Are Stock Exchanges Failing?

This is the question for today? Economic strife and Government austerity measures have almost entirely stifled growth and with the Euro under threat and countries across the European Union suffering massive loss of living standards what can be done to stem the tide and begin the long road back to prosperity?

I can’t help thinking about why Stock Exchanges were created and how far removed they are today from the original. The reasons we had Stock Exchanges was to raise capital for companies to invest and reinvest in their business, occasionally takeovers, but mainly allowing investors to buy into good companies with good prospects making profits and paying dividends. In fact investment in every sense of the word that fuelled growth and the economy. How we could do with that today.

What we have today are Stock Exchanges built for speed and the trader or gambler. So far removed from investing and so far removed from the needs of todays need for growth. The number of new listings and new issues is lamentably low and it’s not just the economic situation that’s causing this.

Far too much investing is via private equity and off exchange. Why? Surely the Stock Exchanges should be looking at capturing more investors and attracting more company listings and more capital raising deals. Even if this means establishing a new Stock Exchange based on traditional structures where speed and electronic wizardry are not the prime requirements but where trading is via own capital (We called this Jobbing pre 1986) and brokers are not compromised by self-interest.

Is it feasible to rebuild the old Stock Exchange with exclusive entry to those that fit a Jobbing and Broking profile re 1985? Could this retro model Exchange actually attract business and investment into new companies and be the ground for growth?

It’s a fanciful notion but I think if there was enough interest a Retro Stock Exchange could be built and save the nation from a black and austere future with growth and hope.