On the 30th anniversary of Big Bang in 1986, the radical change in trading systems and capital markets deregulaton that powered London to trading dominance for the next 30 years, SCOTEX – the planned new stock exchange for Scotland – announces:
1) Big Bang 2: a radical new UK equities post-trade framework using a distributed ledger. The new system is called STARS: Secure Transaction Affirmation and Reporting System. The system will mean:
- Trades will settle almost immediately with no need for post-trade clearing.
- Trading will be much cheaper for everyone as users will be charged a low fee to access a ledger rather than being charged per transaction in a captive system.
- Sellers and their brokers will get their money almost instantly and no later than 15 minutes after a trade.
- Collateral holders do not need to post collateral so it is freed up to use elsewhere.
SCOTEX plans, with regulatory permission, to roll the system out for its primary market, and then to its secondary market over time, again with regulatory permission. STARS would run in parallel to a conventional multi-layered post-trade infrastructure with custodians, clearers, depositaries and registrars in order to prove the performance of STARS before it can be run as a standalone system. See www.bigbang2.uk for more information.
2) Plans to raise up to £15million in order to enable operations as a Recognised Investment Exchange (RIE) and to meet anticipated capital demands of the FCA, as well as the costs of STARS to be authorised as a Designated Payments System by the Payment Systems Regulator (PSR).
3) SCOTEX notes that the Scottish Government has welcomed the proposed new exchange. A Scottish Government spokesperson has said: “The Scottish Government recognises that stock exchanges are an important platform for companies to raise capital for growth investment, while also offering investors the opportunity to contribute to the development of listed companies. The stock exchange initiative could help increase the flow of capital which we would welcome.”