How does Nasdaq’ Bookviewer technology support a direct listing?

Nasdaq’s best-in-class technology, the Bookviewer, provides a transparent real-time view of order data. In a direct listing, Nasdaq’s Bookviewer gives the Financial Advisor access to the full order book on their desktop.

How does the pricing process differ between an IPO and direct listing?

An IPO is priced based on the size and number of orders received at different price levels throughout the roadshow. The lead underwriters typically determine the IPO Price based on this information. Conversely, a direct listing has a Reference Price, which isn't the Offering Price, but rather the calculated price of the shares after all the buy and sell orders have been received from broker-dealers. The Reference Price is used to open the stock. Transparency is critical in calculating the right Reference Price and helps reduce the chance of price volatility once the stock opens for trading. Nasdaq’s suite of IPO tools and proprietary auction technology helps to provide for control and data transparency to mitigate volatility. .

Nasdaq Direct Listings

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What is a direct listing at Nasdaq?

A direct listing allows companies to list on Nasdaq without concurrently raising capital. Typically, a company will list securities on a national securities exchange to provide restricted liquidity to existing shareholders and to raise capital via an Initial Public Offering (IPO). A direct listing, however, provides unrestricted liquidity to existing shareholders and the company does not concurrently issue securities to public investors to raise capital.

What is the difference between an IPO and direct listing?

When a company decides to go public, there are typically existing shareholders including founders, employees, and various early stage investors. Both an IPO and a direct listing enable these investors to cash out. However, in an IPO, there is a lock-up period—typically between 90 to 180 days—in which shareholders are restricted from selling outside of the Initial Public Offering. In a direct listing, there are no lock-up restrictions.

Jack Cassel, VP of New Listings and Capital Markets at Nasdaq, explains how a direct listing is one alternative path to the public markets. Read the article here.

Direct Listings with Capital Raise – Nasdaq Filing

The SEC recently approved Nasdaq’s rule filing to permit a company to conduct a direct listing on our market in connection with a primary capital raise. View the Approval Order here. Our latest proposal to the SEC would improve this process by modifying the existing limitation that the auction occur within a pre-determined price range. If approved, the rule filing would allow a company to sell shares in the opening auction outside of the range in their registration statement, but not more than 20% below the range. Nasdaq has had extensive conversations with potential issuers and the capital markets ecosystem about this proposal, and we look forward to working with the SEC and broader ecosystem on these enhancements. View the proposed rule filing here.

A direct listing provides access to liquidity, no lock-up period, and enables companies to access the public markets without raising capital.

Karen Snow, SVP, Head of East Coast Listings and Capital Services

Benefits of a Direct Listing on Nasdaq

Access to Liquidity

The company provides liquidity for its shareholders without raising capital.

Proprietary Technology

Nasdaq’s best-in-class technology, the Bookviewer, provides a real-time view of order data during the initial pricing of the direct listing.

No Lock-Up Period

Existing shareholders are able to cash out of their equity stake immediately on the first day of trading.

Learn More About Direct Listings

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Nasdaq is the only exchange that provides order book transparency through our technology solution called the Bookviewer.

Jeff Thomas, Senior Vice President, Head of Western U.S. Listings and Capital Markets

: A direct listing enables companies to access the public markets. With a direct listing, existing shareholders sell their shares on the open market, and no additional shares are offered to the public.
: When a company decides to go public, there are typically existing shareholders including founders, employees, and various early stage investors. Both an IPO and a direct listing enable these investors to cash out. However, in an IPO, there is a lock-up period—typically between 90 to 180 days—in which shareholders are restricted from selling outside of the Initial Public Offering. In a direct listing, there are no lock-up restrictions.
: Nasdaq’s best-in-class technology, the Bookviewer, provides a transparent real-time view of order data. In a direct listing, Nasdaq’s Bookviewer gives the Financial Advisor access to the full order book on their desktop.
: An IPO is priced based on the size and number of orders received at different price levels throughout the roadshow. The lead underwriters typically determine the IPO Price based on this information.

Conversely, a direct listing has a Reference Price, which isn't the Offering Price, but rather the calculated price of the shares after all the buy and sell orders have been received from broker-dealers. The Reference Price is used to open the stock. Transparency is critical in calculating the right Reference Price and helps reduce the chance of price volatility once the stock opens for trading.

Nasdaq’s suite of IPO tools and proprietary auction technology helps to provide for control and data transparency to mitigate volatility.
: Companies have used Nasdaq’s Private Market platform to create a market for trading private secondary shares ahead of their direct listings. By leveraging Nasdaq Private Market, the secondary trading is centralized on one platform, which reduces the administrative burden of the company and streamlines the price discovery for the financial advisors.

Nasdaq also continues to work closely with the banking and legal communities, as well as the U.S. Securities and Exchange Commission (SEC), to provide companies an additional path to the public markets via a direct listing with a capital raise.