On April 27, 2020, the Public-Private Execution Network (PPEX), an alternative trading system (ATS) for exempted digital assets and other private securities, gained regulatory clearance to launch in the US.
The trading system’s parent, North Capital, a market-leading provider of technology and brokerage services for exempt securities offerings, announced that it had completed the membership approval process with FINRA and achieved acceptance of Form ATS Initial Operations Report by the US Securities and Exchange Commission (SEC).
Jim Dowd, founder, and CEO of North Capital, was excited about the breakthrough as he stated:
“We’re very happy to have obtained the regulatory approvals necessary to commence operations of the PPEX ATS. The evolution of organized secondary markets will help bring liquidity and transparency to exempt securities investments.”
Dowd added that as the value of private securities has grown exponentially over recent years, issuers and investors have indicated that they are keen to see secondary markets develop.
Private Company Securities To Gain Liquidity And Transparency
Secondary markets do not exist for most private company securities. Still, the introduction of new trading venues such as the PPEX ATS holds the potential for enhanced liquidity and transparency for investors.
Interestingly, securities eligible for listing on the PPEX ATS include common equity, preferred equity, junior debt, senior debt, hybrid securities such as convertibles or structured products, or any other security that is exempt from registration and uncertificated in form.
The PPEX ATS will include detailed listing requirements for securities that are tokenized electronically represented through a transferable digital token on a centralized or decentralized, proprietary, or open-source ledger system.
Security Token Trading Services on the Rise
On April 23, 2020, tokenized security issuance platform “Securitize” launched a new service that will make it possible for users to trade tokenized securities peer-to-peer.
The service, called Instant Access, is being pitched as a means for exchanging digital securities in a way that is both compliant with regulators and poses no counterparty risk.
Securitize and North Capital aren’t the only startups that have recently looked to stake claim to the market for digital securities. Overstock’s tZero, for instance, recently announced a deal to turn $300 million worth of real-estate assets into digital tokens.