What should a future stock market look like for investors?

We’re building a new exchange model with investors at the heart

We’re all aware of what stock markets are, but how many of us actually engage with them? A handful of confident individuals aside, people often feel that public investment opportunities are for the benefit of the few, not the many – and that institutional investors will take most of the spoils.

It’s not surprising, therefore, that retail investors have been slow to participate this year, as they feel increasingly alienated from market opportunities. WeOwn believes it’s time that the investment industry looked more closely at how we can make public listings more accessible – and build a stock exchange model that meet the need of individual investors.

Why aren’t investors backing IPOs?

It’s been a wobbly couple of years for public offerings, as several big names – including Uber, Lyft and Aston Martin – have seen their IPOs fall short of valuations. This is leading an increasing number of retail investors to question the value of stock market trading, looking at cheaper private alternatives instead.

Private investment options might be riskier, but the potential rewards are higher; a worthwhile trade-off for many investors. The problem with the current stock exchange model is that high entry costs mean companies have to reach a certain level of maturity before they can go public, and often their growth trajectory has started to tail off by that point. Their initial growth has been funded by institutional backers, who have seen much greater yields than public investment can hope to achieve.

Exploring the stock market isn’t an easy process for investors, either. The traditional model involves a number of intermediaries and custodians, making operations incredibly complex. Investment processes aren’t dynamic – particularly considering the digital environment that most investors live in – and although new broker apps are entering the market with a good user experience, they are still built on this same, complicated infrastructure.

How can we make the stock exchange model better for investors?

The stock market needs investors to thrive, so it seems short-sighted to be basing transactions around a model that deters many people from participating. We need an affordable, easily accessible, frictionless marketplace – that’s what WeOwn has started to build.

WeExchange is a global, decentralised stock exchange, that will make it easier for both retail and institutional investors to invest in businesses as they scale-up. We’re developing the marketplace on our bespoke blockchain, to ensure speed, scalability and security for all those involved, and to make sure that administration and red tape doesn’t get in the way of a good deal.

The WeExchange model is built around providing great opportunities for investors, many of whom would not explore traditional stock exchanges. By taking a different approach, we are able to offer greater value, for example:

  • Lower-cost investments – we cut out the middlemen involved in traditional exchanges, which means we’re able to lower trading and listing fees for companies. These companies can pass those savings onto investors with lower share prices.

  • Greater potential rewards – reducing the cost of entry enables more businesses to participate at SME stage, when they are growing quickly. Investors can tap into new opportunities early-on, and profit from being first in line as they continue to expand.

  • Wider choice – as WeExchange will be accessible to SMEs that can’t traditionally afford IPOs, more companies will be able to list publicly. This will give investors access to a wider range of options, so they can choose the brands that best fit their passions and portfolios.

  • Immediate trading – although some crowdfunding and crowdinvesting sites have launched secondary marketplaces, these aren’t available 24/7. Our model will offer round-the-clock trading, so investors can get in and get out whenever they want.

Through these principles, our vision is to create a vibrant, liquid marketplace that brings thousands of companies and investors from all over the world closer together, regardless of their location. It’s a next-generation model for a future stock exchange, and we’re excited to launch WeExchange in 2020. Watch this space.

Download our new guide – Taking Stock: Why it’s Time for a New Global Exchange Model to find out more about the future stock exchange.

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