Emailed on August 28, 2020 in The Friday Forward

The New York Stock Exchange this week received SEC approval for a rules change that would allow companies to raise new capital as part of a direct listing.

How it works: It's a bit like a marketable limit order, with primary shares being priced off the opening auction with the NYSE. In other words, there's more pricing efficiency and fewer pre-trade "pops."

• On the flip side, issuers wouldn't be able to handpick large shareholders as they can via a traditional IPO process. Unless they introduce something like a PIPE into the equation.

• Lockups will remain subject to negotiation between issuers and underwriters, as they've always been.

The big question: What company will go first, to help prove out the model and blaze a trail for others to follow.

• One obvious candidate is Airbnb. We recently noted how the company announced it had filed confidential paperwork for an "initial public offering," suggesting it would only sell primary shares. But now that an IPO can also include secondary share sales...

• John Tuttle, NYSE's vice chairman and chief commercial officer, obviously wouldn't discuss Airbnb when we spoke last night about the SEC approval. But, much more generally, he said: "This topic comes up almost every day. A lot of these companies are going to take a serious look at this."

More from Axios here.