How do stock exchange listing rules evolve? Evidence from the London Stock Exchange’s Alternative Investment Market (AIM), 1995–2025

Drawing on the London Stock Exchange’s Alternative Investment Market (AIM) as a case study, this article analyses a hand-collected dataset of material rule revisions to the AIM listing rules from 1995–2025. Its principal finding is that the AIM listing rules evolve much more in earlier years (from 1995–2007) as compared to later years (2008–2025), with relatively long periods without any consequential rule changes. This pattern of rule evolution is consistent with theories of regulatory demand and regulatory learning, as well as the Exchange’s goal of safeguarding reputation. It also emphasizes the importance of initial regulatory design. Some categories of rules are, proportionally, revised more than others, which is consistent with regulatory learning and gap-filling. Only limited evidence is found for regulatory shocks spurring rule evolution. AIM’s forthcoming rulebook reform should be guided by a less risk-averse regulatory philosophy, cognisant of the importance of how these rules are interpreted and subsequently revised.