Primary Offering & Secondary Trading

In this section, we explore the concept of secondary trading, differentiating it from primary offering. Understanding these concepts is crucial for participating in the full spectrum of trading opportunities available on Plume. As a global blockchain, Plume supports both permissionless tokens that fall outside of regulatory definitions of securities, as well as those that do.

Primary vs. Secondary Offering

Primary Offering: Assets are created and sold to investors for the first time. The issuer of the asset is directly involved in the sale. The issuer raises funds for the first time, aiming to return that investment later. The vast majority of assets that undergo this process fall under the securities laws in the US, and globally. Security Token Offerings are a type of primary offering that remain popular in some jurisdictions.

Secondary Offering: Secondary offering refers to trading of assets that already exist, typically when the original holder of the asset re-sells it to someone else. The original issuer is not always directly involved in these transactions, although that depends on their jurisdiction and regulatory compliance requirements. The outcome is the same - existing asset holders trade among themselves. This type of trading is crucial for providing liquidity and price discovery for assets post-issuance.

For every type of security (tokenized or traditional), there are rules around how it’s sold to the investor. The vast majority of investments start out as “private placement”. In the US, privately placed securities that are sold to investors for the first time are called primary offerings. That means the issuers themselves raise initial funds, and aim to provide returns to their investors at a later time. Secondary offerings mean assets are re-sold by their original holders to someone else.

For both primary and secondary offerings, the SEC (Securities and Exchange Commission) lets asset issuers use a number of exemptions that make registration straightforward. Private offerings are described in Regulation D, rules 506(b) and (c). Public offerings are more nuanced, where asset issuers are required to adhere to ever stricter reporting requirements and disclosures. Let's examine their key characteristics.

Regulation	Description	Key Features
Reg D 506(b)	Private offerings for unlimited funds from accredited investors, plus up to 35 non-accredited investors with disclosures.	- Unlimited funds from accredited investors - Up to 35 non-accredited investors with disclosures - No public advertising
Reg D 506(c)	Private offerings for unlimited funds exclusively from accredited investors, with public advertising allowed.	- Unlimited funds from accredited investors - Public advertising permitted - Exclusively for accredited investors
Reg A	Public offerings exempt from traditional registration, with two tiers for simplified SEC compliance.	- Tier 1: Raise up to $20M in 12 months - Tier 2: Raise up to $75M in 12 months - Requires filing with the SEC, but offers a streamlined process
Reg CF	Crowdfunding for small projects, enabling public fundraising up to a specified limit under a simplified regulatory framework.	- Open to a wide investor audience - Suitable for small-scale projects - Cap of $5M in a 12-month period
Reg S	Offers and sales outside the U.S., for non-U.S. residents, exempt from SEC registration for domestic offerings.	- No fundraising limit - For non-U.S. residents only - Not subject to SEC registration for domestic offerings

Without handing primary offerings directly, Plume Network has agreements in place with FINRA registered brokers in the United States. Globally, we're working with market leading fund administrators and issuing banks.