Nasdaq (
NDAQ) is teaming up with a consortium of giant banks, including SVB Financial Group (
SIVB), Citigroup (
C), Goldman Sachs (
GS) and Morgan Stanley (
MS), for a new project that might be the next big thing: The go-to platform for buying and selling stock in private companies. While there's competition in the space (think EquityZen, Carta, ClearList and Forge Global), no one venue has yet dominated the asset class.
Bigger picture: Nasdaq is banking on a dynamic it knows well - traders will drift to the platform with the best liquidity and greatest client book. It also wants to make sure the future trading system will stay within the confines of Wall Street, rather than Silicon Valley. Trading in pre-IPO shares has heated up in the last few years among accredited investors - people who meet certain wealth criteria (like a net worth of more than $1M or an annual income above $200,000) - and some are even looking to bring the capability to the retail crowd. Robinhood (
HOOD) recently jumped in the game by unveiling a new program
called IPO Access.
"The banks that we're working with will bring a massive amount of distribution," commented Nelson Griggs, an executive vice president at Nasdaq.
How will it work? Nasdaq will spin out Nasdaq Private Market into a separate, standalone company that will receive strategic investments from SVB, Citi, Goldman, and Morgan Stanley. Nasdaq had acquired the platform - then called SecondMarket Solutions - back in 2015 after feeling competition to its Private Market initiative. According to a press release, the new venture will create an "institutional-grade, centralized secondary trading venue for issuers, brokers, shareholders and prospective investors of private company stock." (
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