Hawaiʻi's Technology Community

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:, 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.


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Comment by Daniel Leuck on March 29, 2011 at 1:56pm
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.
Comment by David B. Fisher on March 29, 2011 at 12:23pm

The resolution passed the Senate Committee this morning - see

Ten people provided testimony which you can read following the testimony link.   


@Daniel - I appreciate your input.  I think the important thing to keep in mind is that we can design what is needed.  I agree that a local exchange--at least the public component--is not likely to be for entities without any capitalization or operating history.   However, it is likely that there could be a component to help earlier stage companies, perhaps creating mash-ups with entities like


I do hope we can get bankers like Richard Lim and John Dean involved.   I have mentioned the idea to both although they both have very full plates right now, Lim with DBEDT and Dean with the CPB turnaround.  I know there are other creative types in Hawaii's banking community who we can get involved.  

Comment by Daniel Leuck on March 28, 2011 at 11:05am

@David - Its an intriguing proposal and I am happy to contribute input.

re: banks

> They can't lend unless there is equity already invested.  So helping get more equity investment

> in local businesses will increase the amount of lending they can do.

Sure, but traded entities normally also require that the business already be capitalized and operational. Its a complex relationship, but in the end this would create an investment option for companies that today might only have a debt financing (i.e. bank) option for growth. Would this bring enough new businesses into the market to offset this? If it were done right, probably. The math will be tricky so banks may decide to go the safe route if a strong case isn't presented.

I don't say this to be discouraging. I'm just enumerating the challenges I foresee. I'd love to see a creative new investment vehicle come into play.

Comment by David B. Fisher on March 28, 2011 at 10:32am
I think banks will benefit from a local exchange.  They can't lend unless there is equity already invested.  So helping get more equity investment in local businesses will increase the amount of lending they can do.  Also having the investors be local will create more engagement and support (both positive and critical) for the companies making them less risky.
Comment by David B. Fisher on March 28, 2011 at 10:27am
Thank you Cameron.  Daniel, yes there are a lot of challenges and a lot still to learn.  But I think we can all agree that the current system, i.e. Wall Street and also the venture capital system, is broken.  It is going to take lots of people with different perspectives to figure this out.  Luckily in Hawaii we are both small but also diverse enough that we might be able to pull it off--with help from others working on the same challenge/opportunity.  The idea behind the creation of DCCA led study group, which is the focus of the resolution that is up for a hearing tomorrow a.m., is to bring this diverse talent together.   I hope this might be something that you might want to be part of.  Your experience is very relevant and you also have the Big Picture view.
Comment by Cameron Souza on March 26, 2011 at 10:51am
I love this idea. Good luck!
Comment by Daniel Leuck on March 25, 2011 at 4:01pm

@David Your white paper is interesting. I like the fact that you've structured it as a public / private non-profit. I think establishing liquidity would be your biggest ongoing challenge because of the size of our economy and the small subset that is comprised of the types of companies that are normally traded. The most significant initial challenge will be successful establishment of the legal framework (all the banks will be fighting your charter bill) and additional regulatory administration requirements (read: costs) imposed on DFID. Finally, it will be a marketing challenge. The idea of a state exchange is new, so it will take a considerable effort to make people aware of it and create comfort with the idea.

We are happy to chime in as advisers if its helpful to you. A large part of our business is finance - designing systems for investment banks, hedge funds, etc.

Comment by David B. Fisher on March 25, 2011 at 3:24pm
Good points.  The critical mass question is indeed probably in the top five issues.    When you ask about "their plans", I hope you realize that "they is us" and this is in the brainstorm/design phase right now--although there is a white paper at the website.  The resolution is to create a study group which is a recommendation of the white paper.  A key participant needs to be someone from the DCCA with knowledge of securities laws. Of course experienced entrepreneurs, CFO's, investors, and people with exchange experience are also needed--and are, indeed, being identified.  The website is evolving a list of individuals and organizations in Hawaii and beyond with knowledge, skills, and interest including links to two existing possible software platforms.
Comment by Daniel Leuck on March 25, 2011 at 10:42am

Interesting. The problem with exchanges in small economies is that they often can't establish sufficient liquidity. To fall under the SEC intra-state exemption all transactions must be done within the borders of our state, so the brokers, buyers and traded entities must all be within Hawaii. Have you seen their plans? Do you know how the plan to achieve the critical mass necessary to have a viable exchange?

(putting on my geek hat)

It would a lot of fun to build an exchange, although most of the work would be integrating and customizing turnkey solutions.


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