Hermann Hauser, co-founder of Acorn Computers, is trying to turn the world upside down again, according to the Financial Times, this time focusing on share dealing. Aiming to ape the success of Direct Line, the UK telephone-based insurance company, his Cambridge-based Electronic Share Interchange Ltd is set to offer electronic share dealing to anyone in the UK with a personal computer and modem. In a pilot project, to be launched early next year at the business school of Glasgow Caledonian University, investors will trade in fictitious companies and react to news. Electronic Share’s focus is small companies with turnover between UKP1m and UKP20m and the flotation of new ones and the company may locate its operation north of the border, trading the shares of the Scottish business start-ups. Electronic Share’s system will compete with the Stock Exchange’s Alternative Investment Market, to be launched next year to replace the Unlisted Securities Market. Transactions in Electronic’s system promise to be cheaper as there is no need for the stockbroker middleman and simpler. And Electronic Share hopes this will encourage smaller investors and enable more companies to raise money by issuing equities to individual investors. Investors would pay UKP100 for the software, developed by TCAM Systems of Edinburgh, UKP15 a month subscription and 0.1% per transaction, minimum UKP5. Settlement of payment for transactions will be elctronic and payments transferred in seven seconds, using the services of a clearing bank. Electronic Share Information is currently talking to the Royal Bank of Scotland Plc about electronic payment transfer for the pilot scheme. Investors would buy packets of shares at a price quoted on Electronic’s public order board. If the user wanted a better price than the board offered, he could make an offer anonymously. Investors could also buy London-quoted shares, routed through a broker. The system aims to encourage companies new to the traded markets, by making life easier. Electronic Share will not require a trading record, and will make sponsorship by a broker or other intermediary optional. However, this approach could backfire on the system, as institutions like sponsorship. And if institutions are dissuaded from investing, it may discourage invidual investors. New companies would have to publish a prospectus, with directors legally responsible for accuracy, price-sensitive information and quarterly reports.
