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The NYSE is looking to change its listing standards with a tactic called the "direct listing" - which would enable companies like Spotify to list shares publicly without raising new capital or imposing restrictions on when existing shareholders may sell their shares. The goal of direct listings is to remove friction from the IPO process and incentivize some of the world's hottest unicorns - which have been staying private longer than ever - to offer shares to the public.
Direct listings allow companies to have their shares trade publicly, without raising money as in a traditional initial public offering, and there aren’t restrictions on when insiders can sell shares. The NYSE in March filed with the Securities and Exchange Commission to tweak its rule book on the process, a move the agency will rule on in coming weeks. Approval by the SEC would remove an obstacle that prevents companies such as Spotify from using direct listings to list on the Big Board, lawyers say. Making it easier for closely held firms to use this approach could help the NYSE attract “unicorns,” or startups valued at $1 billion or more.
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