NYSE Euronext mulls private-placement market

New York: NYSE Euronext is exploring the private-placement business but has no immediate plans to set up such a market by itself or, more likely, in partnership, an executive at the exchange said on Monday.

"It's something we're looking at actively but we haven't come to any firm conclusions on," Larry Leibowitz, executive vice president and chief operating officer, US Products, said in an interview.

If the exchange sets up a private-placement market, a venue where qualified institutional buyers can buy the unregistered stocks of companies that are yet to go public, it would likely be in partnership with "some of the biggest participants in that market," he said.

Fast-growing business

There is a fast-growing business in private placements of stock, rivalling the initial public offering as a way for US companies to raise capital by selling shares.

Leibowitz said NYSE is studying the business but remains unsure what the exchange's role might be other than providing a venue or the required technology.

"It remains to be seen if it's a viable market of any kind or just a bulletin board for posting the availability of these offerings," he said.

In 2006, 144A transactions, which refer to the US Securities and Exchange Commission rule relating to private placements, reached $162 billion - more than the $154 billion raised through IPOs, according to data from Nasdaq.

Nasdaq recently launched its 144A market to attract companies that want to raise capital without the regulatory and listing requirements attached to going public. Some banks have also launched their own private-placement markets, such as Goldman Sachs' GSTrUE.

Qualified institutional buyers with assets of at least $100 million are eligible to participate in private-placement markets.

Trading floor

Leibowitz said the exchange has no plans to shrink the trading floor further. Last week, the Big Board said it would shut down two of the four trading rooms on the floor by November 1.

"The floor is one of the big differentiators in the trading market," he said.

Instead, improving the exchange's hybrid model combining automated trading with human intervention is a priority, he said.

Leibowitz said the exchange is trying to make the rules governing floor trading more flexible and upgrade the technology to better compete with swifter electronic rivals like Nasdaq and BATS Trading.