We have a date for Jamaica's Micro Stock Exchange, and it's sooner than you think!
The Government is targeting April 2026 for the launch of the Micro Stock Exchange. JSE Executive Director, Dr. Marlene Street Forrest, made the announcement at Cumax Wealth's Spring Investor Forum recently.
And I'll be honest, it took me by surprise that they expect to get it done so quickly. Remember, Finance Minister Fayval Williams just announced the Micro Exhange at the budget debates in March. She said they are establishing a working group to figure out how to approach it.
The Micro Market would target businesses that want to raise between 10 and 50 million Jamaican dollars. That's about 63 to 315 thousand US dollars.
But there's a ton of work to do before this can become a reality. First of all, they have to do a lot of consultation with industry players, small and medium businesses, the brokers and the public.
There's a lot to work out, such as the incentives. Junior Market companies already get generous tax breaks for ten years. Should Micro Market companies get even better tax breaks since they need more help?
And those listing requirements. It costs a lot of money to bring a company to IPO. There are listing fees and broker fees. Plus you need to have strong governance, and file audited financial statements every three months. That last one alone is expensive. It costs at least a couple hundred thousand dollars to prepare audited financials, and this can be very burdensome on small companies.
So will the JSE waive these requirements? Or will the government step in and offer technical assistance or maybe some type of voucher system to fund these things?
And then for the brokers, what incentive do they have to help these companies list? Arranging a listing is a lot of work, and brokers get paid handsomely to do it. For Junior Market companies, brokers traditionally get paid, at least in part, by taking a stake in the company before the IPO, and then selling off those shares at a profit during the IPO.
Will that be enough of a return for them for micro companies? If a company is only raising 10 million dollars, a ten percent stake is only one million. That's about six thousand US dollars. Is that enough of an incentive for a broker?
And these are just some of the questions that immediately come to mind that they’ll have to work out and consult on. Then they have to establish rules, draft and pass the legislation, then have it gazetted.
I mean it took over a year for the Junior Market cap raise to become official, and that didn’t require extensive consultation. All they had to do was draft the law, pass it and gazette it.
So one year seems like a very quick turnaround time to get everything in effect for the Micro Market. And I should add, the JSE has been very slow to implement other measures. Remember short selling? That's been promised since at least 2019 and all now! So I'm skeptical about this timeline.
However, the JSE has said they’ve identified at least 250 companies that would benefit and are ready for a micro market, so that shows that some of the ground work is already being done.
The JSE said it’s in the process of putting together a steering committee to help set up the structure of the Micro Market. So yeah, they're just now putting together the committee and expecting everything to be done in eleven months. I'll believe it when I see it.
And that’s the bottom line.
What do you think? Can the Micro Market be ready in a year? And what concessions should be given to SMEs and brokers to list?
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Let's get this money!