Kristina Roberts
The United States stock exchanges and the Securities and Exchange Commission (SEC) are having private talks about making rules simpler for companies that want to go public. The goal is to encourage more businesses, especially startups with high value, to list on stock markets like Nasdaq and the New York Stock Exchange (NYSE). Right now, many companies prefer staying private because the rules for public companies are seen as too strict and costly.
According to people familiar with the matter, these discussions have been going on for several months. The SEC, Nasdaq, and NYSE are looking at different ways to reduce the burden on public companies. Some ideas include lowering the amount of information companies must share with the public, cutting down the costs of going public, and making it harder for small investors to push for changes in company policies. The sources did not want to be named because they were not allowed to speak publicly about the talks.
This move comes as the US government, under President Donald Trump, is trying to reduce regulations to help businesses grow faster. The Trump administration believes that fewer rules will make it easier for companies to raise money and create more jobs. Some experts say these discussions could lead to the biggest changes in company regulations since 2012, when the Jumpstart Our Business Startups (JOBS) Act was passed to help small businesses.
Nasdaq President Nelson Griggs told Reuters that companies are staying private much longer than before, which is not good for public markets. He said Nasdaq has been talking with regulators in Washington about ways to make public listings more appealing. “We need to make the public markets attractive because that is really how you democratize access to these companies. So it’s a big focus of ours,” Griggs said. He also mentioned that Nasdaq supports modernizing rules, such as making it easier for companies to handle shareholder proposals.
The NYSE also supports changes to help companies. Jaime Klima, general counsel of NYSE Group, said in a statement that the exchange will “continue to advocate for our listed companies with regulators and policymakers.” He added, “We strongly believe that effective and efficient regulation is key to maintaining the attractiveness of our markets.” However, Klima did not give details about the ongoing talks.
The SEC, led by its new chairman Paul Atkins, has said it wants to remove rules that make it hard for companies to raise money. An SEC spokesperson said, “The SEC is considering addressing regulatory burdens that undermine capital formation, including (ensuring) that initial public offerings are again something companies are eager to do.”
The number of public companies in the US has dropped by 36% since 2000, according to Nasdaq data. Many startups now choose to stay private for years, raising money from private investors instead of going public. This trend worries stock exchanges because fewer listings mean less business for them.
One area of discussion is making it easier for companies to raise money through Special Purpose Acquisition Companies (SPACs). SPACs are shell companies that raise money from investors first and then merge with a private company to take it public. This method has become popular in recent years because it is faster and sometimes cheaper than a traditional IPO. The SEC and exchanges are looking at ways to simplify SPAC rules to attract more companies.
Another idea being discussed is reducing the power of small investors in influencing company decisions. Currently, shareholders who own even a small portion of a company can submit proposals for changes, such as environmental policies or executive pay. Some believe this process is being misused, leading to unnecessary costs and distractions for companies. The new rules could make it harder for such proposals to pass.
While these changes could help companies, some investor groups warn that reducing transparency and shareholder rights might hurt small investors. They argue that public companies should be accountable to all shareholders, not just big investors.
The talks between the SEC and stock exchanges are still in progress, and no final decisions have been made. If the changes happen, they could make it easier and cheaper for companies to go public, which might encourage more startups to list on stock markets. However, the debate continues on whether reducing regulations will benefit everyone or just make things easier for big businesses.
For now, the focus remains on finding a balance—making rules simpler for companies while still protecting investors. The outcome of these discussions could shape the future of public markets in the US, influencing how businesses raise money and how ordinary people invest in them.
The SEC, Nasdaq, and NYSE have not given a timeline for when these changes might happen. But with the government pushing for fewer regulations, it is likely that some reforms will be introduced in the coming months. Whether these changes will bring more companies to the stock market or create new challenges for small investors remains to be seen.
In the end, the goal is to make the US stock market more competitive globally. With countries like China and India growing their financial markets, the US wants to stay ahead by making its rules more business-friendly. The discussions between regulators and stock exchanges are a step in that direction.
As the talks continue, companies, investors, and regulators will be watching closely to see how these potential changes could affect the economy. For now, the message is clear: the US wants to make it easier for businesses to go public, but it must also ensure that investors are protected in the process.
The stock market plays a big role in the US economy, helping businesses grow and allowing people to invest in them. If the rules become simpler, more companies may choose to go public, which could create new opportunities for everyone. But the challenge is to make sure these changes are fair and do not leave small investors behind.
Only time will tell how these discussions will shape the future of public companies in the US. For now, the focus is on finding the right balance between simplicity and fairness in the rules that govern the stock market.
