So, is stock trading coming to the Republic’s first state?
It could be, if a Delaware company led by prominent figures in national financial and political circles, including a former top aide to Vice President Joe Biden, can raise a $15 million bond from New Castle County. That’s according to a press report in the News Journal of Delaware, which said the plan is to create a stock exchange headquartered in Wilmington.
The plan is being led by John Wallace, a former CEO of the Philadelphia Stock Exchange, and other high-profile figures.
The Wilmington county council is set to meet next Tuesday to review a proposal from Delaware Board of Trade Holdings Inc., which was incorporated in June and is led by Wallace, former CEO of the Philadelphia Stock Exchange and includes as advisors Dick Grasso, former chairman and CEO of the New York Stock Exchange, and Joseph Grano, former chairman and CEO of UBS Capital Markets.
The report said that the company wants to launch two alternative trading systems in Wilmington – one for trading of U.S. and foreign securities and the other for small and medium businesses that don’t qualify for listing on Nasdaq or the NYSE – a venture type exchange. The bond would be used to pay for technology to set up the exchange and be combined with money from outside investors to cover financial requirements.
The company wants to launch two alternative trading systems in Wilmington – one for trading of U.S. and foreign securities and the other for small and medium businesses that don’t qualify for listing on Nasdaq or the New York Stock Exchange. Both would be regulated by the Securities and Exchange Commission and Financial Industry Regulatory Authority. All transactions would be handled electronically.
The News Journal reported that officials approached county leaders about the project earlier this year.
The bond would be repaid through revenues from the exchange and the company would assume the debt if it can’t cover payments, he said.
“There is no risk to the county,” Grimaldi said. “This helps us get back to the core of being a business-friendly state.”
The exchange is expected to create about 100 jobs paying an average of $150,000 and contribute to the “ecosystem” of account and corporate services in the city, he said.
Company officials have been asked to present the proposal to the county Finance Committee and County Council on Tuesday.
Senior managers for the company include Nick Niehoff, a former Nasdaq executive and CEO of the Cincinnati Stock Exchange, and Dennis Toner, an aide to Biden for more than three decades in the U.S. Senate and later as vice president. Toner, of Rehoboth Beach, was also on the board of the U.S. Postal Service from 2010 to 2012.
Wilmington attorney Michael Kelly, who is representing the company, said they are deciding between locations on the riverfront and on King Street downtown. Kelly said the company hopes to be running 90-120 days after the bond deal is approved.
The stock exchange, in particular the venture-type exchange, is seeking to capture a share of business created by the Jumpstart Our Business Startups Act passed by U.S. Congress in 2012, which sought to make it easier for small companies to raise capital.
Small companies can now sell up to $50 million in shares in a 12-month period without the full reporting requirements of going public. Previous rules capped such offerings at $5 million.
The exact format of the trading systems is unclear, it was reported. No executive for the exchanges would respond to requests for comment.
The non-venture type trading system will cater to large international companies that want a U.S. listing without the costs and regulatory burdens of being listed on NYSE or NASDAQ exchanges, according to the planning document.