Nasdaq
4 questions for Nasdaq's private share market
March 6, 2013: 1:25 PM ET
NASDAQ is putting its imprimatur on private shares trading, but several questions remain.
FORTUNE -- The NASDAQ OMX Group this morning announced that it has formed a joint venture with SharesPost, in order to "establish the preeminent marketplace for private growth companies."
Neither side is disclosing financial details, except that NASDAQ (NDAQ) will be majority shareholder. SharesPost founder and CEO Greg Brogger will serve as president, with the platform to launch sometime later in 2013 (pending regulatory approvals).
In short, this is a major vote of confidence for private trading markets -- and one that should help bring new participants to the table (both traders and issuers). It also is a much-needed reputational boost for SharesPost, which last May was charged by the SEC with engaging in securities transactions without first registering for the required broker-dealer license (the two sides later settled for $100,000).
Today's announcement, however, was more of a marketing exercise than an actual explanation of the new platform. Here are some questions that we don't yet know the answers to:
1. How will the joint venture make money? I'd assume that there will be commissions charged to traders, but will companies also be required to pay listing fees? Moreover, what types of services (data, advisory, etc.) might the platform offer that aren't currently offered by SharesPost? Does it plan to conduct primary capital raises and, if so, how much will it charge? Also would be interested to know if NASDAQ expects this platform to become a significant revenue generator, or if it's primarily a way for the exchange to ingratiate itself with future clients of its public market business.
2. How much automation? Right now, the market for private shares is largely a relationship business that involves a lot of human touch. Is NASDAQ seeking to change that and, if so, by how much? For example, could we end up seeing high-frequency trading of Pinterest shares?
3. How much info? NASDAQ is promising that the new market will be "transparent," but doesn't explain what that means. I'd assume that trading prices and volumes won't be available on Nasdaq.com, for example -- after all, this will be a closed private market -- but is NASDAQ saying that traders will get more underlying company information than currently do on private secondary markets?
4. Why SharesPost? NASDAQ seems to have chosen the private market's number two player in SharesPost, without exploring a similar deal with top dog SecondMarket. It says the decision was based on an affinity for SharesPost's technology platform, but there also are whispers from multiple folks that financial considerations also played a role. In short, SecondMarket would have driven a harder bargain.
Sign up for Dan's daily email newsletter on deals and deal-makers: GetTermSheet.com
-
Nasdaq Exec: JOBS Act not increasing IPOs
Big week for IPOs, but don't thank The JOBS Act.
FORTUNE -- It's now been more than five months since President Obama signed The JOBS Act, a piece of legislation that was partially designed to increase the number of initial public offerings. But Bob McCooey, head of listings for Nasdaq, says that it won't have a significant impact.
"We have thus far seen no measurable impact," McCooey explains. "And our conversations with sponsors MORE
Dan Primack - Sep 20, 2012 11:21 AM ET -
Facebook IPO blunder adds to Morgan Stanley woes
In the past few years, Morgan Stanley has leveraged its investment bank more and more toward technology IPOs. Now its reputation in that area is in trouble.
FORTUNE -- Add Facebook to Morgan Stanley's growing list of woes. The company's stock was falling even before last week's bungled IPO, and is now down 21% in the past month. Despite Morgan Stanley's (MS) recent disclosures showing it has lowered its exposure to MORE
Stephen Gandel, senior editor - May 23, 2012 6:00 AM ET -
Feds nab insider trader at Nasdaq
Apparently Bernie Madoff wasn't the only bad apple at Nasdaq.
In the latest shining moment for the U.S. stock exchanges, the Securities and Exchange Commission on Thursday charged Donald Johnson, a former Nasdaq managing director, with ripping off investors to the tune of $755,000 by insider trading ahead of the release of corporate press releases.
Johnson, you will be impressed to learn, was in charge through October 2009 of the Nasdaq's "market intelligence" MORE
Colin Barr - May 26, 2011 4:19 PM ET -
The future of the NYSE: A shareholder dilemma
The Nasdaq wants the NYSE, and the NYSE wants the Deutsche Bourse. This love triangle is going to get even more tangled before it sorts out.
By Cyrus Sanati, contributor
There seems to be little stopping the New York Stock Exchange in going ahead with its planned merger with Deutsche Bourse -- not even the promise of more money. The NYSE board's unequivocal rejection this week of an alternate ties up with MORE
Apr 13, 2011 5:00 AM ET -
The big deal about the NYSE's big deal: Derivatives
As regulators start to scrutinize the proposed combination of the NYSE and the Deutsche Börse, they'll need to take into account much more than just equity trading.
By Cyrus Sanati, contributor
The battle for the soul of Wall Street continues as the fate of the New York Stock Exchange remains up in the air. The NYSE's tentative $10 billion sale to Germany's Deutsche Börse will need to pass through a regulatory gauntlet MORE
Mar 2, 2011 10:13 AM ETPosted in: dark pools, derivatives, Deutsche Börse, M&A, mergers, Nasdaq, New York Stock Exchange, trading -
Why we still can't prevent flash crashes
Although regulators have put small changes in place in the U.S. markets since last May's flash crash, our hyper-wired interconnected markets still aren't equipped to prevent another one.
By David Leinweber, contributor
There are more than a few weird moments in the history of markets and computers. Two UCLA students used 125 stock board messages to send a dead penny stock up more than 106,600% one morning more than a MORE
Feb 22, 2011 11:47 AM ET -
By the numbers: The Big Board
What's an investment guide without a look at the floor of the New York Stock Exchange? As this 1962 photo suggests, not much has changed since then. Though still the largest exchange in the U.S., the now publicly traded company is grappling with the fallout from electronic competitors such as Nasdaq and Direct Edge. --Anne VanderMey
35% of the trading volume of all NYSE-listed stocks happens on the exchange today. In MORE Fortune Editors - Dec 22, 2010 5:00 AM ET
