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Wall Street Joins in 144A Frenzy

Five big banks join in a new entry in the crowded unregistered securities market.

Five Wall Street firms are getting together to create another way for investors to trade unregistered securities.


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Lehman Bros.



Merrill Lynch



Morgan Stanley

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Bank of New York Mellon

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have formed the Open Platform for Unregistered Securities, or OPUS-5. The new platform, set to officially launch next month, will provide "trade reservation, shareholder tracking and transfer management" for privately offered securities, the group says.

Private placements have become much more common as firms like hedge funds seek access to capital without disclosing all the data required by



OPUS-5 "will support and enable an open platform with multiple market makers and is designed to provide broad liquidity to the U.S. private placement market and facilitate greater access to capital for issuers in the 144A equities market," the five banks said in a statement Tuesday.

Goldman Sachs

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was the first big firm to make a play for unregistered securities, with this year's debut of its GsTRUE system.

Nasdaq Stock Market


has also been trying to line up players in the so-called rule 144A market.

Under Rule 144A, securities issuers need not register as a public company as long as they have fewer than 500 qualified institutional investors. Qualified investors generally have at least $100 million of discretionary assets and are typically pension funds, mutual funds, hedge funds and other institutions.

In May, Goldman Sachs launched its Goldman Sachs Tradable Unregistered Equity system, or GSTrUE. Oaktree Capital, a Los Angeles-based institutional investment management firm specializing in alternative assets, raised $880 million by selling a 15% stake on the exchange.

Nasdaq is set to launch on Wednesday its so-called Portal market, in which members and qualified institutional buyers can electronically trade unregistered securities.

Nasdaq estimates that the amount of equity and debt capital raised under Rule 144A has grown threefold since 2002 and exceeded $1 trillion in 2006 for the first time. In the first half of 2007, global equity and debt capital raised in conjunction with rule 144A was almost $1 trillion, a 43% increase over the first half of 2006, it says.