Securities brokerage CGS-CIMB Singapore has switched on its connection to the private market exchange ADDX, giving all individual accredited investors on its platform access to ADDX’s offerings.

Through the partnership, CGS-CIMB was able to expand its shelf of private market products considerably, both parties said in a statement on Monday.

The brokerage can now distribute to its high-net-worth clients a full suite of deals on ADDX, including private equity, private credit, venture capital, hedge funds, real estate, fixed income products like bonds and commercial papers, as well as structured products.

Previously, CGS-CIMB was more focused on the public markets.

The partnership is part of a new service called ADDX Advantage that was rolled out earlier this year to serve wealth managers, which includes private banks, brokerages and external asset managers.

By end-2023, ADDX aims to onboard as many as 10 wealth managers.

Wealth managers using the service get an instant plug-in to ADDX, which has listed more than 50 deals to date. They avoid having to originate and negotiate deals with each issuer or fund manager separately, which can be a time-consuming process.

The use of blockchain and smart contracts by ADDX enables the fractionalization of investments down to as low as $5,000, from the $1 million typically required when going direct to issuers.

Blockchain technology also enables secondary trading, which is not available through traditional channels.

The lower barriers to entry and exit enable wealth managers to help end-clients manage risk by spreading capital across a more diverse variety of products and the added ability to rebalance portfolios regularly.

ADDX Advantage enables the performance of lifecycle management of securities on behalf of wealth managers, covering actions such as subscriptions, dividend payments, redemptions and secondary trading.

As a sub-custody partner, ADDX also allows wealth managers to retain custody of their clients’ assets.

At the launch of ADDX Advantage in April 2022, CGS-CIMB was among the first to sign up for the service. Since then, the two companies have completed steps essential for the service to go live, including onboarding end-investors.

Wealth managers can choose either to enable end-investors to manage their own holdings on ADDX or to have their relationship managers create and manage sub-accounts for them.

The platform is designed to adapt to wealth managers with different business models and regulatory requirements.

The relationship managers will then execute trades and perform fund transfers on behalf of clients, ensuring a more seamless experience for investors.

“As part of our mission to provide clients with an extensive suite of financial services, CGS-CIMB is always scouting for new offerings that can add value to our investors’ portfolios,” said CGS-CIMB Managing Director and Group Head, Strategic Innovation Elgin Ting.

“Through our partnership with ADDX, CGS-CIMB’s high-net-worth investors now have access to private markets and opportunities that were historically accessible only to institutional players,

“We are excited to see the technology and innovation ADDX is bringing to the financial markets and look forward to working with them,” he added.

ADDX Chief Executive Officer Oi-Yee Choo said returns from a classic 60/40 portfolio mix of public stocks and bonds are at an all-time low, and against this backdrop, the firm has observed growth in investor awareness and appetite for private market products over the past two years.

“Globally, private market assets under management are forecast to nearly double, from $9.3 trillion in 2021 to $18.3 trillion in 2027,

“Individual investor allocation to these alternative assets is likely to rise faster than allocation by institutional investors because technology is democratizing access for individuals,” he said.

According to her, the firm’s solution for wealth managers provides maximum flexibility, fulfilling the different needs wealth managers have, while empowering them to help their end-clients build diversified private market portfolios.

She noted that serving wealth managers will be a key pillar of growth for the firm in 2023, and the firm’s priority is to optimize the user experience for wealth managers, as well as to increase the breadth and depth of offerings on ADDX.

“CGS-CIMB is a leading brokerage and financial services provider in Asia, and for them to have given their high-net-worth clients access to ADDX represents a strong endorsement. Since the partnership went live, CGS-CIMB clients have contributed as much as 30 percent of investment volume for new fixed income issuances,

“In this economic environment, wealth managers that can offer their clients access to previously out-of-reach investments will have a competitive advantage over their peers,” she added.

ADDX fractionalizes venture debt fund by Innoven Capital