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While Rule 144 itself provides an exemption from the registration requirements of the Securities Act of 1933, allowing for the public resale of restricted and control securities under certain conditions, it doesn’t designate specific “regulated markets” in the same way that stock exchanges facilitate the trading of registered securities.
However, the existence of Rule 144 has led to the development of mechanisms and practices that facilitate the secondary trading of these securities within its framework:
Here’s how regulated entities and markets play a role in the secondary trading of Rule 144 securities:
1. Broker-Dealers:
* Broker-dealers are essential intermediaries in Rule 144 transactions. They must ensure that the sellers meet the conditions of Rule 144 (e.g., holding periods, volume limitations, manner of sale) before executing a trade.
* Reputable broker-dealers have compliance procedures in place to handle Rule 144 sales and ensure adherence to the regulations.
* Many major brokerage firms (like Charles Schwab, Merrill Lynch, UBS) have specific processes and forms for handling Rule 144 sales.
2. Alternative Trading Systems (ATSs):
* While not exclusively for Rule 144 securities, some ATSs may facilitate the trading of these securities, particularly among Qualified Institutional Buyers (QIBs) under Rule 144A (a related rule for reselling private securities to QIBs).
* These platforms provide a more organized and transparent way to find buyers and sellers for privately placed securities compared to purely over-the-counter (OTC) transactions.
3. The PORTAL Market (While Historically Significant, Less Active Now):
* The NASD (now FINRA) previously created the PORTAL (Private Offering, Resale and Trading through Automated Linkages) Market specifically for Rule 144A securities.
* While it didn’t develop into a highly active trading facility as initially planned, its purpose was to facilitate secondary trading among QIBs.
* The PORTAL designation was historically important for clearing and settlement through the Depository Trust & Clearing Corporation (DTCC).
4. Transfer Agents:
* Transfer agents play a crucial role by removing the restrictive legends from the physical or electronic certificates of Rule 144 securities once the holding periods and other conditions are met. This step is necessary for the securities to be freely transferable.
In summary, while there isn’t a specific list of “regulated markets” solely for Rule 144 securities, the secondary trading of these securities is facilitated by regulated entities like broker-dealers and, to a lesser extent now, ATSs. These entities operate within the regulatory framework of Rule 144 to ensure compliance during the resale process.
It’s important to note that the liquidity of Rule 144 securities can still be limited compared to publicly traded securities, and transactions often occur through negotiation rather than on a centralized exchange.

Video courtesy of KDPW

Video courtesy of KDPW