Merrill Lynch , Lehman Brothers, Morgan Stanley and Citigroup are among a group of investment banks developing an electronic trading platform for unregistered securities to compete with existing systems such as the one created by Goldman Sachs, The Financial Times reports.
The move comes after Goldman signed up Oaktree Capital, the hedge fund group, and Apollo Management, the private equity firm, to sell unregistered shares through its GSTrUE private trading system. Apollo shares will also trade on a platform created by JPMorgan Chase.
The system being developed by the group of banks is intended to ensure that Goldman, JPMorgan or others do not come to dominate the electronic market for unregistered shares, people close to the matter said.
Such shares, known as 144A issues, are expected to become an increasingly popular way for alternative asset managers, such as hedge funds and private equity groups, to raise permanent capital without submitting to the public disclosure required when selling stock to the general public through an initial public offering.
The group of banks, including Merrill, Lehman, Morgan Stanley and Citi, is expected to launch the new platform in September.