Choose Your Path to Public: Direct Listings on the NYSE

In today's world, technology drives constant change, and businesses need even more flexibility and transparency to meet evolving customer, talent and market demands.

Going public is a powerfully effective solution for these challenges, but an IPO is no longer a one-size-fits-all path to public. That’s why the NYSE is working closely with issuers, regulators and the global market community to meet the new landscape of market demands, without compromising our high standards and commitment to excellence.

The result is the NYSE Direct Listing. Benefiting from our unique market model, companies that pursue a direct listing can choose to decouple capital raising from becoming a public company. In a direct listing, the full liquidity of the market values a company on day one without temporary constraints -- no reduced allocations or required lockup periods. This uninhibited price discovery reduces the cost of capital and democratizes access and opportunity for all investors.

Direct listings are just one of the ways the NYSE is using innovation to drive opportunity for modern businesses.

Benefits of a Direct Listing at the NYSE

Decouples capital raising from public offering

Lower cost of capital and no forced timeline

Full and equal transparency

Democratized access to information

Level playing field for all investors - no allocations, no lock up periods

Plus, all the premium benefits of being a NYSE listed company

Know the Facts

From the Home of Direct Listings

Financial Advisor Roles

Financial advisors are not required to underwrite an initial price like a traditional IPO, but they are essential in consulting alongside with the NYSE to set the reference price for Day 1.

Price Discovery

Day 1 has an extensive price discovery process with a Designated Market Maker (a model unique to the NYSE) on the trading floor, who determines the opening price based on buy and sell orders in consultation with the financial advisor, using the reference price as a starting point.

Roadshows

Flexibility on the direct listing process allows a company to go effective without a waiting period after filing their S-1. Previous listed companies have utilized this feature to opt for an Investor Day in lieu of a Roadshow.

Public Access and Transparency

The direct listing provides access and opportunity for all investors, democratizing public company offerings even further than before.

Day 1 Trading

With the unique market model able to execute such an offering, NYSE Direct Listings have traded with superior market quality in both lower volatility and tighter spreads on Day 1 compared to IPOs*.

Slack and Spotify, listed on the NYSE, ranked among the largest opening trades in the history of the US markets.

Only at the NYSE

The NYSE is the only exchange that has launched a direct listing and is currently working with the SEC to expand accessibility to further develop this approach.

The NYSE is the only exchange to provide a Designated Market Maker to minimize volatility and discover market demand price assessment with unparalleled precision.

*NYSE and Nasdaq averages include all Tech IPOs from 2018-2019 YTD Volatility

Frequently Asked Questions

A direct listing is an option for companies that want to enjoy the benefits of a public listing without going through the traditional IPO process. Direct listing candidates are well-capitalized with no need to raise new capital, and have generally raised significant capital in private markets, giving them a large number of shareholders. All of these holders are able to monetize their shares on day one. Direct listings also allow the company to be fairly valued by the public markets, rather than setting a price based on investor interest during a roadshow.

A listing is the listing of a private company without an underwritten public offering or issuance of new shares. Unlike a traditional IPO, a direct listing:

Does not require the issuance of new shares
Has no stabilization agent
Has a reference price instead of an IPO price
Shareholders can trade immediately after listing

A DMM is a unique market participant that exists only on the NYSE. These traders are subject to rigorous obligations unique to the NYSE to maintain a fair and orderly market in the securities they trade and facilitate the open and close of trading. Their combination of human oversight and best-in-class technology leads to better trading and cost savings for issuers listed on the NYSE.

The DMM has two key roles in a Direct Listing. The first is opening the stock at the right price, which involves a thorough price-discovery process. The second is maintaining price continuity with reasonable depth and minimizing the effects of temporary disparity between supply and demand by supplying their own capital, both at the open and through the early days as a public company. Given the absence of a stabilization agent, both of these roles are critical.

An IPO price is determined by gauging investor interest throughout the roadshow, and is determined by underwriters together with the company. The reference price for a direct listing is set by the NYSE and based on many factors, including private valuations and sustained trading in private markets. No shares actually change hands at the reference price -- it’s simply a starting point for the price-discovery process.

The combination of human judgment and technology is critical to the success of a direct listing. The price discovery process and capital commitment from the DMM firms doesn’t exist on other exchanges. The NYSE has always been home to innovators, and we pioneered the concept of the Direct Listing after several years of work with issuers, the SEC and advisors.

The new proposal is aimed at (a) enabling more companies to use a direct listing and (b) allowing for an optional capital raise. Under the new proposal:

A company can qualify for a direct listing with at least 400 round lot holders and:

a primary capital raise with public market value of at least $100M OR
a $250M total public float or a combined aggregate of a primary capital raise and public float of at least $250M

A company with less than 400 round lot holders can be given a grace period to meet the minimum round lot requirement if it:

has a public market value of at least $350M
does a primary capital raise with a public market value of at least $250M
has a combined aggregate of a primary capital raise and public float of at least $350M

On December 20, 2019 the NYSE filed a proposed rule change SR-NYSE-2019-67 that would expand accessibility of direct listings with the SEC.

Please submit comments here.

Contact the Experts

Email the Team

For Press Inquiries

The Intercontinental Exchange