US SEC approves NYSE direct "listing" plan to block out Wall Street middlemen

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US SEC approves NYSE direct "listing" plan to block out Wall Street middlemen

On Tuesday, the US Securities and Exchange Commission (SEC) had approved an NYSE plan of “Direct” listing which in effect had enabled companies to go public without laying off a flurry of fat fees to Wall Street lenders that used to underwrite such kind of capital raising.

To be precise, the US SEC had issued a statement earlier in the day saying that the companies seeking public listing would be allowed to “sell” their shares directly to the investors in the New York Stock Exchange which in effect would effectively block out the Wall Street middlemen which many experts had claimed to have discouraged a deluge of small-cap companies to go public over frets of higher charges associated with underwriting and trading commissions.

Nonetheless, the US SEC’s approval of NYSE’s “direct” listing appeared to be threatening a planned reform of the US IPO (Initial Public Offering) market.

US SEC approves NYSE’s “direct” listing plan to shrug off middlemen

In point of fact, Wall Street investment banks had been organizing initial offerings and marketing shares to institutions while acting as a broker through their trading desks for decades, while the latest change in public listing that followed month-long industry qualms, would likely to rub out a major hurdle for the companies seeking to go public.

Ironically, a number of investor groups seemingly remained too fretted to adopt the new NYSE legislations, while some of them had cautioned that the direct “listing” plan in effect would depreciate their protections adding Wall Street lenders had fared well for their trades for decades despite a barrage of baleful accusations against the trading desks of market rigging.

Nonetheless, adding that the plan was architected to “prevent fraudulent and manipulative acts and practices and to protect investors and the public interest,” US SEC wrote in a notice earlier in the day, “The Commission finds that the Exchange’s proposal will facilitate the orderly distribution and trading of shares, as well as foster competition”.