In November 2019, the New York Stock Exchange (NYSE) filed a proposed rule change seeking to modify its listing rules to allow companies to use direct listings to raise capital and issue new securities. In a direct listing, a company's existing shares are publicly listed on a stock exchange without an underwritten initial public offering. This option has received attention recently due to the high profile direct listings of companies such as Spotify, although the number of direct listings has remained limited.
The NYSE sought to make direct listings available to companies wishing to raise capital in a primary offering, in addition to resales by existing shareholders in the secondary market. The NYSE rule change would also have eased compliance with the initial listing distribution requirement to have at least 400 round lot holders by giving companies meeting certain market capitalisation thresholds a 90-day grace period to meet the distribution criteria.
However, in December, the SEC rejected the proposed rule change. The NYSE plans to revise its rule change proposal and resubmit it to the SEC. It is reported that Nasdaq is considering a similar change to its listing rules.
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