The Social Stock Exchange Asia (SSXA) will be Asia’s first social stock exchange, providing a trading platform and an efficient capital raising mechanism for Asian Social Enterprises (SEs), including both for-profit and not-for-profit entities with a social mission.  SSXA will connect these SEs with impact investors seeking to achieve both a social return and an economic return on their investment while providing capital to fund innovative social businesses.
 
Product Offerings and Operations
 
SSXA will serve as a marketplace for the listing, trading, settlement and clearing of stocks and bonds issued by SEs.  SSXA will enable investors to invest in and trade shares issued by for-profit SEs and bonds issued by either for-profit or not-for-profit SEs.
 
Unlike BOVESPA in Brazil and SASIX in South Africa, which facilitate grants from philanthropists to not-for-profit entities, SSXA will facilitate investments by impact investors in economically viable SEs throughout Asia, which will generate both economic and social returns.  The chart below shows where SSXA fits on a spectrum of impact investing alternatives:

SSXA will list and facilitate trading in both shares and bonds issued by SEs.

• Shares – For-profit SEs will be able to access equity capital through public offerings of ‘socio-economic shares’ on SSXA.  Investors can expect to receive an economic return through receipt of dividends (and potentially capital appreciation) as well as social returns.  Participating SEs will have access to a source of equity capital to fund expansion of their businesses at a valuation that should reflect both the economic and social value of their business.
• Bonds – SSXA will provide a platform for Asian SEs to raise capital via ‘socio-economic’ bond issuance.  Bonds may be issued by for-profit SEs, which will pay interest and principal on the bonds from the profits generated in their business; as well as by not-for-profit SEs with income streams which provide a source for repayment of the bonds.  Participating SEs will be able to access a new source of capital to fund expansion of their activities, potentially at lower cost than other financing sources.  Investors can expect to receive an economic return – through receipt of interest and eventual return of their principal – as well as social returns.

SSXA will provide liquidity to investors by supporting trading, clearing and settlement of securities.  In addition, SSXA will promote transparency and visibility as to the social returns generated by the listed SEs through robust reporting requirements and by calculating and reporting social returns to investors.
 
Listing Requirements
 
SSXA will promote and reward the best socially conscious businesses in an environment that ensures transparency and accountability for investors.  SSXA will focus on SEs doing valuable work in fields such as clean technology, social market initiatives, education, health care and microcredit.  In addition to applying listing criteria typical of an ordinary exchange, which will focus on, e.g., corporate governance, accounting standards, operating track record, financial performance and the like, SSXA’s listing criteria will also include requirements aimed at limiting inclusion to companies with strong social missions.  SSXA will not be open to companies that simply avoid “sin” industries, such as tobacco, but will require that providing social benefit be a part of the core mission of listed companies.
 
Similar to AIM, SSXA will rely on a group of Sponsors (or Nominated Advisors) which will promote and supervise listings.  These Sponsors will act as placement agents for offerings conducted on SSXA and will work closely with the SEs to ensure compliance with the listing criteria.
 
Partnerships
 
SSXA will be the Asian arm of a global network of social investment exchanges.  SSXA is in active discussions to partner with the London-based Social Stock Exchange Ltd.  Through cross listings and coordinated policies, this partnership will better enable Asian ethical investors to access investment opportunities in social enterprises in Europe, and allow Asian SEs to access European investors through a London listing or dual listings.
 
SSXA’s primary value addition will be in bringing together ethical impact investors with social enterprises in need of funding.  Consistent with this, SSXA does not intend to build the infrastructure necessary to support trading activities, but rather intends to partner with an established stock exchange to provide the trading, clearing and settlement infrastructure.  SSXA has had preliminary discussions with Singapore Exchange and Bursa Malaysia to establish such a partnership.