SECONDRE MARKETS LLC
EFFECTIVE October 16th, 2022
(a) SecondRE Markets LLC (the “Firm”) operates a single subscriber alternative trading system (the “ATS”) for the private placement of interests in real estate holdings held by special purpose vehicles (the “Securities”) in the secondary market. This Rulebook sets out the rules and regulations governing the Firm’s access, as subscriber, to and conduct of the operations of the ATS. All capitalized terms are defined in Chapter 4.
(b) The Firm may amend or repeal any Rule and/or adopt new Rules at any time and for any reason. Any such amendment or repeal of a Rule or adoption of a new Rule will, upon the effective date of such amendment, repeal or adoption, as applicable, and unless otherwise required by Applicable Law, all actions taken and any Transactions entered into after such effective date.
102 Subscriber Qualifications
The Firm must at all times when it operates the ATS be a broker-dealer registered with the SEC under Section 15(b) of the Exchange Act, pursuant to the rules and regulations promulgated thereunder, and a member of FINRA, and be in compliance with all FINRA Rules and regulations and Applicable Law.
103 The ATS
The Firm, as subscriber, may route orders of its customers (“Customers”) to the ATS by use of a web or mobile interface provided by the Firm (the “Platform”) exclusively to its Customers. The Firm may then route any Orders received from Customers to the ATS where the Orders will be matched. In order for any Orders the Firm receives from a Customer to be routed to the ATS, such Customer must:
(a) be (i) an “accredited investor,” as defined in Rule 501 of Regulation D under the Securities Act, or (ii) a “qualified institutional buyer” as defined in Rule 144A of the Securities Act, or (iii) otherwise permitted by the laws of the jurisdiction in which the Customer is organized, resident or domiciled, to participate in the private placement of Securities;
(b) be organized, resident or domiciled in the United States, or in another jurisdiction in which the Firm is authorized to provide services;
(c) be using or intending to use the Platform to buy and sell Securities for the Customer’s own account or the account of its employer, and not be a FINRA-registered broker-dealer or any other person or entity in the business of, or with the purpose of, intermediating investment or financial transactions in exchange for compensation;
(d) have a signed and effective Customer Agreement with the Firm; and
(e) be in compliance with the terms of the Customer Agreement and Applicable Law in all material respects.
The Firm will be the sole subscriber and will not permit any external access to the ATS. The Firm will control access to the Platform by issuing Credentials to Customers. The Firm must require that Customers keep these Credentials confidential and only use them for their intended purpose. The Firm may also issue Credentials to representatives of the Customer, provided however that the Firm retains the discretion to approve or disapprove such representatives in its sole discretion.
105 Active Securities
(a) The Firm will determine in its sole discretion which securities may be traded on the ATS at any given time (the “Active Securities”). Any Active Securities the Firm selects will be interests in real estate holdings held by special purpose vehicles. The Firm may add Active Securities to the ATS at any time.
(b) Such Active Securities may be traded pursuant to one or more applicable federal and/or state resale exemptions from registrations, such as Section 4(1)(a) or Section 4(a)(7) of the Securities Act, Rule 144 or Rule 144A under the Securities Act, or the “Section 4(a)(11/2) exemption” developed through case law and interpretations (together, the “Exemptions”).
(c) The Firm may remove an Active Security from the ATS at any time and for any reason determined by the Firm in its sole discretion, and in the event that there are any pending Orders on the Active Security, these Orders will continue to be active until such time as they, by their own terms, expire.
106 Routing Orders from the Platform to the ATS
The Firm may route Customer’s Orders from the Platform to the ATS provided that those Orders are created through the Platform and that all Orders include all pertinent details about the Active Securities, including: price, lot size, listing expiry date, existing rights of first refusal and issuer approval rights.
107 Intermediated Orders on the ATS
The Firm may from time-to-time post to the Platform and route to the ATS Orders, on behalf of a Person who is not a Customer, or on behalf of an intermediary or broker who is acting on behalf of a Person who is not a Customer (“Intermediated User”), but only once the Firm has received representations from the Intermediated User that the Intermediated User (i) owns or has the right to own or purchase for resale, or represents someone else who does, (ii) is permitted to rely upon the Exemptions, or one of them, to transact in the Active Securities, (iii) stands ready, upon the acceptance of an Order, to effectuate the transaction, and (iv) any other conditions which the Firm finds reasonably necessary to impose.
108 Minimum Order Sizes
There is currently a minimum order size of $25,000 for both the Platform and the ATS, which may be adjusted from time to time at the Firm’s sole discretion, effective upon ten (10) day’s prior written notice.
(a) Upon the matching of an Order, the Firm will contact the relevant parties and all acceptance and execution of the Transaction will occur off-platform.
(b) Once the Firm receives confirmation of the completion of the Transaction from the escrow agent, the Firm will send a 10b-10 notice to such Customers confirming the terms of the Transaction and will update the records of the ATS accordingly.
201 Business Conduct of Customers and Customer Representatives
In order to preserve the integrity of the ATS and all Orders routed from the Platform thereto, the Firm shall require that its Customers, with respect to each Order posted on the Platform which is then routed to the ATS:
(a) Observe high standards of fair dealing and just and equitable principles of trade;
(b) Not manipulate or attempt to manipulate the market;
(c) Not knowingly make, or cause to be made, Orders on the Platform, other than in good faith for the purpose of executing bona fide Transactions and to convey accurate and complete information regarding such Orders or the securities that are the subject thereof;
(d) Not make any fraudulent or misleading communications, or knowing misstatement of a material fact or engage in any fraudulent act or any scheme to defraud, deceive, trick or mislead; and
(e) Cooperate promptly and fully with the Firm in any investigation or inquiry by the Firm with respect to Customer’s or any Customer Representative’s use of the Platform, any Transaction matched through the ATS and effected thereafter.
