ISE has always adapted to needs of the day

Last week my colleagues organised an evening meeting with a group of investors to discuss the economy and a variety of investment themes. It was decided to host the event on the floor of the Irish Stock Exchange (ISE), an ideal location for such a gathering.

Before proceedings, a short but concise guide to the history of the stock exchange took place and that illuminated a number of themes that explain how the history of Irish stockbroking is one of constant change.

Therein lie lessons of what its future may contain.

Those of you who have an interest in the public equity and debt markets will know that a lot of structural shifts have taken place in Dublin since the global financial crisis in 2008.

First, the collapse of world markets took down a large share of the bank stocks. Second, a number of companies chose to migrate on to the London Stock Exchange as they believed it better reflected the scope of their companies and/or exposed them to a variety of index buyers which part replaced existing shareholders.

These developments were and continue to be presented as threats to the very existence of the Irish Stock Exchange.

That interpretation, however, ignores the history of Irish stockbroking which is one of constant innovation in response to a range of challenges.

The history lesson we got last week best explains that process. In the early 19th century, the ISE was a fully signed-up member of the British Empire (indeed it may have been one of the first five stock exchanges established across the world) and, as such, was plugged in to the funding needs of that global economic structure. Finance for Indian, African and Asian companies can be found in Dublin.

Later, the finance needs of railways came to dominate the market and between the mid and late 19th century you will find the Dublin stock market peppered with railway issues that saw boom and bust conditions.

Post independence the finance market needs in Ireland changed dramatically and instead of looking outwards, Irish stockbrokers became highly focused on debt and equity requirements of a fledging Irish economy and young growing companies.

This was supercharged through the 1960s and 1970s when Irish companies began to develop international businesses, the Irish banks expanded and the economy had cyclical ups and downs.

In the late 1980s a wave of agrifood co-ops became the latest surge of activity on the stock market as they adopted plc structures to fund their eventual emergence as global players of repute.

So now the exchange journey is on the move again, and here is how that may develop; (1) new companies with relevant funding needs are finding enthusiastic support through the Irish stock market. The Green REIT is a classic example in the property sector; (2) the exchange, brokers and the Irish Government have concrete plans to introduce incentives for small growing companies to use Dublin instead of London or New York as a funding platform; (3) a strong number of large companies have declared their determination to stay on the Irish Stock Exchange, and; (4) Irish stockbrokers are actively pursuing those companies that have moved to London and have used advanced IT systems, research, marketing and capital to develop lead positions in trading those stocks.

A further intriguing and major opportunity for the Irish Stock Exchange has echoes in its past. In the 1800s the blackboard used to trade Irish assets was dominated by a transport mode that required deep levels of capital and had global reach — railways.

Today, Ireland is centre stage in the railways of the sky as it is a leading centre for the global aircraft finance industry. Could that too be a new avenue for growth of the ISE?