The Green Impact Exchange (GIX) is on track to becoming the first sustainability-focused securities exchange in the US to file with the US Securities and Exchange Commission (SEC), and if approved, could begin operations in early 2025.
GIX submitted its Form 1 application on 9 May 2023, outlining plans to operate a fully automated electronic trading platform for the trading of listed equities – no physical trading floor is planned.
Daniel Labovitz
Specifically, the GIX plan is to list companies that make a “binding commitment” to set, implement, measure, and achieve sustainability goals while being transparent with investors about the state of play as things progress.
Importantly, companies can dual-list and be recognised on GIX without giving up their primary listing exchange.
Prior to launching GIX, founders Daniel Labovitz (CEO) and Charles Dolan (COO) served as head of regulatory policy and executive floor governor, respectively, at the New York Stock Exchange (NYSE).
Speaking to The TRADE, Labovitz highlights the key motivations behind listing on GIX: “Voluntarily taking on a dual listing matters. It says something about the integrity of the company and the character of its leadership that they’re willing to do this, create value in the long term, and be held accountable for it.”
“If your company makes a gesture that says, ‘I am willing to be held accountable for my environmental promises through the listing process’ that is a really significant statement. It means your company is sincere in its motivation to follow through on those promises. It means you’re serious,” explains Labovitz.
Discussing the aims of GIX, Labovitz tells The TRADE that it comes down to addressing all aspects of an exchange’s offering.
“Contrary to popular belief, an exchange is not just about ‘buy, buy, sell, sell,’ which is the domain of brokers. The true essence lies in the infrastructure that supports these transactions. The role of GIX is to provide an unbiased platform where investors can meet to buy and sell, guided by credible, reliable, and trustworthy information. This is the essence of what an exchange does, and GIX is committed to fulfilling this need for the sustainability world.”
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Once live, the GIX trading platform is set to be powered by technology from exchange operator MEMX. In addition, GIX has confirmed that it will be part of the National Market System (NMS), ensuring best execution for all trades directed or routed to GIX.
Furthermore, the exchange plans to implement a ‘return to green’ program set to commit a portion of its gross revenue to support companies focused on sustainability.
In an announcement, the SEC stated: “The Commission is publishing this notice to solicit comments on GIX’s Form 1 application. The Commission will take any comments it receives into consideration in making its determination about whether to grant GIX’s request to be registered as a national securities exchange.”
The founders – including Jim Buckley, former chief regulatory officer of the National Stock Exchange, and Lou Pastina, former executive vice president of operations on the NYSE floor – all have decades of experience in capital markets, working for and with major US stock exchanges.
Over the years, the individuals witnessed developments in the marketplace and capital markets and also saw their own personal beliefs evolve, recognising the importance of leaving the world a better place, Dolan tells The TRADE. As a result, they pinpointed a need for a sustainability-focused stock exchange and recognised that they could be the ones to build it.
Dolan adds that more recently, conversations are being had with key buy-side players: “Our discussions with major buy-side firms have revealed a high level of interest in our initiative. They believe our direction will significantly influence asset allocation decisions and other industry practices, making it a game-changer for the entire sector.”
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Speaking in an announcement today, Shiva Rajgopal, advisor to GIX, affirmed that it is the accountability for sustainability promises which is key.
“The marketplace needs a ‘trust but verify’ approach to help reduce greenwashing. There’s a tremendous financial opportunity to bring together sustainable-minded investors with companies working hard to meet their environmental commitments. For that opportunity to be realised, there needs to be better transparency and accountability of sustainability initiatives and reporting. GIX will provide that.”