Wall Street firms to share Nasdaq 144A securities platform

Wall Street firms to share Nasdaq 144A securities platform

A consortium of Wall Street banks have opted to ditch their competing electronic trading system for unregistered securities in order to cooperate on a single platform operated by Nasdaq.

In August Wall Street firms Citi, Lehman Brothers, Merrill Lynch, Morgan Stanley and The Bank of New York Mellon said they were establishing the Open Platform for Unregistered Securities (Opus-5) to enable institutional investors to trade stocks in companies that are not yet public. These are known as 144A securities after the SEC rule that deals with private placements of stock.

Bank of America, Credit Suisse and UBS joined the Opus-5 project a month later.

The system was being established to provide an alternative to so-called private stock trading platforms operated by Goldman Sachs and JPMorgan Chase.

But a statement released today states that the banks involved in Opus-5 have signed up to the Portal Alliance and have agreed to participate in a shared facility, with the exception of Bank of New York Mellon.

Goldman Sachs and JPMorgan have also signed up to the Portal Alliance, along with Wachovia Securities and Bear Stearns - which launched its own electronic trading platform for unregistered securities in the US, called Best Markets, in August.

According to a Wall Street Journal (WSJ) report this shared platform will be based on Nasdaq's Portal application and will incorporate technology developed for Opus-5 and other 144A platforms.

In a statement Nasdaq CEO, Bob Greifeld, says the industry-standard facility will "enhance capital formation and liquidity in 144A equity securities".

"Investors and issuers will benefit from a unified facility that includes trading, shareholder tracking, clearance and settlement," he adds.

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