The Securities and Exchange Commission has rejected a proposal by the New York Securities Exchange to allow companies to raise capital through direct listings. The New York Stock Exchange last week applied for changes to the rules governing direct listings. On Friday, the proposal disappeared from its website, and a spokesman for the New York Stock Exchange confirmed that it had been rejected.
“We remain committed to improving the new model of direct listing,” NYSE said. “This type of behavior is not uncommon during the application process, and we will continue to work with the SEC on this initiative.” ”
On April 3 last year, Spotify went public on the NYSE with a direct listing, and this year Slack followed suit, choosing to list directly on the NYSE. Banks are working with a number of other companies, including Airbnb, which hopes to take this new path of listing as an alternative to initial public offerings.
By going public directly, the company does not need to raise new capital, but instead issues a portion of the existing stock to the market to allow private investors to sell their holdings. It has proved increasingly popular for companies that don’t need cash, but the New York Stock Exchange is looking to make it easier for companies to go public directly.