The Effectiveness of Trading Venues in Facilitating Small and Medium-sized Enterprise Growth: An Examination of Liquidity and Regulatory Oversight

This paper assesses the effectiveness of trading venues specialized for small and medium-sized enterprises (SMEs) in enhancing their growth and economic contribution. SMEs, recognized as crucial drivers of economic dynamism, face persistent challenges in accessing traditional finance, which stifles their growth potential. Trading venues like the Alternative Investment Market (AIM) in the UK and the NASDAQ Private Market in the US provide critical platforms for SMEs to raise capital more flexibly and cost-effectively compared to traditional financing methods. These venues offer not only financial capital but also increased visibility, investor access, and enhanced credibility, which are vital for attracting investment and promoting sustainable business growth.

This study focuses on the liquidity these venues provide and the regulatory oversight they maintain, critical factors for investor confidence and market stability. Through a detailed analysis of these aspects, the paper explores the overall impact of these venues on SME development and identifies the potential risks, such as liquidity constraints and regulatory challenges, which could undermine their effectiveness. By examining the interplay between market mechanisms and regulatory frameworks, this paper highlights the importance of developing a supportive ecosystem that ensures both the safety of investment and the successful growth of SMEs. The findings aim to contribute to the broader discourse on enhancing the economic landscape for SMEs through targeted financial infrastructure and regulatory policies that support their unique needs and growth trajectories.