Nasdaq enables companies to access the public markets through a direct listing.
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.
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.
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.
Nasdaq is the only exchange that provides order book transparency through our technology solution called the Bookviewer.SVP, 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.
Everything we offer clients in an IPO, we offer in a Direct Listing.VP, Head of Capital Markets