Gibraltar needs a stock exchange to take it to the “next level” in its development as a financial centre for the hedge fund industry, declares Rafael Benzaquen, chief executive at law firm Benzaquen & Associates.

The idea of a stock exchange for the territory is not new. The idea has been knocked around but so far has failed to gain traction, mainly, according to Benzaquen, because the right kind of model that is both sustainable and profitable has not yet been found.

While his ideas for an exchange are not quite finalised, he is optimistic that something could get off the ground in 2010. He hints money has already been committed and investors are just waiting to refine the model.

One of the problems of launching a new exchange is finding revenue streams that are sustainable. Pure listing of hedge funds, for example, is generally seen as a contracting market and one already well covered by the Cayman Islands in the Caribbean and in Dublin by the Irish Stock Exchange.

The Channel Islands Stock Exchange has been a successful model but Benzaquen does not see room for two such exchanges for Europe.

So he is looking at some innovative models. One idea that could be gaining credence is a secondary hedge fund trading exchange. At present only a couple of companies offer secondary hedge fund trading. The practice lacks transparency and could get a boost from a more visible and easy-to-use exchange.

Other ideas concern exchange traded funds and index products.

He also says the group behind the latest idea is looking at possible strategic partnerships, including links outside Europe in the Far East (Mauritius, India) and elsewhere.

His advice is to “watch this space”.