North Capital has received approval from the SEC and FINRA to launch the PPEX platform for trading regulated digital assets and token shares.
According to North Capital CEO Jim Dowd, in February, broker-dealer North Capital Private Securities received approval for permanent membership in the financial services regulatory Service (FINRA), and in March, the us securities and exchange Commission (SEC) allowed the launch of the alternative trading system (ATS) Public Private Execution Network (PPEX).
PPEX supports secondary transactions for all types of securities subject to regulatory exceptions, including digital assets on the blockchain. These private equity products are not subject to the same SEC registration requirements as publicly traded products.
As the CEO of North Capital noted, private capital markets tend to be less liquid than public ones, and the lack of transparency makes it difficult for potential investors to understand what they are investing in. Dowd stated that PPEX will try to solve these problems.
The company plans to introduce rather strict procedures for the verification and disclosure that is comparable to the process of public listing. PPEX will also eliminate the technological deficit that is growing in the private capital markets, where outdated systems that trade securities operate. Dowd noted that their shortcomings became particularly apparent during the coronavirus pandemic.
“With the help of blockchain, you can improve the work with documents, conduct meetings, and perform all the things that we implement with private securities,” said the CEO of North Capital.
The company previously released a TransurAPI tool that allows broker-dealers to make online offers of private digital assets and other exempt securities that PPEX can now work with. Dowd said that TransactAPI was used in 1,000 transactions totaling $1.9 billion.
Although digital assets are only part of TransactAPI and PPEX’s broader private equity trading capabilities, Dowd said they represent the most revolutionary element of the platform, at least from a technological point of view.
“Digital assets on the blockchain can really offer a way to automate and improve the efficiency of certain solutions in private capital markets, and this is what inspired us in the technology three years ago,” he said.
Tools for production and trade tokens-shares are more likely to receive the approval of regulators. Recall that in March, it became known about the SEC’s plans to simplify the placement of tokens-shares for cryptocurrency startups. In addition, Securitize recently launched a service for trading tokens-shares on Ethereum with KYC and AML.