Trading in small caps set to be volatile this Friday

TRADING on London’s Alternative Investment Market (Aim) may be volatile on Friday because this is when CMC Markets will close out any Aim share bets made by its clients.

CMC delisted trading in the junior index with no new positions opened via its trading platform on Aim shares after 21 January .

Any Aim bets by CMC clients that remain open will be closed out at the closing price on 11 February.

CMC’s decision follows its move last year to stop trading in stocks below a certain market capitalisation and reflects the firm’s switch to a new technology platform and its focus on core liquid markets.

“It could be a very interesting day for the Aim market and Aim shares as the CFDs get closed out,” Atif Latif, director of trading at Guardian Stockbrokers, said.

The closing of CFD trades will have an influence on the physical Aim market as providers of the financial instruments have to hedge the trades by holding the actual stocks to protect their positions.

Latif said as much as 50 per cent of Aim market positions could be held via CFDs.