IPOs Get Direct

Spotify and Slack have recently gone public using a direct listing. In a direct listing, the firm arranges for its stock to be listed directly on an exchange without the help of underwriters. One downside to a direct listing for the company is that it cannot sell new shares in the listing. Now, the NYSE and NASDAQ are proposing new rules that not only would allow more companies to use a direct listing. The proposals would allow also companies to raise capital in a direct listing. Both exchanges are proposing methods to allow a company to sell new shares in a direct listing, although the mechanics have not yet been decided. Additionally, a drawback of the current direct listing process is that a company must have at least 400 shareholders who own at least 100 shares each before the listing. NASDAQ is proposing to allow a 90 period after the listing for a company to meet this requirement.