What Is a Private Placement Platform?

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Select clients allow traders to handle all transactions through special capital accounts.
Select clients allow traders to handle all transactions through special capital accounts. (Image: Hemera Technologies/Photos.com/Getty Images)

When engaging trades on the stock market, certain eligible clients can receive offers to participate in private placement platforms. PPPs allow for special stock trading conducted with certain assets. As a profit becomes made, most funds go toward humanitarian and commercial real estate projects, according to Crown Capital Funding.

Client Validity

Clients -- usually high-net investors -- must meet qualification criteria for the PPP to get an invitation to engage in this type of stock trading. The PPP evaluates the person's client information sheet -- CIS -- and proof of funds -- POF -- to ensure he doesn't have a criminal background or use false assets to commit investor fraud. Assets that can be used include liquid cash, a bank guarantee and precious gems.

Separate Capital Account

If the client becomes accepted into the PPP, she must move funds into a separate capital account that doesn't connect to any other account. This account is established by the trade program to take place at a United States financial institution. This separate capital account is required by securities commissions and regulatory organizations.

Trader Control

Once the client transfers the funds into the separate capital account, the trader can begin investment transactions. The trader initiates a stock transaction, which goes through the investment exchange process and clears with the U.S. bank that initiates credits and debits with the capital account. Although the PPP is granted limited power of attorney to make trades on the client's capital account, the PPP has no direct access to these funds, giving the client security that the funds won't become used for other purposes.

Unavailable Funds

Certain funds cannot be used by PPPs to make stock transactions. These include blocked funds, administrative-held funds and funds in non-depletion accounts, as stated by MB Assets. Only those funds within the separate capital account may be used. Also, the client is never required to give any upfront fees to take part in the PPP, and only a small fraction of the profits goes toward the PPP's administrative costs.

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