In theory a Welsh Exchange could have some merit, but businesses would need to have a positive story if they are going to be taken seriously by investors.

And any Welsh Exchange would be an off shot of the London Stock Exchange and fees would not necessarily be cheaper.

What Wales could really do with is having a nominated adviser[s] based in Cardiff that could take high growth potential firms through the IPO process, whether in London or Cardiff.

Enjoying this discussion around other means of providing growth capital to Welsh businesses.

” It seems that the key barrier for the Assembly between a “good” decision and a “bad” decision is the extent to which it emphasizes Wales can “go-it-alone”—a positive for chest-thumping patriotism, but a nail in the coffin of common sense and the dream of a sustainable domestic economy.”

However i think that is as dogmatic as the people you criticise. I certainly wouldnt have the Welsh Lib Dems as committed to separating Wales, and Wales does have an opportunity through devolution to seek out newer and more effective solutions to age old problems. Many of the UK institutions and practices are of a different time, newer democracies do have a window of opportunity to innovate, which will often means having the ability to have control over those areas.

Granted, radical ideas are needed in Wales to energize an economy which struggles in both good and bad times, but, like many, I won’t be holding my breath for these ideas to come from the Assembly.

Mr. Hirst’s point is well-made; there is simply not the liquidity in the Welsh economy to support such an endeavor. Volume is the key. There are not enough Welsh Plcs or Welsh businesses that would operate on the exchange, and likely not enough trading volumes to attract non-Welsh businesses to the potential of floating in Cardiff.

For investors to be attracted, a Welsh Stock Exchange would require the tightest regulation and oversight. Yet to lower the barriers to enable a critical mass of Welsh businesses to be able to float would require significantly less regulation than other exchanges (and good luck launching an exchange with lower regulations in today’s world!). In terms of practical viability, the regulatory reality kills the idea stone dead, even before the economics of supply and demand come into play.

I would estimate for every one SME I advise in preparing for IPO, I see five listed firms wanting to be taken private again. The regulations around being publicly traded devour small businesses. SME’s have to pour so much of their attention and resources into conforming they often forget to run their business. They are operating quarter to quarter, because that is what happens when you are publicly traded, and long term goals are of secondary importance to the needs of The Street (or which ever exchange you are on). The vast majority of SME’s which get listed enjoy Day 1, and then reality sets in.

I would question whether Ms Randerson understands the process that goes into launching an IPO and whether she believes the concept of an IPO is about more than “free money”. Does the opening of an exchange in Cardiff suddenly mean Wales will have a slew of businesses that are IPO-worthy? If a Welsh business is currently unable to raise the structure to float on one of the major exchanges it is more of a reflection of their IPO-worthiness, than it is the accessibility of achieving a successful IPO?

Ms Randerson is seeking a just goal, but through the wrong means. If the goal is raising capital for Welsh SME’s then this would typically be better served in the first instance through attracting investment from private/venture equity rather than public floatation. Whether or not you are a fan of private equity (and I know there are many who or not) the key question is if private equity investment hasn’t been flowing into Welsh businesses, what makes you think investment through IPO’s will?

Government-initiated and Government-brokered private investment in Wales has long been about selling the farm to overseas firms to create or protect their Welsh-based operations (and jobs). The Welsh Office, the WDA, and now the Assembly have all packaged initiatives to support inward–investment in a political, rather than economic manner, sacrificing long-term domestic growth for near-term PR, developing schedules and concessions which protect the Welsh arm of global companies, rather than promoting the growth of home-grown businesses.

Looking at the current backbone of the Welsh economy, what would we float on a Welsh Stock Exchange? Call Centres?

In a global economy, Welsh-businesses historically have not been well placed to attract investment, unless it is underpinned with significant tax-breaks and subsidy. Like it or not, a widely held view in the investment community is that Welsh business and Welsh business culture is as much built on grants and subsidy as it is on entrepreneurship. On a level playing field Welsh business are perceived to not even compete on investment attractiveness, and that has to be the critical barrier we try to overcome. Yet no politician wants to tackle that point.

