New York’s Economic Recovery – The $150 Billion Solution

This month I have invited a friend and colleague to submit an article about a sensational idea he is steering in New York.
While it may appear in financial and other NY publications, we have it exclusively in Insurance Advocate.
Enjoy the balance of Summer,   SA

New York’s economic recovery hinges on innovative solutions to revitalize the private sector and address the substantial deficit caused by job losses and business closures. We propose New York jumpstart business expansion, by leveraging financial technology (fintech) and establish an over-the-counter (OTC) trading market dedicated exclusively to New York. A trading platform that allocates capital to New York’s local businesses and provides liquidity for New York investors. This enables New Yorkers to invest in New York companies and means all New Yorkers can be part of the solution by infusing much-needed capital into local companies and encouraging their growth within the state.
Covid-19 dealt a severe blow to New York’s economy, with small businesses suffering significant losses. According to Comptroller Tom DiNapoli, the State is facing a $35 billion deficit, primarily due to private sector employment decline of 400,000 jobs. It’s over 500,000 jobs lost, if adjusted for the natural job growth that never occurred. Salomon Brothers estimates that Covid depleted New York’s collective business equity by over $25 billion.
A New York OTC Trading platform will unlock vast amounts of capital for New York business and be a catalyst for recovery. The marketplace will exclusively cater to New York residents so they can invest in securities issued by New York companies. New York boasts a considerable number of investors and investment capital, second in size only to California, making it an underutilized resource that could be harnessed to significantly benefit local businesses. Over $150 billion of investment capital is held by over eight million New York households in IRAs, 401k and investment accounts. Billions more are held by New York’s institutional investors. Directing even a small portion of this capital towards local investment would mean billions for New York State companies and attract employers to New York.
People want to buy locally, local produce, goods and, services. They know that supporting local businesses adds to the community. Investing locally is another way to support community and state businesses. And it makes sound economic sense by doubling the impact of a resident’s money. The first impact is the investment return, and the second is related to positive externalities, such as the increase in local jobs and the added taxes a growing business contributes to the county and the state. The many thousands who love New York, will be able to invest in New York.
While New York once significantly benefited from the success of the New York Stock Exchange (NYSE), the NYSE has evolved into a national and global trading marketplace, no longer prioritizing the interests of New York investors and companies. A dedicated trading platform for local investment would fill this gap and enable residents to support local businesses, thereby fostering community growth and creating positive externalities, such as increased employment and tax contributions. And New Yorkers can benefit by having exclusive access to high-quality IPOs and other investments in New York companies.
We are inspired by successful models like the Venture Exchange in Canada and AIM in the United Kingdom, a New York trading platform tailored for small-cap companies would cater to the small-cap sector’s unique requirements. These smaller companies benefit from engaged investors who have a vested interest in their success and would gain exclusive access to IPOs of in-state companies. With a State GDP of $1.5 trillion in 2021, nearly equal to the entire country of Canada, a venture exchange in New York appears both viable and beneficial. Securities brokers would join such a platform to service a market of this size thereby multiplying the benefits to New York.
Given the state’s inability to directly allocate equity capital and provide liquidity to investors or to resolve its budget issues through higher taxes, this problem calls for private-sector solutions. State Stox Group has diligently designed and developed a platform to address these challenges, offering an innovative approach to promote local investment and economic growth. The state should embrace and encourage initiatives like State Stox, ensuring that all New York residents have opportunities to participate. A compelling advertising campaign advocating for investment in New York could further stimulate interest and engagement in the proposed trading platform.
New York’s economic recovery is important to every New Yorker. A strategic focus on financial technology and an exclusive trading platform dedicated to local investment are paramount. By channeling resident capital into local businesses, New York can harness its untapped potential and foster sustainable economic growth, creating a stronger, more resilient state economy.

-Chip Daniels

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Chip Daniels is the Chairman of State Stox Group, a fintech market for New York, a director of Salomon Brothers Securities, and a director of New York Equity. 
The Honorable David Paterson is the Chairman of New York Equity and the former Governor of New York State.