Experienced broker dealer and pioneering secondary market ATS operator Rialto Markets says technology and regulation will enhance crowdfunding, transforming everyone’s access to financial markets.
“It’s a new frontier rapidly being explored by a growing army of retail investors – the men and women in the street – democratizing the investment world,” said Rialto Markets CEO Shari Noonan.
“It is also enabling private company issuers the chance to offer a highly regulated vehicle to realize early value for their shareholders, without the need for listing on a platform such as the New York Stock Exchange or Nasdaq or company sale.”
“We are launching the Rialto Markets Alternative Trading System (ATS) secondary market platform and note that even Nasdaq and Goldman Sachs have plans to follow our lead, testament to our vision and recognition that the revolution won’t be stopped.”
Shari Noonan – Rialto Markets CEO
Crowdfunding was enabled in the US by the JOBS Act 2012, taking off since 2016 through growing appreciation of investment flexibility with the new Regulation A+ and Regulation CF securities status, allowing private companies to raise up to $75m or up to $5m respectively from anyone – everyday citizens, through high net worth accredited investors, and right up to large financial institutions.
The global crowdfunding market is expected to grow by $196.36 billion during 2021-2025, at a Compound Annual Growth Rate (CAGR) of over 15% (source: Technavio).
Regulation CF investment in the US for 2020 smashed all records – monthly, quarterly, and annually – and was up 105% against 2019, with over 358,000 Regulation CF retail investors during 2020 alone (source: Crowdwise).
And Reg A+ is also gaining good traction: extensive research by Rialto Markets using SEC data showed that a 168-strong sample of Reg A+ issuers enjoyed a 90% completion rate, when raising between $5 million and $25 million in capital.
Shari Noonan added: “Smaller retail investors already have safe and regulated access to some of the best and most innovative private companies through crowdfunding. We are opening this up further through our secondary market ATS trading platform.”
“They can now invest in the next Tesla, Amazon or Coinbase and trade those shares on a secondary market much earlier, long before they list on a major exchange like Nasdaq.”
“Their investment stake can be any size; it might be cash they have saved for a rainy day or a small inheritance they hope to grow. With shrewd investment, they might then later pay off a student loan or make a down payment on a home.”
“And there is a whole new investment arena growing up around 401(k) and IRA plans, where trillions currently tied up may be released into crowdfunding and even emerging sectors such as fractionalised art investment.”
Noonan also highlighted the reassurance offered by a secondary market ATS run by a broker dealer such as Rialto Markets, with decades of SEC regulatory and compliance experience across its senior team.
This delivers various options – buy more, hold, realize – for anyone investing in Regulation A+ and Regulation CF private placement securities.
“Investors in private securities also have a government regulator in the form of the SEC looking out for them,” said Noonan. “This is a full-blown regulated trading marketplace for private securities to match any buyers to the sellers and any sellers to the buyers.”
“Trading shares used to be restricted to certain companies that could afford to publicly list on a platform such as the New York Stock Exchange or Nasdaq, but a regulated secondary market using our ATS potentially opens the door to a marketplace and price discovery for many, many, more private companies and potential investors. There are 27 million companies in the US but fewer than one per cent are publicly traded at present (source: Forbes).”
Rialto Markets’ COO Joel Steinmetz highlighted some corporate benefits too: “Rialto Markets’ secondary trading ATS will allow exclusive access to the latest and greatest private companies.”
“We also found, while planning our secondary market ATS that there was a lack of awareness in corporate America about secondary markets and even some hesitancy, but we have now successfully advised and managed many companies and are talking to many more wanting to access this brave new world.”
For more information on Rialto Markets or interviews with company principals, please contact: steve.philp@
Rialto Markets is a FINRA Registered Broker Dealer (Rialto Primary) operating an SEC Recognized Alternative Trading System (Rialto Secondary) for private securities including those issued as a Digital Asset Security. Rialto Primary supports companies issuing equity and debt securities through Reg A+, Reg CF, and Reg D exemptions. Rialto Markets is registered in all 50 states including those requiring a broker dealer to issue Reg A+ securities. To find out more, please visit https://rialtomarkets.
Note to editors: short form biogs of Rialto Markets senior partners
Shari Noonan (CEO) has extensive experience in building and scaling operations and product development with Deutsche Bank, Goldman Sachs, and Instinet and was instrumental in the electronification of the equities market. Shari was involved in deal flow analysis and governance activities in strategic acquisitions in her role as COO of Global Equity Trading and COO of Global Electronic Trading at Deutsche Bank and while in Trading Management at Goldman Sachs. Shari received a BS in Accounting from Marquette University and an MBA from Columbia University.
Joel Steinmetz (COO) has led developments in building trading platforms and algorithmic systems, as well as new businesses while at Citi, Citadel, Instinet and Liquidnet. He was also involved in numerous transactions in capital markets at Citi and Instinet, and has performed deal flow analysis, structuring, and strategic integration. His experience spans the universe of business strategy, data analysis, and technology.
Lee Saba (Head of Market Structure) was previously MD and Principal at Wellington Management, heading multi-asset electronic trading and connectivity infrastructure. Lee led and contributed to industry standards on many concepts including FIX post-trade for equities, futures and FX, execution venue normalization, risk mitigation symbology and electronic trading risk controls. He headed the IT FinTech Working Group and is an advocate of the investor hub for blockchain and digital assets research. Lee also co-chairs the global FIX Trading Community (https://www.fixtrading.org) and is a steering committee member for Northeastern University’s D’Amore-McKim School of Business FinTech Initiative.