Market-maker cuts back as USM closure is confirmed

NEARLY 100 small companies in the UK and Ireland will be left with only one market-maker in their shares after the Danish securities group Bikuben cut its London operation yesterday. At the same time the London Stock Exchange confirmed it was recommending the closure of the Unlisted Securities Market.

Smith New Court is leading a salvage operation to provide a market in as many of the companies abandoned by Bikuben as possible, an SNC director said last night. And Brian Winterflood Securities, which is already broker to many of Bikuben's stocks, will also help out with some of those it does not already cover.

The mixed news comes after a miserable period for shares in smaller companies. Poor trading volumes drove Warburgs, BZW and County NatWest to withdraw two months ago from market- making in these stocks. William T Branth, general manager of Bikuben Securities in London, said yesterday that the company had lost nearly Dkr5m ( pounds 530,000) on its London operations since it set up its market-making subsidiary, Bikuben-Whitefriars, three years ago.

Mr Branth said the company was closing Bikuben-Whitefriars, which dealt in about 90 companies, and consolidating its operations in a new London branch in January. It will also close its only other UK branch, in Wolverhampton. The closures will cost 25 jobs over the next six months, leaving a staff of 30 in London.

The London Stock Exchange said yesterday that, while recommending the closure of the USM, it would smooth the path for the USM's 320-odd members to gain a full listing as quickly as possible. The initial entry fees and EC listing requirements will be waived for USM companies seeking a full listing during the transition.

The Stock Exchange is seeking feedback on its proposals and will make a final decision on the closure on 5 March 1993. No new entrants will be allowed on the USM after 30 June 1993, and the market will officially close on 31 December, 13 years after it opened.

A Stock Exchange spokeswoman said yesterday that there were now about 120 companies with only one market-maker.

Derek Riches, a director of Smith New Court, said SNC would look favourably on taking up those stocks left by Bikuben. This was part of a more general effort to limit the damage to the UK equity market during a period when low volumes were making small company market-making unviable.