We've been following the recent rise of private electronic stock exchanges
established by the major investment banks for the purpose of offering companies a place to sell stock without being subject to SEC regulations. While there seems to be interest in this model, a potential complication would arise if the various exchanges were incompatible. It would hamper liquidity if a company going "public "on Goldman's exchange, for example, was only open to investors participating on that exchange. According to Dealbook, listing firms are prodding the banks to open up their exchanges
to promote liquidity. If this does happen, there's a much better chance of these markets having a significant impact. One other problem that won't be solved easily arises from an SEC rule which states that any company with more than 499 public shareholders is necessarily a public company and thus compelled to abide by the full spate of regulations. If participation is limited to a handful of large investing institutions, this might be okay, but the rule will prevent this system from getting too popular.