The United States Securities and Exchange Commission (SEC) has approved a proposal by American stock exchange operator Nasdaq to allow companies raise capital through direct listing rather than going through the traditional initial public offering (IPO).
In its filing on the matter, SEC argues that the proposal put forward by Nasdaq is consistent with the SEC’s rules and regulations and it could be of much benefit to investors as an alternative to a traditional initial public offering.
For some time now Nasdaq has been pushing for an alternative way which companies can raise capital through the exchange operator hence this announcement comes as good news and a milestone by Nasdaq.
Citing filings from SEC, Nasdaq filed its proposal for direct listing back in August 2020 asking the market regulator to allow to enable companies make their debut on the stock markets through direct listings.
This approval comes as good news to private companies seeking to get listed on stock markets since they now have alternatives on how they can go about it. However, it comes as not so much good news for investment banks which play important roles in IPOs.