stock exchanges are building out their corporate access services

The corporate access industry is in flux. With the sell side facing disruption, companies are looking for new ways to get management in front of the right investors – and one group responding to this need is stock exchanges. Over the last few years, the world’s exchanges have bolstered the number of events, roadshows and IR tools they offer to the market.

Of course, there’s nothing new in stock exchanges providing corporate access services. For decades, the world’s bourses have supported meeting activity through their event programs and corporate services. They have, however, recently upped their game. The continuing decline of the cash equities business – accelerated recently by Mifid II – has led to fewer investment conferences and difficulties when it comes to filling roadshows. Stock exchanges see an opportunity to step in and provide a valuable service.

‘Banks have scaled back resources across equity sales, trading, research and corporate access,’ says Robert Brinberg, president at Rose & Co, an IR advisory firm. ‘Corporate access activities are also focused on maximizing commissions from a bank’s core hedge fund clients. For the corporate, this means fewer opportunities to see the right kind of investors.’

In addition, technology is creating new opportunities. In recent years, several online corporate access platforms have emerged that help to link companies and investors, either directly or via sell-side support. Exchanges are partnering with these platforms to widen their service offering. For example, last year Nasdaq signed a deal with corporate access platform WeConvene to provide meeting technology to its listed companies. Closir, another platform that focuses on emerging markets, has worked with a number of exchanges, such as those in Warsaw and Moscow.

Finally, good old competition is also helping to drive developments. In each region, the major stock exchange groups don’t want to be outshone by the competition. ‘In the US, for example, the NYSE and Nasdaq are in a constant battle to offer value-added post-listing services,’ says Brinberg.

Many of the latest initiatives are targeted at small and mid-caps because these are the companies viewed as most likely to miss out on developments on the sell side. ‘Since Mifid II, some companies have told us that brokers’ support in investor access has been decreasing,’ explains Mathieu Caron, head of corporate services at Euronext. ‘In particular, mid-sized companies organizing roadshows with a European broker may be struggling with filling the agenda, whereas two years ago that agenda was full of meetings.’

Another reason smaller issuers may need a boost is the huge growth in passive investment. ‘[With] a lot of the trends in the marketplace – passive investing, ETF investing – the benefit really accrues to large-cap and mega-cap companies,’ explains Chris Taylor, vice president of listings and services at the NYSE. ‘And folks left out of those trends are small and – to a certain degree – mid-cap companies.’

Conference game

Since late 2018, the NYSE has put on a series of sectorbased conferences at its New York headquarters. The events are designed to feel like bank-sponsored conferences, with high-end service and meeting rooms.

Taylor says the genesis of the idea came from the NYSE’s buy-side advisory committee, which meets several times a year. ‘Early in 2018, the committee told us that it really thought the NYSE was well positioned to help the buy side – and, of course, issuer companies – get together and have high-quality meetings,’ he says.

The first full year of conferences in 2019 saw eight events, covering major industry sectors such as energy, financials and healthcare. Neither companies nor investors need to pay to attend, with the conferences positioned as an additional benefit to NYSE-listed issuers and the buy side.

Taylor acknowledges that it can be hard to cut through and get investors’ attention, given how many messages they receive in their inbox each day. ‘We’re looking to get the attendees from our issuers locked down earlier, so we can go out to the buy side earlier, and it can get events on its calendar as well,’ he says.

Nasdaq, the NYSE’s great rival in the US market, is also building out its corporate access services. Through its partnership with WeConvene, it has added new features to its investor relations platform that allow companies to book meetings directly with the buy side and the sell side. Since the launch, small caps have ‘dipped their toe in the water’ but larger companies have been ‘more progressive’ in organizing their own meetings, says Michael Stiller, global head of Nasdaq’s Strategic Capital Intelligence division. ‘They have deep teams and can assign someone to specifically schedule meetings,’ he explains.

Talking specifics

Aside from technology, Nasdaq is providing more advice to companies about selecting brokers and engaging with investors. ‘Which bank do you leverage in a particular market?’ says Stiller. ‘In the world of Mifid II, it becomes more important. Twenty years ago, it didn’t matter as much because every buy-side firm used every sell-side bank.’

For investors open to direct contact – a growing trend across larger buy-side firms – companies may need support understanding how the different internal corporate access teams work, says Stiller. ‘We help companies think about what the message looks like, how they craft the email, and so on,’ he says.

While the sell side remains the primary partner for companies going on the road, the burden on IR teams to do more themselves is expected to increase. With broker revenues still falling, especially in Europe, this year should see more cutbacks and restructurings. ‘To go out and be more direct to investors means turning IR into a more sales-driven role,’ says Stiller. ‘And some IR folks are not quite ready for that. It’s a behavioral shift. So advice and technology to help ease that transition is where we’re focused.’

