DirectMarkets Update

Dennis McCarthy – (213) 222-8260 – dennis@monarchbayassociates.com

I had a chance to speak with Kevin Lupowitz, head of the Direct Markets unit of Rodman & Renshaw about  the planned launch of the service.

DirectMarkets is an online system to permit public companies to sell shares to investors in a manner that bypasses much of the current Wall Street process.

Regarding the launch, Kevin indicated that investors were currently signing up to become bidders.  Presumably, many of Rodman’s current deal investors would form the initial investor pool.

We might see the first deal processed through the DirectMarkets platform within the next couple weeks.

I asked Kevin a question that has been nagging me, don’t many small and microcap companies need the assistance of bankers and salesmen to get offerings done.

Bankers to advise the company on market conditions and prepare marketing materials.  Salesmen to alert investors to the deal.  Together, the two intermediate the deal terms if needed.

Kevin admitted that the system might benefit from human intervention, at least initially.

He cited his experience at Liquidnet, an automated block trading system, however, to indicate that he’s seen investors get comfortable with automated systems.

I know we’ll all be watching this launch with great interest.  If DirectMarkets succeeds, it’s bound to have a major impact on the small cap market on Wall Street.  But more on that next time.