Tuesday, September 13, 2011

The Receivables Exchange and the NYSE

I've been following The Receivables Exchange in several prior posts, and now the NYSE is interested too: today's WSJ reports NYSE Euronext Bulks Up In Market for Receivables.

"NYSE Euronext plans to boost its role in helping companies secure short-term funding, hiring a longtime GE Capital executive as part of an initiative that includes buying a stake in an electronic market for corporate receivables.

"The parent of the Big Board aims to use its investment in the New Orleans-based Receivables Exchange as another venue for public companies to borrow money, complementing the long-term funding provided via stock-market listings at a time when businesses face financing difficulties.

"NYSE has taken a minority stake in the four-year-old venture and hired Paul DeDomenico, previously chief executive of GE Capital's working-capital-solutions group, to lead the exchange group's corporate-receivables programs.

"The moves, which come amid a fierce political debate over bank lending to small-and-midsize businesses, could provide an advantage to the NYSE in its battle with competitors over share listings, by allowing the Big Board operator to offer a broader suite of services to companies that choose to list with it. And the moves provide an entry point to a market in receivables estimated by the companies at $17 trillion in size domestically.
"The Receivables Exchange formed in 2007 as a platform for companies to auction their accounts receivable to buyers like hedge funds and commercial banks. The eBay-like system lets sellers of receivables generate short-term cash quickly, while buyers can book a profit when debts are paid back.
"Upheaval in the corporate lending market has provided an opening for the company, where trading volumes of accounts receivable in its U.S. market for small-and-midsize businesses leapt nearly six-fold from 2009 to 2010.

"This year the value of receivables bought and sold on the platform is on pace to top $1 billion in value, according to Nic Perkin, the Receivables Exchange's president and co-founder.

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