Hawaiʻi's Technology Community
Developing A Local Stock Exchange
A group on Maui has been brainstorming and doing some research on creating a local stock exchange.
The original part of this is to create a more open match making entity using the SEC's intra-state exception to do direct public offerings. This would create a more open process and allow non-wealthy to also engage in making small investments, plus provide liquidity to those making early investments.
State Senator Roz Baker has introduced a resolution, SCR134 to create a study group to look at creating such an exchange.
While there are several exchanges under development, there are none operating right now, at least in the U.S. So this would truly be innovative. We used to have a Honolulu exchange which traded local stocks, but it like many other local exchanges fell by the wayside. There are several interesting articles and two books coming out in June on local exchanges. One of these articles is linked to at the website.
Please check out the website that we have created: HILocalExchange.org, like our Facebook site "Developing a Hawaii Local Exchange" (tried to include the FB code). There you will find a white paper that we have written along with other resources, articles, and links.
And if you think this is interesting and should go forward, please let the legislature know by clicking
this link
If you have your own resources, questions, suggestions, etc. feel free to post here, send to me privately, or post on FB.
Views: 481
Comment
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Comment by David B. Fisher on July 11, 2011 at 7:27pm
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Re: SOX - there are groups working nationally to come up with a less costly more appropriate set of regulations for small business. One of the ideas is to create a small business self regulating organization or SRO like FINRA. But even today, you can use the SEC's intrastate exception and lower costs to about one tenth of listing in NY. Check out the DPO link at the HILocalExchane.org site.
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Good questions for the study group. I think the website of whatever comes about will be a portal to a wide range of activity. Those that are in the middle of starting now elsewhere are starting with private placement. I think there will be a big emphasis on education and networking. It is going to take time to develop a pipeline of appropriate and interested HI firms willing to DPOs. We might even include a mashup with some of the crowd sourcing sites. Do keep in mind that the top priority is financing Hi operations.
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Comment by Doug Wood on July 11, 2011 at 6:44pm
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David, I read the white paper and I love the idea of a local exchange but I take issue with one part:
A local exchange which follows existing securities laws, will place all available investments in a central location, and allow investors to compare different investments
because all the investments will have to disclose the same information.Sarbanes Oxley sucks. The few local companies that are public, are already public and I don't think many of the small business want the cost or burden of this regulation.
Why stocks? I have always wondered why their is not a futures exchange on the islands. There are a few key commodities, like gold/silver, which do not need to have local 'natural consumers' because the mere fact that there is an exchange to fill the gap of the 24 hour cycle would bring in investors. In the case of gold you can see from Kitco's live chart there is a small window of time (maybe an hour) when gold doesnt have a market. That is the middle of the day here. Since most of the trading is program trading anyhow there doesn't need to be local demand, just local infrastructure and labor. I brought this up to a sys admin at Citadel once and he said, "Dude, don't f**** with the magic hour! That's all we got!
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Interesting article Cameron. I would hope a local exchange would be different. Interestingly the Honolulu Exchange closed in 1976 (the year the article described the beginning of "shareholder capitalism") after more than 74 years. It has been hard to get info on the Honolulu Exchange, but I ran into an interesting site http://www.hawaiianfinancialart.blogspot.com/ which features a coffee table book with memorabilia.
@Brian, there is a link at the HILocalExchange site with 17 case studies of companies that have done direct public offerings. Some are really well known like Ben & Jerry's, and Price Club before it became Costco. Others less well known. Some of our QHTBs may be appropriate, value added food products is a classic.
The public part will probably not be appropriate for start-ups, but there will most like be a private area for more risk/angel oriented type funding. Maybe some functionality for crowd sourcing, although maybe the best way to do this is to mash up with existing services like KickStart.com. There is a new one getting going with Maui roots, GreenFunder.com.
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@Troy, not I, although hopefully we will all get smarter about these things when the study group gets going. MissionMarkets.com is one existing platform that does a lot of different kinds of trading. I know some folks on Maui who have been studying Berkshire Bucks, etc.
We have a second hearing on creating a study group on creating a local exchange on Monday at 2 p.m. I have posted the link for submitting testimony at http://HILocalExchange.net. Must submit written testimony by Sunday 2 p.m.
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Comment by Troy Benjegerdes on April 7, 2011 at 12:20pm
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Does anyone have any idea how similar are the legal issues surrounding a local stock exchange would compare to the ones that would go with a local currency/commodities exchange?
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This is great... I have been playing with a distributed crypto-currency called Bitcoin, and this discussion came up about using Bitcoin as backend for high frequency trading..
http://www.bitcoin.org/smf/index.php?topic=5501
I would love to see an open-source backend so that every state (or even town) can have it's own micro/local stock AND commodities exchanges. Or at least Hawaii and Iowa.. I'd like to be able to buy organic pineapples and have them for sale in Iowa farmers markets, and be able to send you back organic whole grains. Both places have a good awareness of the importance of buying local.
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Comment by Brian on April 6, 2011 at 1:20am
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I think this is an interesting idea, I haven't read your whitepaper so you may have already mentioned it - but I wonder have you given any thought as to what sort of companies you want to direct this effort towards?
I.e. do you see this as a funding mechanism for startups.. or just to promote more local ownership of companies? etc.
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Comment by Cameron Souza on March 29, 2011 at 3:33pm
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Salon just ran an interesting article on the failure of shareholder capitalism and our current financial system in general.
Perhaps the dynamics would be different with local exchanges.
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Comment by Daniel Leuck on March 29, 2011 at 1:56pm
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Congrats on getting it passed by the Senate Committee! Richard mentioned he is aware of the initiative and said he thinks we have the right people in the investment community to vet the idea. I don't know John personally but based on his career I'm sure he is a forward thinking guy.
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