New Functionality Reduces Settlement Times, Increases Efficiencies, and Unlocks Liquidity Faster for Private Companies and Broker-Dealers
New York and San Francisco – April 26, 2023 – Nasdaq Private Market (NPM), a trusted, institutional marketplace for the efficient trading of private company stock, announced today that it has launched a new, open access service to efficiently settle private company transactions regardless of trading venue. NPM’s Transfer and Settlement Solution (T&S) is built for private companies, broker-dealers, and investors. T&S outsources the complex, distracting, and non-core administrative activities associated with the transfer and settlement of private company shares so clients can focus on their core business. Notably, NPM is offering T&S at no direct cost to private companies.
This offering provides an end-to-end share transfer workflow and dashboard for private companies, and the broker-dealers that serve them, to better manage and monitor private stock transactions. T&S’s technology coupled with NPM’s dedicated team of specialists manage secondary block settlement to meaningfully reduce the back-office burden on companies and brokers, regardless of trading venue, broker, or issuer.
“Demand for a trusted, efficient platform to trade private company stock has never been greater,” said Tom Callahan, Chief Executive Officer, Nasdaq Private Market. “Companies now wait a decade or more, on average, before going public. This creates an urgent need for liquidity in the $4 trillion market for private, pre-IPO company shares. Effective, reliable settlement is the foundation of liquidity in any asset class. T&S automates each step of the settlement process in private company trades, in some cases completing it inside of a week rather than the 90-120 days that has been typical in this market. This will allow the largest and most sophisticated market participants to trade with confidence in the private markets.”
There are several contributing factors to settlement latency in the private markets. Such transactions typically require approval by the issuer, steps for matching trades are often disorganized, and the general process lacks standardization. In parallel, the number of trade requests and demand in the market continues to grow. T&S addresses many of these systemic issues and streamlines the process by storing and populating stock transfer agreements (STAs), centralizing stock transfer notice (STNs) requests in an easy-to-use dashboard, as well as working with partners to update books and records once trades are complete.
Additional features and functionality available through NPM’s T&S include:
- Verify Holdings and Right of First Refusal (ROFR): Issuers can verify holdings prior to transfer execution, and download complete investor questionnaires, while brokers and issuers can review buyer and seller submissions
- Process Transfers When Matches Occur: Establish issuer and broker-specific processes to interact with participants such as custom STNs, buyer and seller onboarding, ROFR processes, STAs, and flow of funds
- Track Transfer Activity in Real Time: Monitor trade activity through various dashboards, enable users to track STA execution, and view submissions, participants, and transfers in progress, all in real time
- Utilize Paying Agent Capabilities: Collect and store payment instructions for buyer and seller entities, create custom flow of funds for broker commissions, issuer transfer fees, and seller proceeds, as well as provide trade confirmations and 1099B tax forms to sellers
- Support Process Standardization: As a broker-agnostic provider, solutions are available for private company transfers matched by any broker, standardizing processes, and creating seamless onboarding for buyers and sellers
- Provide History of Activity: Users have access to historical events to review previous transfers, download company reports, and use secondary trade data to compare transactions against those of peers on an anonymized basis
As an industry-leading provider in the secondary market, NPM has executed more than $43 billion in transactional value across over 625 company-sponsored liquidity programs for venture-backed private companies as well as 160,000 individual shareholders and investors.
For more information, visit https://www.nasdaqprivatemarket.com/solutions/private-company-transfer-and-settlement-solutions/
About Nasdaq Private Market
Nasdaq Private Market operates a proprietary secondary marketplace and acts as a premier liquidity provider for private company trading and transactions. Through innovative technology and an experienced capital markets team, NPM supports the needs of corporate, institutional, and retail clients. Founded in 2013, the company provides solutions for private companies throughout each stage of their pre-IPO lifecycle. NPM’s product specialists facilitate private company stock transactions including tender offers, auctions, block trades, company-directed windows of liquidity, and pre-direct listing continuous trading.
Nasdaq Private Market is an independent company with strategic investments from Nasdaq, Inc., Citi, Goldman Sachs, Morgan Stanley, and Allen & Company. Learn more at www.nasdaqprivatemarket.com.
Disclosures and Disclaimers
NPM is not: (a) a registered exchange under the Securities Exchange Act of 1934; (b) a registered investment adviser under the Investment Advisers Act of 1940; or (c) a financial or tax planner and does not offer legal or financial advice to any user of the NPM website or its services. Securities-related services are offered through NPM Securities, LLC, a registered broker-dealer and alternative trading system, and member FINRA/SIPC. Transactions in securities conducted through NPM Securities, LLC are not listed or traded on The Nasdaq Stock Market LLC, nor are the securities subject to the same listing or qualification standards applicable to securities listed or traded on The Nasdaq Stock Market LLC. Please read these additional important disclosures and disclaimers about NPM found here: https://www.nasdaqprivatemarket.com/disclosures-disclaimer/
NPM Media Contacts
Amanda Gold (New York) – amanda.gold@npm.com