NYSE proposal to allow fundraising in direct listings rejected by SEC


The Securities and Exchange Commission has rejected the New York Stock Exchange’s proposal to permit for corporations going public by a direct itemizing to lift capital on the similar time.

The NYSE had filed for the rule change final week. The proposal disappeared from its web site on Friday, and a spokesperson on the Big Board confirmed it has been rejected.

“We remain committed to evolving the direct listing product,” the NYSE mentioned. “This sort of action is not unusual in the filing process and we will continue to work with the SEC on this initiative.”

An SEC consultant declined to remark. 

Spotify went public by a direct itemizing in 2019 and Slack adopted this 12 months. Banks are working with quite a few different corporations, together with Airbnb, who wish to take that route as a substitute for an IPO.

A buying and selling put up sports activities the Spotify brand on the ground of the New York Stock Exchange, Tuesday, April 3, 2018.

Richard Drew | AP

With a direct itemizing, corporations do not elevate new cash and slightly enable current traders, who usually have to attend for a lockup interval to run out, to promote into the general public market. It’s proving to be an more and more well-liked possibility for corporations that do not want money, however the NYSE is in search of to make the direct itemizing extra accessible for a wider swath of companies. 

The subject of direct listings began garnering extra consideration after the Slack providing, as enterprise capitalists like Benchmark’s Bill Gurley grew to become extra vocal of their criticisms of IPOs, which have a tendency to finish in massive first-day pops that profit new traders on the expense of insiders and workers. Gurley held an occasion in San Francisco in early October to teach high traders and pre-IPO tech corporations on the advantages of direct listings, and the large funding banks adopted with occasions of their very own.

WATCH: NYSE proposes rule change to allow capital raise in direct listings



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