CROWDFUNDING platform FundedHere clarified on Thursday that its newly-launched platform FundedX is not a "private stock exchange" as it initially claimed.
FundedX, which was unveiled on Tuesday, had been described by FundedHere as a "new private stock exchange to facilitate the trading of shares of high-growth startups and privately held companies in South-east Asia".
In a statement issued to the press on Thursday, FundedHere said: "The Monetary Authority of Singapore (MAS) has brought to our attention that the articles published by the press, containing the words 'private stock exchange' and 'bourse', may cause the markets to have a misconception that FundedX is a market operator and therefore has a licence as either an approved exchange, a Registered Market Operator (RMO) or an Exempt Market Operator (EMO).
"FundedHere wishes to clarify that the platform is merely one where buyers and sellers can register their interests to buy or sell a particular company stock at the pre-determined price set by FundedX."
FundedHere noted that buyers and sellers will not be able to negotiate on the share price of the company. "This means that there is not a process of price discovery and formation on the FundedX platform."
In its clarification statement, FundedHere cited an article by The Business Times ('New bourse debuts to trade shares in high-growth startups') which quoted Johnson Chen, chief of investment syndication platform CapBridge, as saying that on "secondary broker platforms” like FundedX, the securities sold will likely retain “existing complex shareholding rights and obligations”.
Incoming investors who inherit these rights and obligations will be left with an illiquid asset, which they will have to hold and wait for an exit, Mr Chen had told BT. “Hence, each transaction is ad hoc and no continuous trading takes place. This makes FundedX not quite a private exchange, but more a matching platform.”
CapBridge, together with the Singapore Exchange, is behind 1exchange, a similar platform to FundedX that facilitates the trading of private securities.
To that, FundedX said in its statement: "We believe that this view that we are a 'secondary broker platform' or a 'matching platform' is a closer definition of how FundedX will operate from the outset."
FundedX added: "As with all startups, we appreciate the opportunity to refine our operating model further to the launch of our platform demo day, which we have also used as an avenue to gather further industry feedback before we go live as planned in a few months’ time."
BT understands that FundedHere has not applied for a RMO or EMO licence, but has a capital markets services (CMS) licence in Singapore for the running of its equity and debt crowdfunding platform, which it said would extend to its running of FundedX.
BT also understands that no high-growth startups or privately held companies have "come on board" the FundedX platform as at Tuesday - even as spokesmen from Grab, 99.co and Love Bonito were quoted in FundedX's press statement as lending support to the platform.