Janet E. Morrison, Legal Writer

Stock exchanges in the great financial centres of the world are the lifeline of capital that contribute to the vitality and stability of world's economy.

'Going public' has come to signify the coming of age of a company. The report in the Financial Gleaner issue of October 31, 2008, that the Jamaica Stock Exchange proposes to launch a 'junior stock market' which will offer the advantages of listing to medium- and small-sized companies (SMEs) is good news for companies and investors. The junior market is intended to encourage domestic investment in SMEs, increase employment and stimulate econo-mic development.

The United King-dom, the United States and Canada each has a junior stock exchange which function as a secondary source of capital for young, small and emerging companies.

One of the major hindrances that in-vestors have to investing in an SME is their inability to sell the shares in them, there being no ready market or 'platform' on which to trade the shares.

This leads to a general inability of an SME to attract new capital.

This inability, together with the inaccessibility of loan capital caused by insufficient collateral or by high interest rates, contribute to severe under-capitalised SMEs - that is, SMEs with potential for growth in the Jamaican market, where venture capital is hard to access, are often stillborn for want of equity or affordable capital for expansion.

A junior stock exchange might therefore create opportunities for small, young and growing companies to raise capital in the open market to fuel needed investment for the benefit of companies and their investors.

janet.morrison@dunncox.com