OFEX

An unregulated over-the-counter market established in 1995 by J.P. Jenkins, a broker specialising in smaller companies, and authorised by the Financial Services Authority.

There are around 200 companies listed on OFEX, many of them small, young companies with a high-tech bent. Admission to OFEX is decided by a panel of 'wise men' and the only requirement is that companies must publish financial reports twice a year. So the risks are high.

Liquidity of OFEX companies is poor as trades are carried out on a matched bargain basis - that is, you can only sell if J.P. Jenkins finds a buyer for your shares - and the bid/offer spreads can be wide. This doesn't mean you shouldn't invest in OFEX companies. The market serves a useful purpose. It just means that OFEX is risky.

OFEX shares are regarded as 'business assets' for CGT purposes in the UK.

The OFEX website is www.ofex.com.