DirectMarkets – 24/7 Company Share Sales

Dennis McCarthy |

The big capital market news today is Rodman & Renshaw's announcement of the planned launch of "DirectMarkets", an automated means for companies to sell shares directly to investors.

Like any new capital market development, this announcement was met with some skepticism about its likely success in the marketplace. Will it operate like a vending machine, available 24/7?

How much control will companies retain on timing and pricing of new issues?



Will listing a company's shares effectively cap its price appreciation since any demand can be filled with primary shares? And what about the effect on liquidity?

One of my colleagues reminded me of another major capital market development, the dutch auction IPO, used with much fanfare on Google's IPO five or six years ago.  It's interesting to note that the recent major IPOs, including Facebook's planned IPO, use the traditional method, not the dutch auction IPO.

So, we will debate the future of DirectMarkets, but only time will tell.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
FB Facebook Inc. 127.04 -0.51 -0.40 19,097,223
USB.P.N US Bancorp Del DEPOSITARY SH S G 25.46 0.13 0.51 46,583
GOOG Alphabet Inc. 805.02 2.85 0.35 1,670,045

Comments

Emerging Growth

Reliq Health Technologies Inc.

Moseda Technologies Inc provides mobile and IT cloud computing to increase operational efficiency and security. It develops SmartFleet, a solution designed for commercial use, as well as SmartCare, a mHealth…

Private Markets

GoCoin

Blockchain currencies (e.g. Bitcoin) provide a new disruptive way to transfer value between parties over the internet as opposed to going through banks. GoCoin provides online merchants with a suite…

8tracks

Our mission is to be the best place for people who care about music to create and discover thoughtfully curated playlists. In essence, 8tracks is a platform for online mixtapes.