Could the heavy hand of regulation finally be lifting from America’s public markets?
According to Yahoo! Finance, U.S. exchange operators like Nasdaq and the New York Stock Exchange (NYSE), alongside the Securities and Exchange Commission (SEC), are deep in talks to reduce regulatory burdens for public companies, aiming to make listing more appealing for high-value startups amid a broader push for reform under President Donald Trump’s administration.
These discussions, ongoing for several months, focus on the mounting challenges companies face when going public or staying listed. The number of public companies on U.S. exchanges has dropped 36% since 2000 to just 4,500. Firms like Elon Musk’s SpaceX have sidestepped IPOs, citing excessive disclosure demands and costs.
Historically, regulations have tightened over the decades, especially since the Sarbanes-Oxley Act of 2002 ramped up disclosure rules. Post-2008 financial crisis, the SPAC boom, and meme stock frenzy after COVID-19 only intensified oversight on issues like climate and cybersecurity. When Apple went public in 1980, its prospectus was a lean 47 pages; today, it averages 250 pages of often generic risk language.
Under Trump’s first term, efforts to ease rules gained traction, with then-SEC chair Jay Clayton targeting parts of the Dodd-Frank Act. The Jumpstart Our Business Startups (JOBS) Act of 2012 also allowed confidential IPO filings. Now, market experts see this as potentially the biggest regulatory shift since that landmark law.
The current talks, led by new SEC chairman Paul Atkins, aim to streamline capital formation. “The SEC is considering addressing regulatory burdens that undermine capital formation,” a spokesperson noted. The focus is on making initial public offerings enticing again for wary firms.
Proposed changes are bold and wide-ranging. They include slashing disclosure requirements, especially in preliminary proxy filings, and overhauling proxy processes to limit information shared with shareholders for voting. Costs of listing and staying public could also drop through reduced fees.
Additionally, reforms target activist investors by making it tougher for minority stakeholders to launch proxy contests or submit repetitive proposals. This could quiet disruptive voices, but it also risks less transparency for everyday investors. Are we trading accountability for efficiency?
Special purpose acquisition companies (SPACs), a workaround for traditional listings via mergers with shell firms, are also in focus. After recent SEC crackdowns, proposed rollbacks would ease capital-raising for SPAC-listed firms and public companies through follow-on share offerings.
Easing rules might lure more companies to list, but there’s a catch. Less disclosure could mean more risk for investors, as reduced transparency clouds true company value. As University of Pennsylvania professor Jill Fisch put it, full information helps markets “price securities more accurately.”
“That’s good for everyone,” Fisch added. Without it, are we inviting speculation over sound investing?
Exchange leaders are vocal about the need for change. Nasdaq President Nelson Griggs said companies are “staying private longer,” and stressed making public markets “attractive” to democratize access. NYSE Group’s general counsel, Jaime Klima, echoed this, advocating for “efficient regulation” to keep markets competitive.
Still, don’t expect a flood of IPOs overnight. As Dave Peinsipp from Cooley law firm cautioned, a rush to list is unlikely even with SEC rulemaking. Success hinges on the returns and valuations companies can secure.
For investors eyeing opportunities, this could signal a shift worth watching. If reforms take hold, undervalued firms might emerge in public markets, offering rare entry points. Stay sharp—research deeply, prioritize fundamentals, and don’t chase hype over substance.