The frictionless movement of assets is becoming a common feature of markets around the developed world, yet Australia remains a step behind. The ASX is in no mood to rush the move to T+1, however, after its calamitous attempt to implement distributed ledger technology.
It’s a dire situation for consumers but a massive tailwind for financial advisers. More people and more capital in the superannuation coffers than ever, with a stubbornly small number of advisers to service them.
FinClear set to launch private market trading platform
Magellan’s investment in fast growing fintech FinClear is becoming more prescient by the day, with the company this week announcing they will shortly be rolling out a share registry dedicated to private companies.
In 2021, the group took over third party clearing house Pershing, which took their technology-driven platform to adminstering some $130 billion in accounts managed by financial advisers, fund managers and stockbrokers. Before this year, they were well known as being among the leaders in this infrastructure and data flow.
But huge demand for private market investments, including venture capital and private equity, from a growing cohort of investors ranging from pension funds to family offices has exposed a significant opportunity. Not only do many of these investors want to be able to trade their unlisted investments at some point in the future, they want streamlined administration and paperwork.
This is the challenge put to Dean Jagger, who will run the unlisted share registry platform, called FCX, for FinClear. Jagger has worked to digitise both Automic and Link Market Services in recent years, so is a natural fit for the position. Expanding on the new role, Jagger said “Having managed share registries in every capacity over my career I see FCX as a step change in the way companies issue, manage and raise capital in this country,”
FinClear CEO David Ferrall pointed out the biggest trend in markets today, being that “many companies these days are preferring to stay unlisted and not be subject to the scrutiny and high regulatory hurdles that are imposed on you,” he said.
“What we’re doing is bringing a regulatory overview and structure to unlisted over time as they come on to FCX.” The new platform is being viewed as a ‘junior’ bourse to the ASX rather than a competitor, comparing itself to Nasdaq’s Private Markets platform which offers somewhat of a stepping stone to public markets.
After holding off on a formal IPO for many years, many are suggesting FinClear may even become its own customer, opening up access to trading on its own shares in the coming year. Fees will be charged in similar ways to other platforms and registries, with the capital raising tool one of the first improvements to come.
Similar to the ASX, the settlement process, which will be same day for unlisted shareholdings will be delivered via distributed ledger or blockchain technology. This represents a significant evolution of the capital raising and private market process in Australia.
