SCOTEX needs to be a primary exchange to issue IPO’s and only RIE’s can be primary exchanges. Furthermore many fund managers are only allowed invest their assets under management in companies listed on an RIE.
What authorisations do you need apart from FCA authorisation?
STARS will need to be a Designated Payments System (DPS). The Payment Systems Regulator (PSR) has oversight of DPS’s. We don’t expect to require Recognised Clearing House (RCH) status from the Bank of England as STARS will not be clearing trades. (STARS will act as a pre-trade screen for SCOTEX to ensure only firm and deliverable orders that dont need clearing are accepted into the central order book).
Banks and brokers have a relatively small footprint in Scotland – how will companies come to market on SCOTEX?
We expect that to change in time but in the interim SCOTEX plans, with regulatory permission, to bring companies to market on its own exchange. This means SCOTEX will assist in producing the prospectus, arranging roadshows and bookbuilding etc. We think this kind of exchange evolution is appropriate for SCOTEX with the correct systems and controls in place. SCOTEX will not underwrite IPO’s.
What are SCOTEX’s projected market opening hours?
Depending on participant feedback SCOTEX may run two central order book sessions for its primary market: 0800hrs to 1030hrs and 1300hrs to 1630hrs. Auctions will be run at 1100hrs and 1200hrs. The Tokyo Stock Exchange runs two central orderbook sessions so there is precedence for this.
Can non-Scottish companies list on SCOTEX?
What is the size of the opportunity for SCOTEX in terms of the exchange space?
There are over 2000 large companies (employing > 250 people) in Scotland without a stock market listing so there is a great opportunity there. SCOTEX has a target of getting 3% of those to market by 2020 and 7% by 2025.
What is the size of the opportunity for SCOTEX in terms of the post-trade digital ledger space?
Potentially enormous. Worldwide there are potentially hundreds of millions of dollars to be saved through applying blockchain technologies just to securities trading and ownership.
Will SCOTEX be an AIM-style exchange?
No. Scotland’s fund managers overwhelmingly want to invest in dividend-paying middle-market growth companies and large caps, not speculative sub-market companies. It is important that SCOTEX positions itself as a Main Market exchange and aligns itself with the investment framework and goals of Scotland’s asset managers.
Who does SCOTEX see as it’s main competition?
Those companies working in the emerging digital ledger (blockchain) post trade and securities ownership space.
When will you launch full exchange operations?
We are targeting Q1 2019.