GLOBAL Alternatives is setting up Europe’s first cross-border trading exchange for crowdfunded securities, and prepares to launch an Innovative Finance ISA (IFISA) right after the groundbreaking move.
The alternative investment marketplaces operator owns Property Crowd, a debt and equity property crowdfunding platform headquartered in London.
The new exchange, named Prop-X, will allow Property Crowd assets to be traded cross-border alongside other securities on the secondary market.
The initiative sets out to fill a gap in the market, as crowdfunding platforms have so far been “geographically myopic” and public exchanges have failed to build liquidity for alternative investment, the firm said.
“The incumbent exchanges have not been so good at building alternative asset class liquidity, and with the demise of bank liquidity in a number of areas, this may not change any time soon,” said Brendan Bradley, the newly appointed chairman of Global Alternatives.
“Therefore, there is a requirement to find alternative liquidity providers that can pick up the slack.”
He said that Prop-X is a “logical extension of Property Crowd, where users can source genuine secondary market liquidity” and compared the model to the prime broking infrastructure used in traditional asset classes to protect clients.
All securities originated by Property Crowd will be listed on Prop-X, alongside private debt and equity issuances that will be backed by property assets from the institutional sector.
Property Crowd currently offers investors returns ranging between 10 and 12 per cent, while its upcoming IFISA wrapper – which is planned for early April – will yield interests of between eight and 10 per cent, a spokesperson told Peer to Peer Finance News.
The crowdfunding specialist expects investors to flock to the new tax-free offering as it will magnify returns on funds that are currently sitting in cash and equity ISA accounts.
“We expect to finalise and launch our new property-backed ISA shortly, in time for the end-of-tax-year rush,” he said.
“Investors will also be able to transfer any funds they have accumulated in other ISA accounts over previous tax years into their property-backed ISAs, taking advantage of the significantly higher yields on offer and benefitting most from the IFISA’s tax-efficient framework.”
Although not directly authorised, the company said it will be able to offer the tax-free wrapper as it is an appointed representative of Gallium Fund Solutions, which has received ISA manager status by HMRC.
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