• Plus Markets, the stock exchange where Arsenal shares are traded, announced on May 14 it was closing
• It’s since been taken over with a promise to keep it open
• For different reasons, both Stan Kroenke and Alisher Usmanov may have preferred if it had closed, removing the marketplace for Arsenal shares

That’s the executive summary. If you want the full story, read on . . .

Arsenal shares are currently traded on Plus Markets Group’s ‘PLUS-SX’ stock exchange, which describes itself as “a London-based stock exchange providing cash trading and listing, derivatives and technology services.” Plus Markets also says it “delivers product innovation and competitive pricing to market participants by operating a low cost base RIE [Recognised Investment Exchange]. PLUS offers a neutral trading environment, wholly independent of any market user.” More simply, it provides an alternative to a full stock exchange listing for around 150 smaller companies such as Arsenal and the brewer Adnams.

Plus Markets announced on Monday 14 May that it was to close, having made losses and failed to find a buyer for the whole of its business. There was no date set for the closure, but it was expected to be within six months. However, on Friday 18 May it was announced that ICAP, a FTSE100 company and in their own words “the world’s premier voice and electronic interdealer broker and the source of global market information and commentary for professionals in the international financial markets” would take over the Plus group. They’re paying a nominal price of £1 for the business and say that they intend to keep the PLUS-SX exchange going and indeed expand it, which would mean no change to Arsenal’s current share arrangements.

Things may not be that simple, though. Analysts believe it’s going to be difficult to turn the Plus Markets business round and start to make money, and they believe the main reason ICAP are interested is just to get their hands on Plus Group’s RIE licence, which is one of only five issued by the UK regulator. The licence allows its holder to compete with other European stock exchanges at a time when regulation is being beefed up and off-exchange trading is being pushed on to recognised exchanges. ICAP may not be bothered about supporting the companies that currently list on PLUS-SX.

So where would that leave Arsenal? If their exchange closes then they have the choice to apply to join another exchange or to simply allow their shares to be traded privately. There are benefits to both options.

The most important benefit of a listing is that it creates a market for shares where buyers and sellers know they will find each other, meaning that both are more confident in owning shares. Shareholders know they will always find a buyer if they need one, and will receive a fair price based on good market knowledge. Other benefits include:

• Enhancing the status of the company
• Increasing public awareness and interest in the company and its products
• Providing the company with an opportunity to raise funds by new issues of shares.

Of these, only the last is likely to be of much use to a football club, and with Stan in charge we can rule that one out at Arsenal as well.

There are drawbacks to a listing too. In Arsenal’s case these are chiefly:

• The need to adhere to the rules and regulations of the exchange and its governing bodies
• Some loss of privacy and increased media and public access to information as a result of the above.

Given the fact that almost 97 per cent of Arsenal shares are now held by two people, neither of whom care about any of the other shareholders including each other, the fact that a listing creates a stable market for shares might also be seen by the owner as a disadvantage.  So it might well be that any change to PLUS-SX will be used by Stan Kroenke as an excuse to de-list. Stan doesn’t need a market because he has no need to go out and buy shares, and de-listing means he won’t need to answer to regulatory bodies in the same way he does at the moment.

For small shareholders, de-listing may not be so welcome, as they will lose the safety net of always having someone to sell to. Many of the remaining small shareholders are lifelong fans who will never sell, but de-listing may panic those who were thinking of selling into looking for a buyer while they can. And of course there is one: Usmanov. So even the threat or expectation of de-listing may mean he suddenly has a lot more shares offered to him, and his 30 per cent target might be reached very quickly.

Would that put Stan off the idea of de-listing? I doubt it. I think the implications of Usmanov reaching 30 per cent are overstated. The plain fact is that Stan owns two-thirds of Arsenal and can maintain that position as long as he wants to. He doesn’t need to answer to anyone else even if Usmanov is granted access to additional information when he reaches 30 per cent.

Further Usmanov / Arsenal share information here: Usmanov Q & A

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