Wall St. Opens It's Arms to Electronic 144A Marketplaces

This week has seen a flurry of activity in the development of electronic platforms for trading equity offerings by private companies that fall under a href=" https://en.wikipedia.org/wiki/Rule_144A" target="_blank">Rule 144A of the U.S. Securities Act. The rule allows for the private resale of securities between institutional investors, which gives private companies a means for raising capital without listing publicly. Nasdaq

Nasdaq announced the availability of an extension to its Web-based PORTAL platform that allows for displaying and accessing liquidity in 144A issuances. Additionally, heavy-hitters Citi, Lehman Brothers, Merril Lynch, Morgan Stanley and The Bank of New York Mellon revealed their plans to create OPUS-5, a competing platform for 144A listings. And to round out the competition, Bear Stearns got in on the act this week, launching its 144A platform, Best Markets, in the U.S."The launch of NASDAQ's PORTAL trading platform is a milestone in the transformation of the capital raising process in the U.S.," said NASDAQ executive vice president and CMO John Jacobs, in a release. "The PORTAL platform will bring the same efficiency and transparency to the 144A market that NASDAQ brought to public equity trading in the U.S. 36 years ago." OPUS-5 (Open Platform for Unregistered Securities) will provide trade reservation, shareholder tracking and transfer management for privately offered equity securities transacted under Rule 144A of the Securities Act of 1933. The platform will also monitor the number of shareholders in these issues. OPUS-5 is expected to launch in September 2007, according to a joint-release from the system's proprietors. Additional securities firms are expected to participate in the market over time. The Bear Stearns platform, already active in European and Asian markets, makes a timely stateside entrance. The firm is touting features including historical secondary market trading data and indicative bid/ask pricing information from Bear Stearns and other broker-dealers selected by the securities' issuer.

NASDAQ's numbers point to a private placement market that has tripled since 2002, and exceeded $1 trillion in 2006 for the first time. Such striking growth quickly contextualizes the sudden flood of interest from firms looking to get their slice of the 144A pie.