The TRADE 60 | Page 19

[ N E W S A s independent stock exchange’s across Europe become part of larger borse groups, there is one group working to launch a new trading venue with a focus on ‘capitalism for good’. The launch of the Scottish Stock Exchange will mark the first time Scotland will have its own stock exchange since 1973, when the na- tion’s trading venue became part of the London Stock Exchange Group. Speaking to The TRADE, Tomas Carruthers, founder and chief executive of Borse Scot, the regis- tered firm behind the project, said that the aim of the Scottish Stock Exchange will be to create a “glob- ally-facing and impact focused” trading venue. “What that latter point means is our issuers will all have to report on their environmental and social impact, just as they already report on their financial performance and governance arrangements”, Carruthers said. “Our vision is to normalise impact reporting, for it to be in the mainstream: only by aligning market return requirements with impact can we hope to address the prevailing external challenges.” Based in Edinburgh, the ex- change has currently slated the latter half of 2019 to launch once it receives approval from the Fi- nancial Conduct Authority. While some newly-minted exchanges have struggled to attract liquidi- ty, with alternative venues often succumbing to establish a solid position among a crowd of peers, the new venture’s focus on social and ethic investing may be a key differentiator. Carruthers says that while ESG (Environmental, Social and Gov- ernance) has become a well-estab- lished concept in financial markets, impact investing aims to take this a step further by placing non-finan- R E V I E W ] “Our vision is to normalise impact reporting, for it to be in the mainstream: only by aligning market return requirements with impact can we hope to address the prevailing external challenges.” TOMAS CARRUTHERS, BORSE SCOT cial returns on an equal footing to financial, and, he asserts, demand is on the increase. “The Global Impact Investing Network reported in their latest annual survey that impact invest- ment assets under management more than doubled to $502 billion, while the World Bank's Interna- tional Finance Corporation esti- mates demand for said assets could be up to $26 trillion,” he says. “Societal attitudes are changing fast and market forces will bring the capital and therefore the incen- tive for companies to rethink their priorities.” Opportunities and challenges At a time when Brexit casts a looming shadow over the European financial markets, with the echoes of the failed bid for Scotland to become independent from the rest of the UK five years still reverberating, it's far from a stable environment in which to launch the nation’s first independent ex- change in nearly half a century. However, Carruthers points to significant advancements in tech- nology, alongside a “seismic shift” towards impact investing, that makes Scotland an ideal home for a new exchange. “Scotland has a long history of innovation in financial services and a global outlook; in the mod- ern day, its adoption of the UN's Sustainable Development Goals, the entrepreneurial environment, the high proportion of financial and advisory skills and its current absence of an exchange, makes it a natural place to launch,” he explains. It was announced in December that the new exchange had part- nered with pan-European trading venue operator Euronext, which would provide its Optiq platform as the project’s technological foundation. Carruthers points to this part- nership as a key development for the progression of the exchange; by using a platform already heavily embedded in the European mar- kets he says this lends the project’s technical components “instant credibility” – it may also go some way towards accelerating regulato- ry approval – although the trickier subject of Brexit is one that the project has been planning for. “Our own plans are well-ad- vanced and have strong support. Both Euronext and we have reviewed our bases case and our project plans in the light of Brexit and we remain on track,” says Car- ruthers. “While uncertainty creates sclerotic markets, companies and municipalities nonetheless need capital and we hope that the technological advances in capital movements will ensure deal flow.” Issue 60 // TheTradeNews.com // 19