AIM (formerly the Alternative Investment Market) is a sub-market of the London Stock Exchange that was launched on 19 June 1995 as a replacement to the previous Unlisted Securities Market (USM) that had been in operation since 1980. It allows companies that are smaller, less-developed, or want/need a more flexible approach to governance to float shares with a more flexible regulatory system than is applicable on the main market.

At launch, AIM comprised only 10 companies valued collectively at £82.2 million. As at May 2021, 821 companies comprised the sub-market, with an average market cap of £80 million per listing. AIM has also started to become an international exchange, often due to its low regulatory burden, especially in relation to the US Sarbanes–Oxley Act (though only a quarter of AIM-listed companies would qualify to be listed on a US stock exchange even prior to passage of the Sarbanes–Oxley Act). By December 2005, over 270 foreign companies had been admitted to AIM.

The FTSE Group maintains three indices for measuring AIM, which are the FTSE AIM UK 50 Index, FTSE AIM 100 Index, and FTSE AIM All-Share Index.

AIM is an exchange regulated venue featuring an array of principles-based rules for publicly held companies. AIM's regulatory model is based on a comply-or-explain option that lets companies that are floated on AIM either comply with AIM's relatively few rules, or explain why it has decided not to comply with them.

Aside from granting leeway in regard to regulatory compliance, the Exchange also mandates continuous oversight and advice by the issuer's underwriter, referred to as a Nominated Adviser (Nomad). Firms seeking admission to the AIM must appoint a Nomad at least 12–24 weeks prior to their admission and retain one during their entire period of listing. The role of Nomads is central to AIM's regulatory model, as these entities play the role of gatekeepers, advisers and regulators of AIM companies. In advising each firm as to which rules should be complied with and the manner in which existing requirements should be met, Nomads provide the essential service of allowing firms to abide by tailor-made regulation, reducing regulatory costs in the process. Theoretically, Nomads are liable for damages from tolerating misdemeanors on behalf of their supervised companies, including the loss of reputational capital. However, this heavy reliance on Nomads has been criticised as creating a conflict of interest, since Nomads receive fees from the companies they purportedly supervise while, in practice, managing to avoid liability for market misconduct.

In 2006, the London Stock Exchange launched a review of Nomad activities, resulting in a regulatory "handbook" for Nomads published by the Financial Services Authority in 2007.

AIM is an unregulated market segment, therefore it escapes most of the mandatory provisions contained in European Union directives – as implemented in the UK – and other rules applicable to companies listed in the LSE. AIM believes self-regulation is pivotal to AIM's low regulatory burden: companies seeking an AIM listing are not subject to significant admission requirements; after admission is granted, firms must comply with ongoing obligations which are comparatively lower to the ones that govern the operation of larger exchanges; and certain corporate governance provisions are not mandatory for AIM companies. Therefore, AIM-listed companies are often subject to manipulation by institutional investors. AIM-listed companies usually are only required to adhere to the corporate governance requirements of their home jurisdiction, which, as a practical matter, vary widely.

However, the regulatory requirements are more onerous than for private companies and AIM listed plcs are required to prepare audited annual accounts under IFRS.