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SEC rejects NYSE plan for direct listings

Illustration: Sarah Grillo/Axios

U.S. securities regulators have rejected an application by the New York Stock Exchange to allow companies to raise capital during direct listings, Axios has learned.

Why it matters: As we wrote earlier, the NYSE proposal could have upended the traditional IPO market, which has relied on Wall Street banks to set pricing terms.

What they're saying: “We remain committed to evolving the direct listing product. This sort of action is not unusual in the filing process and we will continue to work with the SEC on this initiative," per an NYSE spokesperson.

What's next: The SEC had until Friday to accept or reject the proposal, so expect NYSE to meet with regulators to determine next steps. The exchange remains determined to create these "hybrid" structures, which many venture capitalists and startups believe are in the best interest of both themselves and investors.

  • Rival exchange Nasdaq also is working on its own proposal.