July 1, 2025
Deregulation: Stock Exchanges Are Brainstorming With the SEC
Often, when I whine about the shrinking number of public companies and the absence of a robust pipeline for initial public offerings, I am very focused on the plights of securities lawyers and the companies they represent. But that is pretty self-centered, because the stock exchanges are also sad. There’ve been fewer bell-ringing parties, probably, among other reasons for wanting more listings.
So, it’s not too surprising that the major exchange operators are responding to the SEC’s call for deregulatory feedback. Reuters reported last week that Nasdaq and NYSE reps are among the groups that are sharing ideas with the SEC that could ease the burden of becoming – and remaining – a public company. Reuters describes some of the topics that may be on the table:
One area in focus is an overhaul of current proxy processes, which involves information that companies have to provide shareholders to allow them to vote on various matters.
The reform would make it harder for activist shareholders with small stakes to launch proxy contests and curb repetitive proxy proposals from minority investors, the sources said. It would also lead to less onerous disclosure requirements in preliminary proxy filings, according to the sources.
Another effort involves making it less expensive for companies to list on exchanges and remain public by reducing fees associated with listing, the sources said.
The conversations also include making it easier for companies that went public through deals with special purpose acquisition companies (SPACs) to raise capital, the sources said. In recent years, the SEC had cracked down on SPACs, in which a firm goes public by selling itself to a listed shell company, as a work around listing regulations.
The rollbacks would also make it easier for public companies to raise capital by selling additional shares through follow-on offerings, they said.
Meanwhile, as Dave shared last week, “capital formation” legislation has also advanced in the House. If you have ideas for improving the regulatory framework, don’t forget to add your two cents to the suggestion box!
– Liz Dunshee
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