202 Prohibited Conduct
In order to preserve the integrity of the ATS and all Orders routed from the Platform thereto, the Firm shall require that its Customers, in connection with their use of the Platform and with respect to each Order posted on the Platform, each Transaction matched through the ATS and effected thereafter, refrain from:
(a) Using the Platform or the Software for any purposes other than in connection with the purpose intended hereunder, and specifically to post Orders and initiate Transactions in Securities;
(b) Copying any portion of the Platform or the Software;
(c) Reselling or otherwise distribute the Customer’s Credentials;
(d) Reverse engineering, decompiling, disassembling or otherwise attempting to discern the source code, algorithms, software design or architecture of the Platform or the Software in whole or in part;
(e) Modifying, adapting, translating or reproducing the Software, merging any part of the Software with or into other software, or creating derivative works based upon the Software;
(f) Using the Platform or the Software in any manner or for any purpose that infringes, misappropriates, or otherwise violates any intellectual property right of any Person, or that violates Applicable Law;
(g) Taking or authorizing any action that could detrimentally interfere with the operation of the Platform; or
(h) Accessing or using the Platform or the Software for the purpose of benchmarking or competitive analysis of the Software; developing, using or providing a competing software product or service; or any other purpose that is to the Firm’s detriment or commercial disadvantage.
203 Extension or Waiver of Rules
The Firm may, in its sole discretion, waive or extend the time period for performing any act or acts designated by these Rules, but only to the extent that such waiver or extension is not inconsistent with Applicable Law.
301 Modifications to the ATS
The Firm has sole discretion and control over, and the right to modify at any time, the functionality, configuration, appearance and content of the ATS and the Platform, including without limitation: (i) the selection of Active Securities available on the ATS; (ii) the parameters and protocols by which Orders are placed or otherwise processed by the Platform and routed to the ATS; and (iii) the availability of the ATS and the Platform with respect to particular Transactions at any particular times or locations.
If the Firm has any indication that an Order may have been incorrectly routed to the ATS, then the Firm will review such Order. If the Firm determines, based on its review of the records, that an error occurred, the Firm shall modify the Order as soon as practicable.
Unless otherwise specifically provided in the Rules or the context otherwise requires, the terms defined in this Chapter 4 have the meanings specified herein for all purposes of the Rules.
“Active Securities” has the meaning set forth in Rule 105.
“Applicable Law” means, with respect to any Person, any statute, law, regulation, rule or ordinance of any Regulatory Authority applicable to such Person, including the Exchange Act, the Securities Act, SEC Regulations and guidance thereunder, the FINRA Rules, and, to the extent applicable to such Person, similar foreign laws or regulations.
“ATS” has the meaning set forth in Rule 101.
“Credentials” means the login information, user name, access code, password, and any other credentials that the Firm provides to a Customer, or that the Platform generates for a Customer, and that enable a Customer to access the Platform for the purpose of posting Orders that will be routed to the ATS.
“Customers” or “Customer” means an entity or individual that has entered into a Customer Agreement with the Firm.
“Customer Agreement” means the agreement entered into between a Customer and the Firm relating to such Customer access to and use of the Platform and rights to post Orders that will be routed to the ATS.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Exemption” has the meaning set forth in Rule 105.
“FINRA” means the Financial Industry Regulatory Authority, Inc.
“FINRA Rules” means the rules adopted by FINRA or its predecessor, the National Association of Securities Dealers, Inc., and approved by the SEC, as in effect at any given time.
“Firm” has the meaning set forth in Rule 101.
“Intermediated User” has the meaning set forth in Rule 107.
“Order” is a function by which a Customer or other party may place a buy or sell offer on the Platform or otherwise through the Firm, which the Firm may then route to the ATS.
“Person” means any individual, partnership, corporation, association, trust, limited liability company, joint venture, unincorporated organization or other entity.
“Platform” has the meaning set forth in Rule 103.
“Regulatory Authority” means any domestic or foreign government (or political subdivision), governmental or regulatory authority, agency, court, commission or other governmental or regulatory entity (including any self-regulatory authority or Self-Regulatory Organization) with authority or jurisdiction over the trading of, or Persons engaged in the trading of securities or other financial instruments.
“Rule” means any Rule adopted or amended, from time to time, by the Firm related to or in respect of Transactions or the operation of the ATS or otherwise pursuant to this Rulebook.
“Rulebook” means this SecondRE Markets LLC Single Subscriber Rulebook, as amended from time to time.
“SEC” means the U.S. Securities and Exchange Commission.
“SEC Regulations” means the rules, regulations and orders promulgated by the SEC and in effect at any given time.
“Securities” have the meaning set forth in Rule 101.
“Securities Act” means the Securities Act of 1933, as amended.
“Self-Regulatory Organization” has the meaning given that term in Section 3(a)(26) of the Exchange Act.
“Software” means the executable, object code version of the Platform made available to Customers pursuant to the Customer Agreement.
“Transaction” means a potential unregistered resale of securities of interests in real estate holdings held by special purpose vehicles where buying and/or selling party has been matched by the Firm on the ATS, which may be consummated from time to time
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