Dream Exchange CEO on latest developments for the upcoming new stock exchange

Joe Cecala, Dream Exchange Founder and CEO, joins Yahoo Finance to discuss the future outlook on the upcoming minority-owned stock exchange and aiding in accessibility for capital markets.

Video Transcript


KRISTIN MYERS: Welcome back. What if there was a minority-owned Stock Exchange, much like the NASDAQ or the New York Stock Exchange that would create economic empowerment for diverse businesses? Well, our next guest is building it.

We're joined now by Joe Cecala, Dream Exchange founder and CEO. Joe, great to have you back with us. You and I chatted about a year ago about the Dream Exchange when you were still going through the process of licensing. But for those that don't know, quickly explain how Dream Exchange works and where you are in the process right now of building that exchange.

JOE CECALA: So thank you. And thank you again for having me again because it is an exciting story. We're still under construction, so we're not licensed yet. But we're making some very significant milestones. In fact, the additions to our team is really what's been disclosed this week.

We have one of the senior architects of the NASDAQ who just joined our team. He was with the NASDAQ 15 years. And really, what we're building is a two-pronged kind of approach. The first thing we're doing is building a state of the art environment for financial technology. And our team is really the dream team. So we've added Bruce Trask. We have Ray Edwards, who's built order books for exchanges before.

We're building it inside of a cyber-secure environment. We've made an agreement with a company called DefendEdge. And everything we're constructing is state-of-the-art. And it's all being constructed within a cyber-secure, even literally from our corporate meetings and our executive meetings are literally incapable of being penetrated because that was-- first and foremost, we wanted to be better than the other exchanges. It wasn't just a goal of can we get a license to match orders like all the other exchanges. We want to be better than they are.

And we're working really well with the Black community. We're going to have some major milestone announcements coming in the coming months about some of the partnerships and ambassadors and strategic relationships that we've made this past year. Those will be, again, national news stories.

So it's going extremely well. It's been an overwhelmingly positive reception by the market. We had over a million people through our website last fall just on our first announcement. So it's obviously an idea whose time has come to put capital markets, public capital markets in a place where they can actually help the minority communities and help the entrepreneurs of our nation.

ALEXIS CHRISTOFOUROS: Joe, I know that when you are licensed and up and running, you're looking to list new, early-stage companies that you believe have a long runway to growth. But what will the criteria be to list on your exchange? And I think when investors hear that it's a smaller exchange, they start to think about liquidity. What can they expect in terms of that?

JOE CECALA: So there's been a little bit of shift in our business plan, not that we're lowering the bar in any way. But there's two reasons not to be worried about liquidity. One is we're creating a national market system exchange. So we will be part of the national best bid, best offer system. We will be right beside the other, ostensibly, seven exchanges that exist today.

So any market liquidity for any public security will be able to be trade matched on our exchange in exactly the same way, in fact, in a better way because we're building it as a brand new, state-of-the-art environment. Then the archipelago or New York Stock Exchange, NASDAQ, we will be on parallel with their liquidity requirements.

So it'll be traded through, matching orders. We'll be on both sides of every bit and offer, just like every other exchange.

The difference that we are going to make is we're designing a customized set of rules for listings designed to attack the small and mid-cap market. Small and mid-cap companies are not small and mid to the owners of those companies. They're everything they have. So we're customizing the rulebook in a way to lower some of the minimum capitalization requirements without lowering the transparency and reporting requirements. We're fully compliant with the SEC rules on reporting and transparency. So that's the first thing.

On the national exchange, we will be able to accept listings that currently are not open to being listed on New York Stock Exchange or NASDAQ. And the New York Stock Exchange has a $250 million market cap minimum. We'll be much lower than that. When we publish our rules, it will be finally disclosed.

But the other big thing we're doing is we're really instrumental in advocating for the Main Street Growth Act, which allows for an entirely different trading environment. It allows for the creation of venture exchanges. Now, the creation of those exchanges will allow for what have been historically exempt private offerings to participate in a public environment so long as they meet all of the standards for reporting.

And they'll be very small transactions. They could be $5 to $50 million public offerings. And that's the segment of the market, not even by my own research, which we have extensive research on, but by the Treasury Department and the SEC's research, that shows that the $50 million public offering was the bulwark of the American capital market system.

75% to 90% of all public offerings 20 years ago were $50 million and under. And today, we have probably less than 4%. Some years it's as low as 2%. So that's the entrepreneur money. That's the venture capital exit money. That's the private equity exit money in an intermediate stage where, at $50 million, there's substantial growth, substantial upside, substantial wealth creation for the smart investor.

So the venture exchange marketplace, under the Main Street Growth Act, will really transform capital markets. It's going to be a very exciting time when that bill passes. It's been a bit slow only because of, obviously, the political environment and COVID and impeachments and things like that. And so a very small securities bill--

I think it's hot to move this year. We're getting such favorable responses, bipartisan support. It's so interesting just to see people who have been labeled as progressives like Arianna Pressley agreeing with the bill and saying, this would be good for capital markets.

KRISTIN MYERS: Well, we'll have to see how that definitely goes moving forward. Unfortunately, we don't have any more time. Joe Cecala, Dream Exchange founder and CEO, thanks for joining us.