In the week in which the AIM Market celebrated its eleventh birthday, Nasdaq finally bit the bullet and announced a £2.7 billion "final" offer for the London Stock Exchange ('LSE'). The move was prompted by the announcement that seven of the City's biggest banks are working towards forming a pan-European electronic shares trading platform that would compete directly with the LSE and other continental markets (itself prompted by the forthcoming implementation of the Markets in Financial Instruments Directive (MiFID). The Exchange promptly batted away Nasdaq's offer, saying the bid so undervalued the company that its board was not even willing to meet for further discussions. Clara Furse, the Exchange's Chief Executive, said: "We believe Nasdaq's final offer fails to recognise the outstanding growth record and prospects of our group on a standalone basis, let alone the exchange's unique global position." However, market opinion seems to be increasingly coming round to the idea that this could be the beginning of the end for the LSE's independence. It has been the target of more bids, both hostile and friendly, than any other European company that comes to mind in recent years. There seems little doubt, though, that the offer price will have to rise - although under the Takeover Code, Nasdaq cannot raise its offer unless the LSE recommends a bid or a competing bidder emerges.

So what might a US-owned Exchange mean for AIM? Bob Greifield, Nasdaq's chief executive, has stated that Nasdaq will promote AIM, saying: "We admire the success of that market and want to continue it." Many brokers have been emphasising the positives, most significantly the fact that a deal with Nasdaq might bring more institutional money to AIM, something that is sorely needed at present.

However, set against this is the obvious concern that AIM's unprecedented success over the last few years has been largely driven by its "light-touch" regulatory regime. The spectre of the heavy-handed Sarbanes-Oxley legislation, or something similar, is enough to cause worry amongst the participants in the AIM market. Nasdaq has offered some protections to the London market in the form of an oversight committee, which cannot agree changes without the consent of the FSA. In addition, the government is rushing through Parliament the Exchanges and Clearing Houses Bill. The Bill will enable the FSA to veto changes to the regulatory provisions of recognised investment exchanges and recognised clearing houses if it appears to the FSA that the changes would be disproportionate to the end the provisions are intended to achieve or would not pursue a reasonable regulatory objective. Many have claimed that this should result in ownership of the LSE being a "neutral" matter (i.e. it shouldn't matter who owns the LSE in practice) but it is hard to feel truly confident about this, especially as the Bill seems somewhat vague. What with the proposed new rulebook for Nomads, a step that represents the "biggest single change" to the AIM Market since its launch 11 years ago, this is certainly an interesting time for the AIM market.