NYSE Can Allow Firms to Raise Funding Through Direct Listings, Says SEC

The New York Stock Exchange may now allow some companies to raise capital via direct listings rather than IPOs.

AccessTimeIconAug 27, 2020 at 9:30 a.m. UTC
Updated Sep 14, 2021 at 9:48 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

The Securities and Exchange Commission (SEC) has given the green light for the New York Stock Exchange (NYSE) to allow some companies to raise capital without the expense of an IPO.

  • In a Wednesday order, the SEC approved the exchange to amend Chapter One of the Listed Company Manual to allow firms to hold direct listings.
  • The move means companies can now launch a direct listing on the NYSE as an alternate to the initial public offering (IPO), generally preferred by the SEC.
  • The direct benefit means it would reduce costs associated with soliciting a bank to underwrite the transaction of an IPO.
  • Previously, companies that have sold common equity securities in a private placement were allowed to list shares on the NYSE "solely" to allow shareholders to trade the stock.
  • The rule change widens the scope to allow companies to list shares "in addition to, or instead of" facilitating shareholder sales.
  • Firms will be allowed the new listing on a case-by-case basis and must meet certain thresholds, including being likely to sell $100 million in shares on the first day of trading on the NYSE.
  • The so-called Primary Direct Floor Listing will also allow companies to avoid certain restrictions associated with IPOs, namely lockup periods that prevent insider trading.
  • The American Securities Association (ASA), a brokerage group, said direct listings without protections against insider trading would allow for nefarious actors to cash out at "inflated valuations."
  • That would leave "Mr and Mrs. 401(k) holding the bag," the ASA wrote in a March letter addressed to the SEC as cited in the Wall Street Journal.
  • However, in the Wednesday order, the SEC said the NYSE's direct listing plans already had sufficient investor protections in place.
  • The changes come at a time when U.S. crypto exchange Coinbase is said to be preparing to list on the U.S. stock market sometime in early 2021 with preference given to a direct listing.
  • On Wednesday, the SEC also announced changes to the rules for accredited investors, slightly expanding the pool of Americans who can invest in private securities.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.

Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.