U.S. exchanges and the Securities and Exchange Commission have been engaged in months of high-level discussions aimed at overhauling the regulatory framework for publicly traded companies. With the number of listings languishing near multi-decade lows—down 36 percent since 2000—market operators are pressing for targeted relief to lower the cost and complexity of going and staying public. The dialogue, involving the SEC, Nasdaq and the New York Stock Exchange, reflects a broader deregulatory agenda championed by the current administration, and could yield the most significant easing of disclosure and proxy rules since the 2012 JOBS Act.

Streamlining Disclosure and Reporting Requirements

A central pillar of the proposed reforms is a substantial reduction in mandated disclosures—particularly for emerging-growth and smaller reporting companies. Regulators are examining ways to pare back the length and detail of required filings, such as trimming boilerplate risk-factor language and scaling back mandatory quarterly narrative disclosures. By allowing shorter, more focused prospectuses and annual reports, the exchanges argue, companies could save millions in legal and accounting fees. This initiative echoes the SEC’s recent withdrawal of 14 proposed rules under its new chair, which prioritized cutting unnecessary compliance burdens across climate, cybersecurity and digital-asset reporting standards

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In practice, the changes under consideration would enable a tiered disclosure regime. At its heart, this model grants lighter reporting obligations to firms with market capitalizations below specified thresholds, provided they meet certain governance and audit criteria. For mid-sized enterprises—those with valuations between \$250 million and \$700 million—regulators are weighing deferred compliance timelines for new rules and exemptions from some seasonal SEC filings. Proponents argue such gradations would better align costs with company size and investor needs, without undermining transparency for larger issuers.

Curtailing Proxy-Contest Complexity

Another focus of the talks involves the proxy process, where small shareholders can launch costly board challenges and submit repetitive proposals. Exchange and SEC officials are discussing amendments that would raise the ownership threshold required to nominate directors, curbing proxy fights from investors holding minimal stakes. In parallel, they propose streamlining preliminary proxy disclosures to eliminate duplicative detail and shorten review cycles.

By narrowing the window for eligible proposals—limiting each investor to a small annual allotment—the reforms aim to reduce disruptive, protracted contests and alleviate the administrative load on corporate secretaries. At present, companies can spend upwards of \$5 million defending against activist slates even when dissidents control barely 1 percent of shares. Under the new blueprint, shareholders might need to hold at least 5 percent for a sustained period before initiating a proxy challenge, thereby focusing contests on truly material governance disputes.

Lowering Barriers for SPAC and Follow-On Offerings

Special Purpose Acquisition Companies (SPACs) have, until recently, provided an alternative route to public markets, but heightened SEC scrutiny curtailed their appeal. As part of the deregulatory push, exchanges are advocating for renewed SPAC flexibility—streamlined disclosures for de-SPAC transactions, revised lock-up requirements for sponsors, and expedited SEC review of merger proxy statements. These adjustments could revive SPACs as a viable vehicle for growth-stage firms reluctant to endure traditional IPO vetting.

Concurrently, discussions cover measures to simplify follow-on equity offerings. Proposals include raising the cap on “shelf” registrations, allowing issuers to tap the market for up to five years without re-filing, and lowering investor-protection thresholds that trigger additional disclosure. By expanding automatic “greenshoe” options and reducing underwriting covenants, companies could raise capital more rapidly during favorable market windows without incurring repeated legal expenses.

Reducing Listing and Ongoing Fees

Listing fees and annual exchange charges have also come under scrutiny. The NYSE and Nasdaq have floated proposals to trim initial listing fees for smaller firms by up to 50 percent, coupled with discounted renewal charges during the first five years post-IPO. This tiered fee structure aims to mirror practices in Europe and Asia, where exchanges compete aggressively for listings by undercutting incumbents on cost.

To ensure exchanges remain adequately funded for surveillance and investor-protection functions, the fee cuts would be offset by modest increases in regulatory transaction levies on high-frequency trading and off-exchange executions. In effect, the burden shifts slightly away from issuers toward active market participants, preserving exchanges’ self-regulatory capabilities while lightening the burden on newly public companies.

While easing burdens for issuers, policymakers remain mindful of preserving core investor safeguards. Any rollback of disclosure and proxy rules is being calibrated to avoid blind spots in financial reporting. The SEC has underscored that reforms will not dilute fundamental obligations—for instance, auditors’ attestations, insider-trading restrictions and anti-fraud provisions are off-limits. Instead, the focus remains on eliminating “costly minutiae” and aligning U.S. capital markets’ regulatory intensity with global peers.

Industry veterans note that past deregulation efforts—like the JOBS Act’s confidential filing regime—boosted IPO activity modestly but did not produce a lasting surge. They caution that valuations, market sentiment and macroeconomic conditions ultimately drive listing decisions. However, by addressing high-profile irritants—opaque proxy rules, voluminous filings and steep fees—the current initiatives have a realistic chance of making public listings more attractive to fast-growing private companies.

Next Steps and Industry Impact

Exchanges are preparing formal recommendations for the SEC, expected later this summer. Following submission, the commission will solicit public feedback and convene stakeholder roundtables before codifying any rule changes. Final decisions are anticipated by year-end, with phased implementation slated for early 2026. Should the reforms gain approval, U.S. capital markets could see a revival in IPO pipelines, particularly among technology and life-sciences startups that have shunned public markets in favor of private funding rounds.

In tandem, the easing of public-company regulations is likely to spur ancillary legal, accounting and advisory services tailored to smaller issuers navigating the revamped regime. At the same time, activist investors may need to recalibrate engagement strategies in light of higher proxy thresholds, potentially shifting toward longer-term ownership approaches rather than short-window board campaigns.

As exchanges and the SEC continue their discussions, the outcome promises to reshape America’s public-company landscape—striking a new balance between robust transparency, efficient capital raising and the competitive allure of listing on U.S. markets.

(Adapted from Reuters.com)