Access all areas: A review of corporate access services provided by stock exchanges around the world

BME, which operates stock exchanges in Madrid, Barcelona, Bilbao and Valencia, has been running corporate access events for two decades, says Laura Sacristán, chief commercial officer at the Spanish group. In 2019 those events included roadshows for small and mid-cap companies to Frankfurt, Paris, Geneva and New York. On the schedule for 2020, in addition to last year’s cities, are Copenhagen, Toronto and ‘possibly’ Sydney, she says. BME also organizes events in Madrid, such as Latibex for South American companies and Foro MedCap, a conference for smaller companies and investors. Attendees get to enjoy drinks on the trading floor of the city’s historic stock exchange building, which first opened in 1893.

Amid declining sell-side support, Euronext has ‘observed that companies need to be more autonomous and more active, which is even more important given the raising of ESG topics,’ says Mathieu Caron, head of corporate services at the exchange group, which operates markets across several European countries. Euronext has responded by offering more help to both companies and brokers. It is sponsoring more bank-led conferences to ease the financial burden of such events, and building out its IR services – for example, a recent upgrade to its desktop product included new features for planning a roadshow. Where the exchange draws the line is organizing meetings directly – it wants to remain a ‘neutral party’ that supports other market participants, says Caron.

While London Stock Exchange Group (LSEG) occasionally runs roadshows for growth companies, the exchange sees its role more as a trusted central point in the market where participants can find the services or information they are looking for. There is already a ‘very developed broker market’ in the UK, says Tom Hinton, head of issuer services at LSEG. ‘We work with the market to make sure the solutions on offer are helpful.’ Around 18 months ago, the LSE launched a new issuer services platform, which gives public companies access to digital investor relations tools to connect with investors, such as customizable web pages and the opportunity to live-stream announcements.

In a world where companies have to do more on their own, including more direct contact with investors, Nasdaq aims to support the corporate access process ‘end to end,’ says Michael Stiller, global head of the exchange’s Strategic Capital Intelligence division. Last year saw a partnership announced with WeConvene, adding meeting technology to Nasdaq’s existing corporate services. The exchange is also providing more advice to companies on areas such as how to engage directly with buy-side corporate access teams. In addition, Nasdaq continues to run its twiceyearly London investment conference, which first took place more than 20 years ago.

The ‘core focus’ of the NYSE’s corporate access offering is its investor access days, says Chris Taylor, vice president of listings and services at the exchange. The Big Board hosted eight investment conference-style events at its New York headquarters last year, with roughly the same number planned for 2020. Each event has a sector focus and is designed to appeal to smaller issuers and asset managers that may be struggling for sell-side attention or missing out on asset flows amid the rush to passive. Under the program, the exchange hosted almost 250 one-on-one or small group meetings in 2019, says Taylor. ‘Our goal for 2020 is to build on that momentum,’ he adds.

Singapore Exchange (SGX) got into the corporate access game in 2015 when it launched a dedicated corporate and investor access service, says a spokesperson for the exchange. The team’s ongoing work includes putting on roadshows – run in partnership with brokers and other financial companies – that take senior management teams to financial centers in Asia, Europe and the US. A calendar on the exchange’s website lists more than 20 ‘SGX corporate days’ lined up for 2020. SGX has also ‘expanded its corporate access desk with the implementation of a dedicated institutional investor coverage team,’ the spokesperson adds.

The Stock Exchange of Thailand is another old hand at corporate access. For the last 15 years, the exchange has worked with brokers to put on roadshows and conferences for small and mid-cap companies, says Saengtawan Prasittisuk, deputy vice president of foreign institutional investors. The current offering is split into inbound and outbound activities. The main inbound event is the Thailand Focus conference, which takes place in Bangkok and has run since 2004. The outbound work features roadshows to ‘financial hubs such as Singapore, Hong Kong, Japan, the US and the UK,’ says Prasittisuk.

The Warsaw Stock Exchange (GPW is its Polish abbreviation) has always offered investor access to listed companies but, since the arrival of Mifid II, the exchange has been more active, says Izabela Olszewska, board member at GPW. ‘For example, in 2020 we will co-host investor conferences with local and global brokers in London, New York, Vienna, Prague and Frankfurt, and travel to Japan and Hong Kong for the first time,’ she says. GPW also runs an investor conference each year focused on technology, biotech and video-game companies called Innovation Day, which supports smaller companies that may lack broker coverage. Future plans include helping companies tap into the growing pool of ESG-focused investment.

This article was published in the spring 2020 issue of IR Magazine

Editor's note: This article was updated to change the wording of the second sentence.