Wall Street giants launch second private trading platform

As Apollo Management reportedly prepares to raise capital via Goldman Sachs’ new private trading platform, five of the bank’s biggest competitors have launched a rival offering - one day before a NASDAQ version is due to begin operations.

Five of the largest investment banks on Wall Street have joined forces to launch a private trading platform, intended to rival a similar offering from Goldman Sachs that is reportedly being used by private equity firms to raise capital.

Citi, Lehman Brothers, Merrill Lynch and Morgan Stanley said today that they were establishing the Open Platform for Unregistered Securities, or OPUS-5, a trading platform for privately-owned stocks, which will have Bank of New York Mellon as an independent administrator.

OPUS-5 is designed to create extra liquidity for institutional buyers and sellers looking to trade equities issued under rule 144a – i.e. non-public shares. It will also provide issuers who are not looking to complete an initial public offering with a fast and efficient way to raise capital via a private placement.

The platform is designed to rival GSTrUE, the Goldman Sachs Tradable Unregistered Equity system, which was launched earlier this year. According to press reports, buyout firm Apollo Management plans to raise capital on GSTrUE rather than following in the footsteps of rivals The Blackstone Group and Kohlberg Kravis Roberts by selling shares on the New York Stock Exchange. Oaktree Capital Management has also completed a capital raising on the Goldman platform.

The announcement also comes one day before the re-launch of NASDAQ’s new and improved PORTAL market trading system. The automated web-based platform, which is an update of the US exchange’s 17-year old PORTAL system, was trumpeted as “the first centralized electronic system for displaying and accessing trading interest in 144A issues”. It was approved by the Securities and Exchange Commission earlier this month and is due to begin operating on August 15.

The private platforms will make it possible for private equity groups to monetise their management companies and realise additional capital from sophisticated institutional investors, without the additional disclosure and reporting demands of the public markets.

OPUS-5 is likely to launch in September.