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SEC Approves NYSE Capital-Raising Direct Listings

January 7th | 2021



This SEC recently approved NYSE’s proposal to allow for direct, capital raising listings on the NYSE. Direct listings are where a company lists its shares on a national stock exchange without conducting a traditional initial public offering ("IPO"). NYSE’s Primary Direct Floor Listing provides a company the option of selling shares to raise capital in the opening auction upon initial listing on the Exchange, thereby bypassing a traditional, firm commitment underwritten offering.


The comments received regarding NYSE’s proposal were generally supportive, and many, like Citigroup and Goldman Sachs for example, expressed the view that issuers should have choices in the form of their offerings to meet their objectives so long as the processes employed are fair, clear, and transparent to investors.


In its approval order, the SEC cited many enhancements over NYSE’s previous proposal that the SEC rejected. Some of the enhancements this time around include, among other things, measures to ensure the issuer cannot unduly influence the opening price through a new order type, measures to highlight that financial advisors involved with direct listings cannot violate the anti-manipulation provisions of the Exchange Act, and enhanced monitoring for Reg. M violations through a NYSE/FINRA regulatory services agreement.

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