A bid by the New York Stock Exchange LLC to let companies raise capital while also doing direct listings was denied Friday by the Securities and Exchange Commission.
Currently, the SEC does not allow companies to raise new capital while going through the direct listing process. NYSE wanted to allow companies whose common equity securities were not previously registered to be able to do so. Unlike IPOs, direct listings allow companies to participate in the stock market without selling new shares and with fewer restrictions and fees.
NYSE proposed the change Nov. 26 for companies that sell $250 million or more in stock on opening day.
"The exchange believes that a primary direct floor listing in which the company sells at least $250 million of its stock in the opening auction on the day of listing would provide an appropriately liquid trading market and make highly likely that the company would meet the initial listing distribution standards quickly after initial listing," NYSE's SEC filing said.
An SEC spokeswoman declined to comment.
A NYSE spokesman said the rejection was not unusual and that it will continue to work with the SEC on its initiative.