ANALYSIS: Easing Direct Listing Rules Sparks Expectation, Unease

The rules for direct listings are likely changing soon on the NYSE and Nasdaq exchanges. The SEC has approved NYSE-proposed changes to its direct listing rules, and Nasdaq’s request for its version is pending. However, a petition by the investor advocacy group Council of Institutional Investors (CII) has stayed the SEC’s NYSE order, and a debate over the merits of these rule changes is heating up.

Direct listings were little used by large companies until music streaming service Spotify registered shares on behalf of shareholders in 2018. They offer the benefits of no lockup period for insiders selling shares; ...