The Nasdaq Stock Market ( NDAQ) is hoping that its alliance with several big Wall Street firms to expand its trading platform for unregistered securities will entice international companies to list on the exchange. Nasdaq announced Monday that it is expanding its Portal platform, originally launched in August, to include technology from 12 banks and brokerages, including Goldman Sachs ( GS), to create "an industry standard facility" that will serve the market for 144a equity securities. The exchange has touted its platform as a way to enhance transparency and liquidity in the private market -- something that was virtually nonexistent when such transactions were completed by phone. Private placements have become much more common as firms such as hedge funds and other generally tight-lipped companies are looking for access to capital but do not want to undergo the rigorous compliance necessary for public companies under Securities and Exchange Commission rules. Nasdaq CEO Bob Greifeld, in an interview with TheStreet.com, says the exchange's expansion in the unregistered securities market is a "strong component" of its overall strategic vision to gain more listings -- particularly from foreign companies. "Many international companies want to list in the U.S. to raise capital in the U.S., but they find the regulatory burden is somewhat tough for them to handle," Greifeld says. "
Portal would give us relationships with a number of different corporate organizations, which will put us in a position to market our product and services. We believe it's a perfect feeder system for our main market listings."
Named the Portal Alliance, the move is an expansion of Nasdaq's recent upgrade to Portal where it created a centralized electronic platform to display and allow qualified investors to trade private issues, the exchange says. With Wall Street firms on board, Portal Alliance will also allow for shareholder tracking and settlement of unregistered securities to qualified buyers. Portal currently has 700 equity securities and 100 qualified subscribers. Of those securities, about half were from foreign issuers, it says. So far this year, Nasdaq had 23 foreign IPOs list on the exchange. Wall Street firms that have been establishing beachhead platforms in the unregistered securities arena include Goldman Sachs, under its own platform GsTRUE, as well as a consortium of banks under the Open Platform for Unregistered Securities, or OPUS-5. In addition to Goldman, other firms involved in the Portal effort include Bank of America ( BAC), Citigroup ( C), Bear Stearns ( BSC), Credit Suisse ( CS), Deutsche Bank ( DB), JPMorgan Chase ( JPM), Lehman Bros. ( LEH), Merrill Lynch ( MER), Morgan Stanley ( MS), Wachovia ( WB) and UBS ( UBS). Under Rule 144a, issuers of the securities do not have to register as a public company, so long as they have fewer than 500 qualified institutional buyers, or so-called QIBs, to buy and sell the securities. Qualified investors generally have at least $100 million of discretionary assets and are typically pension funds, mutual funds, hedge funds and other institutions.
Nasdaq's focus on the private securities world comes at a time when the exchange is working hard to boost its global positioning, particularly in light of the NYSE Euronext ( NYX) merger this past spring. Nasdaq failed to acquire the London Stock Exchange in February and was left holding onto a nearly 30% stake in the London bourse. Since then, it agreed to purchase Nordic exchange operator OMX in May. But this summer, the Dubai government offered to buy the OMX for $3.9 billion -- about 10% above what the Nasdaq and OMX agreed to this past spring. Nasdaq and Borse Dubai ended up reaching a deal in September that will give Nasdaq control of the OMX stock exchange while giving the Dubai stock exchange a 20% stake in Nasdaq. Under the deal, Nasdaq sold its remaining 28% stake in the London Stock Exchange to Borse Dubai as well. On Monday, regulators in Sweden approved of Borse Dubai's proposal to purchase the OMX, reports say. Nasdaq had previously been approved as owner of the OMX. The deal is expected to be completed in the first quarter. Nasdaq has also been making inroads in the options marketplace. Just last month it agreed to acquire the Boston Stock Exchange for around $61 million. It also agreed last week to purchase the Philadelphia Stock Exchange, the third-largest options exchange in the U.S., for $652 million. Shares of Nasdaq were recently falling $1.47, or 3.6%, to $39.77.