3c hapter - Index of

Back to the Future 215
the manufacturer of an innovative, energy- effi cient engine, a
maker of recycled paper products, a regional water utility, and
a restaurant and shared community kitchen. But getting them to
take the plunge is another story.
On the fl ip side of the equation, an exchange must have suffi
cient investor participation to provide the necessary capital and
liquidity. Once again, though, the idea seems to strike a chord.
Janel Widdowson, a fi nancial advisor based in Lancaster, says many
of her clients, especially younger ones, feel disenfranchised from
the fi nancial system. “The complexity and instantaneous streaming
of data has narrowed our time horizons. We don’t invest anymore;
we’re traders,” she says. A local stock exchange could “bring
it back to its fundamentals.” Her clients, she says, are hungry for
alternatives. “LanX could satisfy that craving.”
Then there is the question of support, such as research and
sales, that Grant Thornton’s Weild and Kim argue is vital to
a well- functioning market. Who will vet the companies and tell
their stories? Will there be a local equivalent of Moodys? These
questions tie into the bigger issue of business model. Can local
exchanges support themselves on listing and transaction fees? Or
are they better structured as nonprofi ts or public-private partnerships?
These are all questions that have yet to be answered.
The biggest challenge, however, may be navigating the legal
hurdles. Exchanges are closely monitored by the SEC. The major
exchanges, like the NYSE or NASDAQ, are what is known as
self- regulatory organizations, meaning they are responsible for
policing themselves. The SEC also has authorized Alternative
Trading Systems (ATS), markets run by registered broker- dealers
that electronically match buyers and sellers (typically accredited
investors). The SEC would have to sanction any local exchange—
a prospect many consider unlikely at the moment. Alternatively,
a new exchange could partner with an existing exchange or ATS
with regulatory approval.
A more immediate concern for Proffi tt is funding to pull
off his plan. Although all of these challenges loom large, he has
lately found some promising support. He’s been talking with
groups in Maui, Detroit, Hartford, Connecticut, and Toronto that