Ofex lines up own index

Ofex, the fringe stock exchange on which more than 200 companies are traded, could be getting its own benchmark index.

The Ofex portfolio of companies covers a wide range of business types and sizes from the Groucho Club and Po Na Na to National Car Parks. For that reason, the managers of the exchange have shied away from producing an index, as it would be difficult to create one that was representative of all the listed members. But things could change. Many of the business on Ofex are technology-related, and have performed well in recent months.

The success of these companies have made Ofex attractive to start-ups and smaller operations keen to cash in its overall trading success. Ofex has been swamped with applications to list, and is admitting new members at the rate of about five each month.

If the exchange continues to expand at that rate, the management of Ofex is agreed that there would be sense in creating an index of the top 25 companies to help investors get a snapshot of the fundamental trends in trading. If the number of Ofex members ever rose beyond 1000, the index might be even bigger.

But John Jenkins, the stockbroker who founded Ofex four years ago, believes that any index would have to be used with caution. Many of the companies go though spates of frenzied trading, and lie dormant for long periods, giving a skewed picture.

The range of company sizes is a reason for concern: ranging from companies with nine-figure valuations to those worth as little as £500,000. An index would appeal to the internet users of the Ofex facility. The prices information website attracts a hefty 20 million "hits" a month from internet traders.