What is TISE and TISE Private Markets? TheCEO of the International Stock Exchange (TISE) and operator of TISE Private Markets, Cees Vermaas explains.

The International Stock Exchange (TISE) is an established operator of public markets, and we are best known as a leading European bond market but last year we diversified with the launch of a private markets offering, TISE Private Markets. We spent two years speaking to private companies and other interested parties to develop and refine our proposition in private markets. Private companies told us that they wanted a system that is simple and convenient but not like trading public company shares with brokers, which is expensive and does not offer control over who owns the shares.

That’s why we launched TISE Private Markets, which is the first platform of its kind for UK private companies. TISE Private Markets is a fully disintermediated platform providing unlisted companies with a dedicated marketplace through which they can directly access an integrated set of tailored electronic solutions, including trading, settlement and registry management.

Companies which join have full control of their dedicated market, from onboarding shareholders to scheduling auction events and managing registers. There is access to a bespoke auction model which concentrates liquidity, a tailored auction algorithm to protect pre-emption rights, seamless electronic settlement of cash and shares, and online tools for the convenient management of share transfers and shareholder records.

TISE Private Markets enables private companies and their shareholders to have the benefits of a more efficient mechanism for share trading without the cost, administrative burden and loss of control associated with being publicly listed. It gives private companies control over their shareholder register and facilitates the process of shareholders buying or selling their shares without additional charges, transaction fees or other commissions levied by brokers. This offering also assists these companies in their growth via a platform that not only allows for a better way of share trading but also increased efficiency in the management of the shareholder base and the wider administration of the business.

Can you describe your role and responsibilities at TISE?

I’ve been the chief executive of TISE, encompassing TISE Private Markets, since November 2020. I focus on strategy, business development and infrastructure, and am responsible for all aspects of leadership and management of the company.

I try to work with and create enhanced value for all of TISE’s stakeholders, including our staff, members, issuers and shareholders.

Can you describe your work background and experience prior to TISE?

I’ve got over 25 years’ experience in international financial market infrastructure, so it’s very much my area.

Before moving to Guernsey, I had senior executive positions at several international exchanges, including chief executive of CME Europe, chief executive of Euronext Amsterdam and head of European cash markets for NYSE Euronext.

Before that, I spent a decade working in IT and programme management roles at leading Netherlands-based companies, Philips and Delta Lloyd Group. 

How do you relax away from work?
I am most relaxed when I’m outside and spending time with those I love. I like to be outdoors and being active – running, cliff walking, even water sports – it’s the perfect way to switch off from work and really get yourself moving, away from office chairs! I’m also a qualified private pilot and nothing feels quite like being airborne – it’s also very useful to make sure I stay connected with my family and friends in the UK, France and back in my native Netherlands.

What is your competition?

There are other existing options for trading shares in private companies, such as Asset Match and JP Jenkins. The popularity of secondary market transactions is increasing year on year, with volumes rising from $3.2 million in 2017 to $20.4m in 2021, according to Nasdaq. Yet, the existing service providers charge fees on the amount of activity conducted through the platform and are reliant on public market infrastructure providers, such as brokers, who also take a cut from the transactions which they facilitate.

This year, the UK Government has also consulted on the introduction of the Private Intermittent Securities and Capital Exchange System (PISCES) as a mechanism for shares in private businesses to be traded in periodic auctions. Under the proposals, the FCA would grant licenses to the likes of the London Stock Exchange Group to operate a PISCES platform that would, in effect, allow a company to go public temporarily while providing access to a wider pool of investors before reverting to its private status.

There has been a somewhat cool reception to PISCES from industry associations who have concluded that uncertainty about demand and practical costs need to be resolved before the concept can be realised. We await the results of the consultation but for the moment, nothing has launched and from what we know, PISCES will bring with it many of the obligations of being a publicly listed company. This includes the overly onerous and costly disclosure and reporting requirements, as well as the involvement of brokers and other intermediaries who charge fees and commissions for their services. Private companies stay private to avoid this.

What’s clear is that private markets need a solution for liquidity to achieve the desired recycling of money into new investments. How about… a secondary market for private companies and investors to access liquidity events without the volatility of listing on the main markets? Somewhere early shareholders and venture capital and private equity funds can find exit opportunities? Where new institutional investors can gain access to companies they might not be able to otherwise? Where employees can access liquidity in their shares? Where investors can recycle their capital having the certainty of periodic liquidity events?

Why do you love the SME sector?

Because they are the lifeblood of the British economy. They provide the bulk of goods and services we all use, create most of the employment, and generate tax revenues and export overseas. However, their ability to access capital is still hindered by the cumbersome, almost Dickensian, processes that come with buying and selling shares in private companies. It’s unreliable, drawn out, expensive and uncertain. Typically, a private SME shareholder would need to initiate contact with the company, which is then tasked with identifying potential buyers or sellers of the shares. This alone can take weeks, or even months, adding complexity and hindrance to a transaction that could otherwise be swift and efficient. That’s why we launched TISE Private Markets.

What does the future hold?

I am seeing the public markets declining in relevance for all but the largest companies and at the same time, the growth and expansion of the private markets. Private companies have historically struggled to find an efficient mechanism for share trading and while there are some existing secondary market liquidity platforms, and others in development, these rely on traditional public market infrastructure providers, such as brokers and other intermediaries, who levy charges based on transactional activity.

We’ve introduced TISE Private Markets as a fully disintermediated proposition which provides private companies and other managers of private assets with their own stock exchange in a box. In this environment they can efficiently and effectively manage their share registers and host liquidity events for existing shareholders and to which they can invite potential new shareholders. In a private company economy, this is the future.