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After decades of transactions handled through phone calls and handwritten notes, initial public stock offerings (IPOs) are going digital.
Capital Markets Gateway (CGM), as the new online platform is called, will list which new deals are pricing when, the terms, and will allow firms to place orders through their existing relationships with their bankers.
Once IPOs are priced, fund managers can log on to see if they have been allotted any shares instead of waiting until the next morning to learn the news over the phone.
CGM also monitors IPO and follow-on stock sales, block trades, commissions owed, lists of underwriters for each new issue, and offers data and analytics on activities.
CGM’s creation was backed by several banks and investment funds, including Fidelity Investments, Franklin Templeton, Goldman Sachs, JP Morgan Chase, and Morgan Stanley, among others.
Although the old system is outmoded, whether bankers and traders will adopt the new platform remains to be seen, The Wall Street Journal noted.
This year has seen more than $110 billion in IPOs, more than $100 billion in SPAC deals, and $480 billion in stock trades, straining the old system to its human and technical limits. (See “IPOs Poised for Record Year,” 22 June 2021.)
An average of 20 IPOs a week have been priced this year, but the number has sometimes reached 40.
“It used to be that fund managers looked at IPOs and follow-ons,” CMG Michael Wilcox said to the WSJ.
“Now they’re looking at IPOs, follow-ons, private investment in public equity, SPACs, and crossover investments.
“The only way to truly be able to focus on investment decisions is to utilize technology,” he said.
TREND FORECAST: From smartphones to virtual reality, from digital sports to digital music, the digital world platform is the New Abnormal. Thus, digital will continue to expand, thus pushing out the antiquated world of phone calls and handwritten notes.