Nasdaq Gains SEC Approval to Launch Private Placement Market

The Nasdaq Stock Marketreceived the green light from the Securities and Exchange Commission to launch a private electronic trading platform for unregistered debt and equity securities. The Portal Market will begin operating on Aug. 15. Nasdaq's plans to create a secondary market in private placements, which tend to be illiquid securities, have been circulating in the media with a story posted in Advanced Trading.The automated Web-based platform is an extension of Nasdaq's Portal system for registering 144A securities, which are not public. The 144A private placement market is open to qualified institutional buyers (QIBs) with at least $100 million in assets to invest and there can be no more than 499 investors, otherwise the companies have to register with the SEC.

As a neutral exchange Nasdaq will have the credibility to reach out to issuers in many industries and across the globe. Its goal is to "bring added liquidity and transparency to the 144A market," stated Nasdaq EVP John Jacobs in today's release. Jacobs called this a "natural progression for Nasdaq given our expertise in electronic trading systems." This is not stopping several investment banks from rolling out their own private trading systems. Goldman Sachs was the first to roll out GSTRuE (Goldman Sachs Tradable Unregistered Equity System) in May, attracting alternative asset manager Oaktree Capital Management and more recently Apollo Management, LLP, the private equity firm, signed up to trade private shares on GSTRuE, though some of Apollo's shares will also trade on a platform developed by JP Morgan.

A few weeks ago, the Financial Times reported that a group of rival investment banks including Citigroup, Lehman Brothers, Merrill Lynch and Morgan Stanley were developing an electronic platform for unregistered securities.

In the first half of 2007, global equity and debt capital raised in conjunction with a 144A tranche was almost $1 trillion, a 43 percent increase over the first half of 2006, reports Nasdaq. It will be interesting to see if these new electronic private placement systems become an alternative to raising capital via IPOs and whether institutional investors flock to these platforms.The Nasdaq Stock Market received the green light from the Securities and Exchange Commission to launch a private electronic trading platform for unregistered debt and equity securities. The Portal Market will begin operating on Aug. 15. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio