Bear Stearns latest to launch private exchange

Bear Stearns has created a private trading platform, which will bring the total number of such private US exchanges to four.

Investment banking firm Bear Stearns yesterday launched a private trading platform dubbed Best Markets.

It makes Bear Stearns the sixth such player in an increasingly trendy space: today, US exchange NASDAQ launched a new version of its PORTAL system; September will see the debut of OPUS-5, organised by Citi, Lehman Brothers, Merrill Lynch and Morgan Stanley; and Goldman SachsGSTruE exchange has already listed Oaktree Capital Management, while Apollo Management reportedly prepares to follow suit.

Private placement markets can be attractive alternatives to public markets for private equity firms that want to raise permanent capital through an equity offering, but prefer to avoid the disclosure and reporting demands of the public markets.

The markets are accessible only to qualified institutional buyers as defined by Rule 144A of the US Securities Act of 1933 – generally institutional investors with at least $100 million in assets or brokers with at least $10 million in assets.

Best Markets will not only serve as a market for 144A equity offerings, but will also give potential investors access to Bear Stearns’ historical secondary market trading data and indicative bid/ask pricing information, according to a statement.

The PORTAL market is an update of NASDAQ’s 17-year-old PORTAL system, through which NASDAQ reviewed and designated 144A securities for the Depository Trust Company at the request of the Securities and Exchange Commission. The new version creates an online marketplace, with the goal of increasing the 144A market’s transparency and efficiency, said NASDAQ spokesman Wayne Lee. NASDAQ said in a statement that the new system is “the first and only centralized electronic system for displaying and accessing trading interest in 144A issues”.

Archer Daniels Midland, Adidas, the Bank of China and Samsung are among the companies that have raised capital on the PORTAL market in the last two years. The new market has over 600 securities listed.