Private shares trading
Thoughts on private shares trading? Think Forge, Nasdaq PM. More desks being built out at investment banks.
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Based on the most helpful WSO content, here are some insights on private shares trading:
Liquidity Challenges: Trading private shares often involves dealing with less liquidity compared to public markets. This can make it more challenging to execute trades quickly and at desired prices.
Market Making: Investment banks are increasingly building out desks to handle private shares trading. These desks often focus on market making, which involves providing liquidity by being ready to buy and sell shares.
Platforms: Platforms like Forge and Nasdaq Private Market (PM) are becoming more prominent. They facilitate the trading of private shares by connecting buyers and sellers, providing a marketplace for these transactions.
Role of Desk Analysts: On the sell-side, desk analysts typically cover specific sectors and provide recaps and ideas to sales/traders. This role is crucial in private shares trading as it involves identifying opportunities and understanding the fundamental drivers of trades.
Electronic Trading: The electronic disruption is also impacting private shares trading desks. The integration of electronic trading systems can enhance efficiency and execution speed, although the impact varies across different desks.
Risk Management: Managing risk is a significant aspect of private shares trading. Traders need to be adept at handling the unique risks associated with less liquid markets and the potential for higher volatility.
These points highlight the evolving landscape of private shares trading and the increasing focus on building specialized desks within investment banks to handle these transactions.
Sources: https://www.wallstreetoasis.com/forum/trading/converts-trading?customgpt=1, Best Desks for Sell-Side Trader --> Buy-Side Macro PM, Bulge Bracket Trading in Government Bonds, Different Desks on the trading floor, Q&A: Credit hedge fund analyst at MF, former BB trader
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