The agency quickly rejected a recent NYSE proposal

What are direct listings? They are not allowed by the SEC at the New York Stock Exchange. Direct listings allow firms to engage in the public equity markets without selling new shares. The process also carries fewer listing fees and restrictions.

Spotify went public with a direct listing in 2019. Slack Technologies also engaged in one as well. According to reports, unicorn Airbnb had explored the possibility of one in the year ahead.

Direct Listings and the NYSE

Two weeks ago, the NYSE proposed a rule to allow companies to raise capital while conducting these types of listings. Last week, the SEC rejected the proposal that would let companies sell $250 million or more during their first day of trading.

The SEC does not permit firms to raise capital while engaging in the process. The NYSE proposal, dated Nov. 26, would have let firms without registered common equity securities do so.

“The exchange believes that a primary direct floor listing in which the company sells at least $250 million of its stock in the opening auction on the day of listing would provide an appropriately liquid trading market and make highly likely that the company would meet the initial listing distribution standards quickly after initial listing,” NYSE’s SEC filing said.

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