Rialto launches secondary market ATS as crowdfunding explodes

Rick Steves

In 2020, the broker-dealer was granted approval by FINRA to operate an ATS for digital securities.

Rialto Markets has announced the launch of its Alternative Trading System (ATS) secondary market platform after years of empoweing companies to raise money via crowdfunding and institutional investment.

Operating a fully compliant secondary market trading platform for buying and selling shares in private companies, the SEC-recognized ATS offers clarity and simplicity to a complex marketplace.

According to its own research, firms looking to raise between $5 million and $25 million have a 90% success rate using crowdfunding.

Shari Noonan, Chief Executive Officer at Rialto Markets, said: “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.

“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”, Noonan added.

Rialto Secondary, its ATS approved by the SEC, facilitates the trading of private securities including those issued as a Digital Asset Security.

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Rialto Primary is the FINRA-registered broker-dealer which 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.

The new Regulation A+ and Regulation CF securities status allows 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.

According to reasearch from Technavio, 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%. Regulation CF investment in the US doubled in 2020 YoY with over 358,000 retail investors, according to Crowdwise.

Reg A+ issuers enjoyed a 90% completion rate when raising between $5 million and $25 million in capital, according to Rialto Markets.

“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”, Noonan continued.

“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.”

The newly launched secondary market ATS run by the broker-dealer delivers various options – buy more, hold, realize – for anyone investing in Regulation A+ and Regulation CF private placement securities.

“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 percent are publicly traded at present (source: Forbes)”, the CEO added.

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