NEW YORK (Dow Jones)--A new trading platform for illiquid assets that have been clogging up bank balance sheets will launch Thursday.

New York-based SecondMarket Inc., plans to begin auctioning collateralized debt obligations (CDOs), unsecuritized loans and nonagency mortgage-backed securities through its online trading platform. The move could set the ball rolling on price discovery ahead of the government's proposed plan to help private investors buy these loans and securities from banks.

Due to the opaque nature of many of these assets, pricing is extremely difficult.

"There will be transparency in pricing," said Barry Silbert, chief executive of SecondMarket.

"Buyers and sellers can see where auctions are getting done and can see bids and offers."

The U.S. Treasury Department announced the Public-Private Investment Program (PPIP) late last month. It is designed to help banks to rid themselves of loans and securities that have hurt their operations and capital, while the market for these assets remains all but frozen. The program will give guarantees and some leverage to private investors to buy such loans.

Market expectation is that the government's PPIP initiative won't get under way until late spring at the earliest. Between now and then, SecondMarket's trading platform could play a supporting role "helping with the price discovery process," Silbert said.

Typically, there hasn't really been a secondary market for these assets because buyers typically tend to hold them to maturity. In the recent crisis, mortgage loans and bonds have seen massive losses, making valuations even more difficult.

"It's important to have a healthy secondary market for these assets regardless of what the government does in order to create value and liquidity for these securities," Silbert said.

The trading platform also will bring in private capital from a large number of different firms so sellers are not relying on a small group of prospective buyers.

Other companies also have been helping to unclog the system. Debt Exchange Inc. for instance, arranges the online auctions of distressed loans for the Federal Deposit Insurance Corp. and other sellers.

But SecondMarket is the first company to create a centralized marketplace for a broad group of illiquid assets, according Silbert.

To attract potential buyers, SecondMarket will have the sellers offer to pay some of the proceeds from any MBS, CDO or whole loan sale to all or some of the losing bidders. The idea is to give incentive to buyers to spend time researching these assets. Some bidders might take part in the auctions primarily for the fee, but even this will help create a floor in the price of the assets, according to Silbert.

Around 300 potential buyers, including hedge funds, private-equity firms and foreign institutions have already signed up to take part in the auctions, according to Silbert. There are also a number of sellers that will start listing securities for sale Thursday.

The question is whether sellers will be prepared to accept what buyers are willing to pay for the assets or whether "fair market" value will be too strong a pill to swallow.