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Hiive vs Forge: Who wins on fees?

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data

fees

December 16, 2023

There are many different brokers of private stock and because the market is so opaque their fees can vary quite dramatically. However, because Forge Global is a public company, we have transparency into their average fees and therefore a unique opportunity to perform a direct one on one comparison between Hiive and Forge. 

The chart below illustrates Forge’s total fees as a percentage of their total transaction volume as reported in their public financial statements, compared against Hiive’s total fees as a percentage of Hiive’s total transaction volume (our financials are NOT public, so you will have to trust us that these are correct figures!).

What gives? 

Clearly, Hiive’s fees are significantly lower. How is this possible in a competitive market? 

There's a simple explanation. Hiive only charges the seller a transaction fee, while Forge, as they disclose in their financials, usually charges both the buyer and the seller in a transaction. So while a Hiive seller and a Forge seller may each pay  a similar fee (say 2-5% depending on transaction size), buyers on Forge typically have to pay an additional fee on top.

Sellers, mind the gap

You may ask why a seller would care about this since they themselves don't pay more on Forge? The answer is that they really have no choice but to care. Rational buyers in the secondary market will offer an all-in price for a stock, inclusive of fees. Thus, if a buyer sees stock for sale on both Hiive and Forge at the same price (e.g. $25/share), but they have to pay a fee on top at Forge, then it’s pretty obvious where they will choose to transact. The other way to think about it is that a buyer on Forge will reduce their bid to the seller by the amount of any fee that they have to pay to the platform.

Why do the fees move up and down so much?

You may notice in the chart that the fee rate changes quite significantly every quarter for both brokers. Does this mean that Hiive and Forge are constantly changing their fees? Not exactly. It actually reflects that fact that the proportion of institutional sellers (funds) relative to individual sellers (current and former employees of pre-IPO companies) is constantly changing.

Institutions tend to move in and out of the market based on overall market conditions, whereas individuals sell based on their short and medium term financial needs. Because larger institutional sales have lower fees, when more institutions sell in a quarter, the average fee for that quarter goes down. 

Resistance (to lower fees) is futile

Fees in the pre-IPO market will inevitably come down for a number of reasons. Competition amongst platforms is rising. Equally importantly, the transparency that modern platforms give to buyers and sellers increases their bargaining power. This is great news for buyers, sellers, and private companies. And, as long as Forge keeps ignoring this reality, it's great news for Hiive too.

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The information presented in this media is provided for your informational purposes only and does not constitute an offer by Hiive to buy or sell, or a solicitation of an offer, or a recommendation, to buy or sell, any security. Hiive is not, by this media, providing financial, business, investment, legal, tax or other professional advice nor should this media be the basis for making any decision that may affect your financial or other interests. This media does not constitute a prediction of future events or performance. This media is not a research report and commentary contained herein should not be considered to be research. The information in this media, some of which may have been obtained from third-party sources, is provided on an “as is” basis. Hiive does not guarantee the accuracy or completeness of information in this media and does not assume any liability for reliance on the information provided herein. © The Hiive Company Limited 2023. All rights reserved. Reproduction prohibited.

Find Hiive on BrokerCheck. Before you work with Hiive you should review the Form CRS and these important disclosures. Any references to “Hiive” are to The Hiive Company Limited and Hiive Markets Limited."

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