The private exchange wave. It was kicked off by Goldman Sachs through its flotation of Oaktree on GSTrUE. It was then joined by a few individual firms, and finally by a consortium of Wall Street behemoths called Opus-5. And now they are joining together to support a common platform, Nasdaq's Portal system. From today's Wall Street Journal:

A dozen Wall Street firms have decided to drop their competing trading systems for the unregistered securities known as 144a offerings and cooperate on a single platform operated by Nasdaq Stock Market Inc.

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In recent months, investment banks built competing off-exchange markets for these 144a transactions, or sales of securities from companies that seek to raise money without the scrutiny and regulatory burdens of going public. The sales are open only to large, qualified investors, such as mutual funds and hedge funds. The systems ranged from Goldman Sachs Group Inc.'s GS TrUE to Opus 5, from an alliance of eight big investment banks.

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By using a single system operated by Nasdaq, investors in these instruments will congregate at the same site, which should result in a more-liquid market. Although making the market more transparent will result in lower trading profits for investment banks, increased volume is expected to offset smaller trading spreads.

This move is both highly rational and entirely expected, as a series of fragmented exchanges would be highly inefficient and bound to consolidate over time. I made this observation around six months ago as the private exchange wave was just getting started.