Have questions about StartEngine Secondary? Get your questions answered here.
StartEngine Secondary is our investor trading platform. StartEngine Secondary is an Alternative Trading System (ATS) registered with the SEC and operated by StartEngine Primary, LLC (our wholly-owned broker-dealer subsidiary).
An ATS is an electronic trading system that matches orders for buyers and sellers of securities. It allows investors to trade shares purchased through Regulation A+, Regulation Crowdfunding or Regulation D for companies quoted on Secondary.
In the beginning, StartEngine Secondary will only be available to companies that have previously raised funding on StartEngine. Companies have to sign a quotation agreement with StartEngine Primary LLC to allow their investors to trade on StartEngine Secondary. Not every company that raises funding on StartEngine will trade on Secondary.
In the near future, it is possible that companies that have raised capital via Regulation Crowdfunding and Regulation A+ on other equity crowdfunding platforms trade on Secondary. We may even introduce other assets to Secondary besides shares in companies.
U.S. residents over 18 years old can open an Investment Account. A U.S. bank account, a U.S. address, and a U.S. phone number are required to access StartEngine Secondary.
Secondary allows investors to trade with each other in a peer-to-peer marketplace. Sellers can post offers to sell a specific number of shares by setting a minimum price. Buyers can post offers to buy a specific number of shares by setting maximum price. If a match is made, then the trade is executed. See below for more details.
For Companies: The first year of being listed on Secondary will be free. Subsequent years there will be a listing cost for the platform. Additionally, companies must be current with their fees for StartEngine Secure.
For Investors: Opening an account to trade on Secondary is free! Buying shares on Secondary is free! Selling shares on Secondary will incur a 5% transaction fee.
Your Investment Account is what will allow you to hold funds and trade on StartEngine Secondary. We require all users to open an Investment Account (which is part of, but separate from, your StartEngine Account). All funds and assets in your Investment Account will be held by our banking partner Prime Trust LLC.
Timing can vary, but for most users, the process to open an account is under a few minutes, and funding your account takes one to two days.
We require personal information due to banking regulation.
We also require you to complete a suitability questionnaire to make sure your financial goals are in line with your investments.
For now, accounts will be limited to individual cash accounts. We hope to add Joint, Trust, and IRA accounts at a future date.
Once you open your Investment account, you can transfer funds from your bank. The name on the account you are transferring funds from should match the name on your Investment Account.
The current iteration of the accounts do not have this feature, but it is in the product roadmap for the near future.
If a red error shows in your Investment Account, please see if you can update your information within your account. If no error shows, or your account requires manual review, please reach out to firstname.lastname@example.org.
You can withdraw funds from your Investment Account at any time after a 10 day waiting period (from the time of your initial transfer). Your withdrawal cannot exceed the funds available and the funds pending use in your account. Under certain conditions, you may be required to provide additional information for security purposes. Please note when you initiate the withdrawal in your account, you will then get an email from our banking partner, Prime Trust, to confirm the withdrawal. If you don’t get this email, please check spam and then reach out to us at email@example.com.
Investors can place orders on StartEngine Secondary at any time. However, each stock trading on StartEngine Secondary will have individual market hours. Market hours are the times at which our matching engine will match orders with each other. The market hours for StartEngine (the first company to trade on StartEngine Secondary) will be 1pm-3pm ET / 10am-12pm PT Monday-Friday.
Users can place limit orders 24/7, and clearing (matching limit orders) will only occur during market hours. We plan to add market orders at a future date, as well as other order types.
Submitting a buy or a sell order is really straightforward! Head to your investment account at secondary.startengine.com, and select the “Trade” button in the top right corner. To the right of the page, you’ll see the trade widget. Select whether you want to buy or sell.
If you’re buying, enter the number of shares you’d like to purchase, and the maximum price you’re willing to pay.
If you’re selling, enter the number of shares you’d like to sell, and the minimum price you’re willing to accept for the shares.
To view the current buy/sell orders on the market, you can scroll down to the “Order Book” which will show you the current buy/sell orders. Enter a buy order above the lowest sell order, or a sell order below the lowest buy order to increase your chances of the trade being executed.
Trade orders will only be executed during market hours for the security you wish to trade. For example, the market hours for StartEngine shares are Monday-Friday, 1pm-3pm ET / 10am-12pm PT. Trade orders expire after each day’s market hours. If your order is not cleared in that window, then you will need to resubmit your trade order again. If you have trouble finding a buyer or seller for your order, try adjusting your asking price!
We were able to fill part of your order at your desired price, but there wasn’t enough demand to meet your entire offer before your order expired. Trade orders are filled based on a few criteria. In order of priority, those are the asking price, the time the order was submitted, and then finally the size of the order. Try submitting the rest of your order another day or adjusting your asking price to fill the rest of your original order.
You can cancel your order at any time before the order is matched by Secondary. After an order is matched, there is no possibility of a cancellation or a refund.
At this time, employees of StartEngine Crowdfunding and their households are ineligible to trade on StartEngine Secondary as are “insiders”, as defined by the SEC. An “insider” is an individual that is a director, senior officer, entity, or individual that owns more than 10% of the publicly available shares. Similarly, at this time, employees of other companies trading on StartEngine Secondary can’t trade on StartEngine.
Individuals must not be, nor have an immediate family member residing in the same household, employed by or associated with any of the following: a broker-dealer, stock exchange, the Financial Industry Regulatory Authority (FINRA) or other financial institution.
Each security may have slightly different state rules. Investors in most states will not have any issues trading on StartEngine Secondary. However, some states have restrictions. Here is an example of what those restrictions look like for a specific security:
StartEngine shares are eligible to trade in all 50 states and both territories, with the following exceptions: investors in the states of Alabama, Kentucky, Montana, Pennsylvania, & Virginia are limited to 3 sell transactions per year across all securities eligible to trade (but investors are able to buy as much as they want).
If you have questions about the restrictions of a specific security, reach out to us at firstname.lastname@example.org.
There are no market makers on StartEngine Secondary. A market maker is a participant or a company that actively buys and sells securities (in a National Market System) on both sides of the market in order to provide liquidity while profiting from the difference in the buy (“bid”) and sell (“ask”) spread.
Securities purchased in a Regulation Crowdfunding transaction cannot be resold for one year. This means that investors cannot sell their shares that they purchased in a Regulation Crowdfunding offering on Secondary for one full year from the time of the initial investment if a company has signed a quotation agreement and is in good standing.
Thus, StartEngine Secondary is an option for Regulation Crowdfunding Companies 1 year after their offering and initial issuance of those securities, however, they must meet StartEngine’s listing requirements, which center around # of investors, valuation, total assets, and a sufficient number of available shares.
Regulation A+ offerings do not have the same limitations as Regulation Crowdfunding offerings. StartEngine Secondary will initially be available for Regulation A+ offerings and issuances (shares issued in the offering) immediately. If a company agrees to be quoted on Secondary, they’ll be able to announce that their shares will become immediately tradable upon the close of their campaign.
We cannot provide investment or financial advice. We are only able to help with issues related to the platform. If you have questions about investments or returns, please contact an investment professional for advice.
When the development of StartEngine Secondary is completed, a company which intends to apply to list its securities on the marketplace will be subject to certain requirements which it may or may not be able to satisfy in a timely manner. Even if a company is qualified to list its securities on the market, there is no guarantee that a demand for these securities will exist. Even if a company does meet the requirements for listing its securities, we do not know the extent to which investor interest will lead to the development and maintenance of a liquid trading market. You should assume that you may not be able to liquidate your investment for some time or be able to pledge these shares as collateral.