The US Gears Up For Its First Ever Black Owned Stock Exchange

In a period of confusion and uncertainty for financial markets, there have been small signs of change and innovation. The Dream Exchange offers potentially the most ambitious effort yet...

The economic outlook in the aftermath of Covid-19 is unquestionably daunting. Predicted forecast for global growth has severely affected businesses, both small and big, as many continue to adjust to an economic fallout not seen in decades. Likewise, global stock markets have been affected in kind. Only four months ago the FTSE 100 suffered its worst quarter since ‘black Monday’ in 1987, while the same day saw the Stoxx 600 index featuring some of Europe's biggest companies down by over 23% at the close of Q1.

Knowing this, you’d be forgiven for thinking that now was the time to batten down hatches in hopes of riding through amidst uncertainty. However these troubling times have also seen noticeable feats of change and innovation within black communities. June saw the official launch of Black Pound Day, a solution-based approach to support the growth of the UK Black economy. The initiative which was birthed by former So Solid Crew member Swiss, saw thousands across the country pledge their money toward supporting black owned businesses. Across the pond, an even more ambitious attempt is about to be made to support the creation of wealth within black communities, with a view to giving them greater footing in the financial sector.

This June saw the launch of the UK's first ever Black Pound Day

The Dream Exchange which is the creation of former securities lawyer Joe Cecala in partnership with Cadiz Capital Holding L.L.C., a private equity firm, headed by William H. Ellison seeks to list small, primarily minority owned companies that wish to go public and seek early stage investment.

In a must read Interview with Black Enterprise's Dana Givens, Cecilia explained:

“Early in my legal career, I learned how stock exchanges “hunt” for liquidity because I was the lawyer for the founders of Archipelago, one of the first and the biggest electronic stock exchanges in the world. Archipelago grew into what the world has come to know today as the New York Stock Exchange….Because of my experience in understanding the formation of the world’s greatest electronic stock exchange, I learned how a stock exchange creates and controls liquidity in the markets,”

“After years of research, I discovered that the structure of the US capital markets and the current stock exchanges favor only the largest transactions with celebrity companies. My research showed that, prior to Archipelago, the overwhelming majority of IPO’s were $50.0 million and under! By 2004, small capital IPO’s had all but disappeared. After years of working with minority businesses, I realized as well that minority businesses were nearly absent from all IPO and public company listings.”

The Dream Exchange hopes to launch in 2021

He further added: “The importance of a Black-owned stock exchange cannot be understated. Research from the SEC’s IPO task force shows that 92% of all jobs are created after a company goes public,” he explained.

“In the 230-year history of stock exchanges in America only one Black-owned firm has made it to the New York Stock Exchange and there has never been a Black-owned stock exchange. Without access to public markets, any sector of society absent will most certainly suffer economically. This is the importance of having a channel for access to the public markets in America.”

Despite the wider economic climate The Dream Exchange comes at an opportune moment. As Cecala himself revealed, Small IPOs (IPOs raising less than $50 million in gross proceeds) have been on a downward trajectory so much so that further research found that in 2017 only 5 small IPOs had been completed. To put that into perspective, almost 197 had been completed 20 years prior in 1997 (with a market capitalization at the IPO stage of less than $75 million). While The Dream Exchange’s focus on small IPO goes against the grain in the unicorn hunting age, Cecala’s creation has the potential to offer a fresh shot in the arm for technological innovation, job creation and competitiveness. The Exchange, which has already seen 6000 black owned companies reach out to be listed, aims to launch in 2021. We’ll certainly be keeping an eye out for it, to see how things shape up before its big arrival.

Mayowa Ayodele

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