This issue underpins a lot of the problems with policy-making in the Assembly. It seems it is more important for the Assembly to make a decision to promote an element of devolution, than it is for the Assembly to make the right decisions. The Assembly needs to understand that oftentimes decisions which make the most sense for Wales will not be those which promote another strand of devolution and separation from London—just because an option does, does not make it a good option. It seems that the key barrier for the Assembly between a “good” decision and a “bad” decision is the extent to which it emphasizes Wales can “go-it-alone”—a positive for chest-thumping patriotism, but a nail in the coffin of common sense and the dream of a sustainable domestic economy.

Ms Randerson should be admired for her “out-of-the-box” thinking to raise this question as a talking point, but for the good of Wales and the Welsh economy, let’s hope “Shadow” long remains part of her job title.

Just a few points. The London stock exchange actually has four market options- the Main Market and AIM are just the two most widely reported- that offer differing options for issuer’s- be that from a biotechnology start up, to sophisticated investment proposition to global blue chip. London also has an unrivalled profile, access to a massive pool of international investment, cutting edge technology and superior liquidity on trading services. Jenny seems to think Wales should have one of these without a scrap of evidence of how it would happen.

Jenny writes that Welsh firms cannot afford the listing fees and then produces no evidence to support this.

She also writes that a stock exchange could bridge a gap between business and capital- has she not heard of a bank, credit union, private equity house?

Yes there used to be lots of smaller exchanges across the world. Yes and Rome used to have an empire.

In the 1970s and 1980s, the world’s bigger companies got a significant appetite to be bigger still, to expand and do business on a global scale , working across countries and continents, sometimes organically, sometimes through acquisition. To achieve this required CAPITAL.

The Big Bang of 1986 was critical for all stock exchanges but particularly London in that it was able to meet this global expansion head on. The electronic trading revolution was accompanied by wave upon wave of US, French and Swiss investment banks all setting up shop and bringing with them an international investor base. Bespoke boutique stockbroking of the kind that Jenny references was rapidly replaced by a deep well of pension and investment funds from across the globe. The game had changed forever.

So exactly how does Jenny see a Wales stock exchange working? Oh that’s right- she doesn’t know.

She uses the classic politician’s all encompassing get out of Jail Free card about how we need to be bold and radical. Yes we do Jenny. There is a very serious debate to be had regarding capital markets, regulatory environments and financial responsibility on a global scale. This headline grabbing gimmick is not it.

As Angela El said stock exchanges have been based and operated in Wales before so what many would see as a bold idea would simply be bringing the expertise back to life in Wales, something those with influence should think about.

Not sure if you have seen this but the Telegraph has picked up on the story and written a piece
http://www.telegraph.co.uk/finance/personalfinance/investing/6345226/Give-Wales-its-own-stock-exchange.html

Unwilling – you’ve lost me on that one…

Companies float for one reason: to tap into markets for capital by exchanging their equity – and a potential share of future profits – for cash. For this to work shares need to have liquidity: a plentiful supply of people and institutions willing to buy and sell them a moment’s notice. Private individuals and local businesses simply would not provide the necessary liquidity in a Welsh stock market.

Your suggestion that a Welsh exchange could provide an opportunity for local people to play the market is highly irresponsible. Investing directly in equities is very risky form of investment. Individuals who want to invest in equities are much better advised to spread their risks by investing in a share portfolio, managed by a professional fund manager. To protect their clients’ investments fund managers invest in liquid markets.

Finally, you say that ‘banking will never be the same again’. Tosh. Banking and finance is driven by two things: fear and greed. At the moment, the fear of losing money is the overriding emotion. Therefore, the supply of credit has dried up. As signs of recovery emerge, fear will be replaced by money-making greed, and credit will flow again.