by anirban sen and chris printice

NEW YORK (Reuters) – American stock market operators discuss with the Securities and Exchanges Commission (SEC), the gendarme of the financial markets, with a view to lightening the regulatory constraints which weigh on listed companies, in order to encourage more start -ups to enter the market, learned from four informed sources of the file.

These discussions, whose details are reported for the first time, involve the dry, the Nasdaq and the New York Stock Exchange. They relate to various reforms, ranging from a reduction in the volume of the information to be provided, including a drop in costs of an IPO (IPO), and to a decrease in the nuisance power of minority investors, the sources said under the cover of anonymity.

According to sources, current discussions, started several months ago, are part of a context marked by the will of the administration of President Donald Trump to soften the regulations in general in order to stimulate the economic growth of the country.

Overall, some market experts have declared that these discussions could mark the most important initiative with a view to a reform of business regulation since the promulgation in 2012 by the former American president, Barack Obama, of the law “Jumpstart our business startups act”.

“The figures clearly show that companies remain not listed longer,” says Reuters Nelson Griggs, president of Nasdaq. According to him, the stock market operator discussed the regulatory authorities in Washington with a strengthening of the attractiveness of the financial markets.

“We must make public procurement attractive, because this is how we democratize access to these companies. It is therefore one of our main objectives,” he said. The NASDAQ has publicly pleaded in favor of lightening the costs, notably with a modernization of the process of filing the documents required by the SEC.

In a statement addressed to Reuters, Jaime Klima, Legal Director of Nyse Group, assures that the stock market operator “will continue to defend the interests of our listed companies with regulators and political decision -makers”

“We firmly believe that an effective and efficient regulation is essential to maintain the attraction of our markets,” she said, without detailing the object of current discussions.

The SEC, chaired by Paul Atkins, said it worked to soften the rules likely to hinder the growth of the share capital.

“The SEC plans to alleviate the regulatory constraints that hinder capital training, in particular by ensuring that companies are again desired to make a first public offer,” said a spokesperson for the regulation and financial market control agency.

The dry did not wish to comment on the specific discussions in progress which it had with the scholarships and other stakeholders.

However, according to experts, the relaxation of the rules relating to information obligations and the reduction of costs related to IPOs or a quotation is often made to the detriment of investors, who could be faced with an increased risk of loss in the absence of a little or less regulatory.

“Historically, investors and issuers have always considered American financial markets as the best in the world. It is because of the regulatory system,” said Jill Fisch, business law professor at the University of Pennsylvania. “This is due to the fact that if the information is complete, the markets work better. The price of titles is more precise. It is good for everyone,” he argued.

Decline in regulations

According to sources, discussions focus on the rules that make companies rating more difficult and maintaining their stock market.

One of the points of the agenda is the revision of the current procedures for proxy voting, that is to say the information that companies must provide to shareholders to allow them to vote on various questions.

A reform of this point would make the task more difficult for minority activist investors and could make it possible to reduce costs in the preliminary files of file deposits to the SEC, the sources said. Business rating and their stock market maintenance would also be less expensive, according to sources.

The discussions have also focused on the possibility of facilitating capital lifting for companies that have entered the stock market via a SPAC, an investment vehicle, have specified the sources, while in recent years, the SEC has taken severe measures against the SPAC.

Within the framework of the planned reform, listed companies could also raise capital more easily by assigning additional actions via a follow-up offer (“Follow-on Offering”), the sources said.

Decrease in the number of listed companies

Since 2000, the number of public enterprises listed on the stock market in the United States has decreased by 36%, to 4,500, according to figures compiled by the NASDAQ.

Several managers of companies at Wall Street, such as Jamie Dimon, the director general of Jpmorgan Chase, and Ken Griffin, the founder of Citadel Securities, have warned of the increase in rules and the decrease in the number of listed companies.

Some companies have chosen to stay away from the IPOs, denouncing in particular a high cost in terms of information obligations and an additional regulatory examination, two sources said, citing SpaceX of Elon Musk as one of them. Solicited, SpaceX did not immediately respond to a request for comments.

Even with a reduction in regulatory constraints, the change could be long to manifest.

“Do I think there is going to be a rush to the IPOs because of the regulations (from the SEC)? Probably not,” said Dave Pessip, co-president of the law firm Cooley. He added that it would strongly depend on the yields and valuations that companies can hope for.

(Report anirban Sen in New York; with the contribution of Chris Prentice and Krystal Hu; Claude Chendjou, edited by Augustin Turpin)

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