[ 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