Scotland moves closer to first stock exchange in 50 years

Plans to launch the first stock exchange in Scotland for nearly 50 years are gathering pace, with the appointment of a chair expected imminently and deals struck with clearing and settlement providers.

Tomás Carruthers, an Edinburgh-based entrepreneur, hopes the new exchange will go live as soon as the second half of the year, when it will help smaller companies raise capital to support development and make a difference in their communities.

Companies valued at £50m could be an early priority, according to a person familiar with the scheme, known as Project Heather.

The plan is to base the exchange in Edinburgh, one of the main financial hubs in the UK outside London and home to large fund managers, including Baillie Gifford and Standard Life Aberdeen. According to a report in September 2018 by the Investment Association, the trade body representing the UK’s asset management industry, £615bn is managed by its members in Scotland.

The exchange is close to appointing a chair, according to Carruthers, who has been on a broker roadshow in the City and Scotland ahead of the launch.

Speaking about the exchange’s intention to host companies looking to make more than just a financial impact, Carruthers told an audience in London this month: “There’s an access-to-capital problem for businesses that declare a positive social or environmental impact. But it’s not just a Scottish problem, it’s a global problem.

“We haven’t moved far enough towards creating financial institutions which can give us a new kind of future, a future in which capital is allied to the achievement of not just short-dated financial returns but long-term positive social impact.”

Technology has already been secured from Euronext, the European exchange operator, and an agreements with EuroCCP, an Amsterdam-based clearing house, and Brussels-based settlement provider Euroclear, are close, according to a spokeswoman for Project Heather.

Establishing links with clearing and settlement providers is a crucial step for any stock exchange because they enable trades to complete; final contracts will be signed once the Scottish project has gained regulatory approval from the Financial Conduct Authority, the UK’s financial watchdog.

Carruthers has secured investment from private individuals in the “single-figure” millions of pounds.

After helping to start Electronic Share Information in 1994 to publish stock prices online for the first time, Carruthers co-founded Interactive Investor, a rival to FTSE 100 fund supermarket Hargreaves Lansdown. He later had a hand in the creation of the Social Stock Exchange.

Scotland has not had a dedicated national stock market since the disbanding of the Scottish Stock Exchange in the early 1970s, which later merged with the London Stock Exchange.