In the company of fledglings and old family firms off the main Exchange; STOCK MARKET WEEK

The killing of the 4.2 share trading facility was one of the more astonishing Stock Exchange decisions of recent years.

Suddenly a range of companies, which had inhabited the long-established backwater share market, and thousands of investors faced the prospect of being cast into a share wilderness.

Cometh the crisis, cometh the man. John Jenkins, an old-fashioned jobber who had dealt extensively in the 4.2 market - football clubs were his family's speciality - realised the Stock Exchange had created a share- dealing gap which had to be filled.

He produced Ofex - Off Exchange - to accommodate the 4.2 waifs and strays.

Today the fledgling share market, started with 45 constituents, has a total capitalisation of more than pounds 2.3bn with more than 150 companies enlisted. A steady queue of recruits await the call.

To many private investors Ofex is a mystery. It is difficult for anyone who does not have access to a securities screen to follow prices. And keeping in touch with the news flow, despite strenuous efforts by its own information service, is difficult.

Ofex is clearly one of the successes of the City share market upheaval which included the Stock Exchange launching AIM, the Alternative Investment Market, to replace the old Unlisted Securities Market.

AIM has certainly exceeded Stock Exchange hopes, illustrating the need for a junior market. But the extinction of the 4.2 facility remains a mystery; surely the Stock Exchange realised AIM was not suitable for many of the backwater shares?

One Stock Exchange official was dismissive of the need for a 4.2-style market. "Many public companies do not need a market; they can exist happily without one," was the blinkered view.

Well, National Parking Corporation, the National Car Parks and Green Flag group, begged to differ. It moved from 4.2 and is the biggest Ofex constituent, valued at pounds 643m. Weetabix of breakfast fame was another to make the switch. Its capitalisation is pounds 322m.

Until recently, old established family-run brewers such as Shepherd Neame and Daniel Thwaites were among the front runners. But, like the main market, football clubs have come to the fore.

Rangers, the Glasgow club where Joseph Lewis, the Bahamas-based entrepreneur said to be Britain's richest man, has a 40 per cent interest, has a pounds 210m value, and Arsenal comes in at pounds 196m.

In fifth place is Display IT, worth pounds 85.5m, a young group offering share price and other financial information. Some believe it will emerge as a rival to Reuters.

The top companies display just what Ofex is largely all about. A mixture of old, established businesses where the passing of time has required the need for a share-dealing facility and brash, start-up groups.

There is an even wider appeal. For example Text 100, a PR firm with profits of more than pounds 1m, went to Ofex partly in order to offer a window for share options; Wellington Market Co, established by Royal Charter in 1244, used Ofex for raising pounds 1m through an open offer and preference conversion. It has 22 markets.

Many Ofex companies are not for the squeamish; some constituents feel obliged to issue wealth warnings in their prospectuses.

Yet the fringe market has, so far, not encountered any disasters. A couple of companies are struggling to survive and there was the high- profile Skynet episode.

The car security group's shares returned earlier this year following a pounds 1.7m cash- raising exercise. They had been suspended when a move to the Alternative Investment Market collapsed and the Securities and Futures Authority (SFA) started to investigate a rip-roaring performance which sent the shares surging from a 27.5p placing to 275p.

Skynet, now much chastened, trades at 48p.

Still, Ofex is bound to produce volatile share movements. Motion Media, developing video telephones, and Display IT are two active constituents.

And last week Bestodds, offering a radio paging service for punters, jumped 1,300p to 4,300p on its debut.

Mr Jenkins' company, JL Jenkins, owns Ofex and provides the market-making facility, dealing with Stock Exchange firms. He keeps a tight grip on proceedings. It is, of course, not difficult to get a company on to the fringe market but a vetting panel - accountant, solicitor, fund manager and banker - examine new arrivals.

The growth of Ofex - and probably the Skynet misadventure - have prompted thoughts about defining and tightening up market conduct.

A revised code of practice is being prepared. The new guidelines, soon to go through the consultative stage with market-users and companies involved asked for their observations, will, it is hoped, strengthen controls and add a little sophistication to what, in some quarters, is still seen as something of a maverick market on the lines of the old Vancouver exchange.

If it continues to grow at its present rate more official and officious bodies may get involved. A share market with, say, 500 constituents may be regarded as too large to be ignored by the regulatory authorities.

It would be ironic if Mr Jenkins one day found himself running a form of Ofex-cum-AIM, under the supervision of the Stock Exchange.

It is surprising that the Ofex success has not prompted imitations. There is obviously a need for lightly regulated markets catering for old- established companies with long, or modest, shareholder registers, and start-up businesses needing access to money-raising facilities.

Mr Jenkins' long career in the old 4.2 market gave him a shrewd insight into the needs of the companies the Stock Exchange decided to abandon.

With so much of the securities industry now outside the control of the Stock Exchange it would not be surprising if attempts were made to bring Mr Jenkins' creation into the fold.

There are already links; his market-making company is a Stock Exchange member and jobs in a range of shares traded on the official market.