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Illustration: Aïda Amer/Axios

The U.S. Securities and Exchange Commission finally approved on Tuesday a rule change that will allow companies doing direct listings on the New York Stock Exchange to simultaneously raise primary capital.

Why it matters: Despite the surge in interest in the last couple of years, direct listings have struggled to appeal to a wide swath of companies since many still need to raise capital when going public.

Background: Spotify's direct listing in 2018, which allowed the company's shareholders to begin trading their shares on the stock market, sparked growing conversations over the need for alternatives to the traditional initial public offering.

  • Common arguments have included the need for better pricing mechanisms because many companies find themselves with a first-day closing price much higher than the IPO price, also known as "leaving money on the table."
  • Lock-up periods preventing employees and some other shareholders from selling for months can also be viewed as another shortcoming of the traditional IPO process.

Between the lines: Some critics have also taken aim at the fees banks collect for underwriting IPOs, which the NYSE's new listing option eliminates.

  • Yes, but: Banks have still been highly involved in the handful of direct listings so far, collecting millions in advisory fees.

Go deeper

Dion Rabouin, author of Markets
Jan 28, 2021 - Economy & Business

How GameStop exposed the market

Illustration: Eniola Odetunde/Axios

Retail traders have found a cheat code for the stock market, and barring some major action from regulatory authorities or a massive turn in their favored companies, they're going to keep using it to score "tendies" and turn Wall Street on its head.

What's happening: The share prices of companies like GameStop are rocketing higher, based largely on the social media organizing of a 3-million strong group of Redditors who are eagerly piling into companies that big hedge funds are short selling, or betting will fall in price.

China deems all cryptocurrency transactions illegal

A person walking past China's central bank in Beijing in August 2007. Photo: Teh Eng Koon/AFP via Getty Images

China's central bank declared on Friday that all cryptocurrencies are illegal, banning crypto-related transactions and cryptocurrency mining, according to Reuters.

Why it matters: China's government is now following through with its goal of cracking down on virtual currencies, which it has said is a financial, social and national security risk and a contributor to global warming.

Biden's big bet backfires

Two key dealmakers — Sen. Joe Manchin (D-W.Va.) and Sen. Mark Warner (D-Va.) — leave a luncheon in the Capitol yesterday. Photo: Kent Nishimura/L.A. Times via Getty Images

President Biden bit off too much, too fast in trying to ram through what would be the largest social expansion in American history, top Democrats privately say.

Why it matters: At the time Biden proposed it, he had his mind set on a transformational accomplishment that would put him in the pantheon of FDR and JFK.