(Bloomberg) — CBOE Global Markets Inc. is partnering with a London-based tech firm to create a US trading platform for shares of closely held companies, a traditionally illiquid market that investors have increasingly sought to access.
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CBOE Private Markets registered with the Financial Industry Regulatory Authority as a broker-dealer, according to a filing in August — an essential step in setting up a so-called alternative trading system. The new venue will compete with a platform that Nasdaq Inc. spun out in 2021.
Investors have clamored for access to private ventures in recent years amid an extended dry spell in the market for initial public offerings. Many are also eager to invest in firms before they go public and soar in value.
Chicago-based CBOE — a derivatives and exchange network that operates worldwide — is responding to this demand by partnering with Globacap, a software company that will provide the platform’s technology for trading nonpublic shares.
In October, Globacap raised $21 million in venture capital funding from the CBOE along with investors including Moore Strategic Ventures and the Johannesburg Stock Exchange.
CBOE Private Markets is in its pilot stage, and the firm hasn’t released a startup date. CBOE declined to comment.
The FINRA registration marks “an important milestone for our company as we continue to expand and enhance our services in the financial industry,” a Globacap spokesperson said in a statement. “At this stage, we are not in a position to provide further details.”
CBOE Private Markets will operate as an alternative trading system, the term for electronic markets that function like an exchange but are subject to less regulation.
While some of those firms specialize in publicly traded stocks, others offer trading in companies that aren’t listed on a national exchange — such as private tech ventures.
Nasdaq Private Market gives closely held companies, brokers and investors the ability to access, manage and execute stock transactions. ClearList, which is majority-owned by market-maker GTS, also operates a trading system for secondary transactions in private securities.
Best known for inventing the options market in the 1970s, CBOE bought Bats Global Markets in 2017 to expand into trading stocks, exchange-traded funds and currencies. Upon completing the roughly $3 billion deal, the exchange began relying on Bats’ trading software, considered among the best in the industry at the time.
–With assistance from Katherine Doherty.
(Updates to note in sixth paragraph that CBOE declined to comment)
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