U.S. Stock Exchanges and SEC Explore Loosening Regulations to Attract More Public Listings

25 June 2025

In a significant shift that could reshape the American capital markets landscape, major U.S. stock exchanges are in active discussions with the Securities and Exchange Commission (SEC) to explore easing regulatory requirements for public companies. This potential recalibration of disclosure and governance rules comes as part of a broader effort to make public markets more appealing amid a notable decline in new listings.

According to industry sources and documents reviewed by Reuters, executives from the New York Stock Exchange and Nasdaq have been working with top SEC officials to re-evaluate longstanding obligations imposed on companies after they go public. These include requirements around quarterly earnings disclosures, investor communications, and corporate governance frameworks. The conversations are taking place amid growing concern that the U.S. is losing its edge as the world’s most attractive destination for IPOs.

The backdrop to these talks is a stark decline in the number of public companies in the United States. From a peak of over 7,500 in the late 1990s, that number has now fallen to around 4,000. Many high-growth startups have preferred to remain private, citing the burdens of regulatory compliance, disclosure scrutiny, and litigation risk. Venture capital and private equity funding have also provided viable alternatives to public financing, allowing these companies to delay or even avoid going public.

For the exchanges, reversing this trend is imperative. Their core business models depend heavily on new listings and trading volumes. More IPOs mean more initial listing fees, more long-term trading activity, and greater investor participation. In the long run, sustained listing droughts can weaken these platforms’ relevance and profitability. To that end, they are now looking to the SEC for flexibility, arguing that many existing requirements are outdated in a world dominated by technology, fast-moving capital, and global competition.

One major concern expressed by exchanges is the quarterly reporting mandate, which some executives believe puts too much pressure on short-term performance and deters innovation. They are pushing for an option that allows companies to file semiannual reports instead, a model that aligns more closely with practices in Europe and the United Kingdom. Proponents argue that fewer reporting cycles could reduce administrative burden, encourage long-term thinking, and attract more companies to the public markets.

The SEC under Chair Gary Gensler has previously signaled a commitment to investor protection and transparency, and any changes would need to balance market efficiency with accountability. However, Gensler’s team is reportedly open to dialogue, acknowledging the shift in capital-raising behavior and the necessity to keep U.S. markets globally competitive. While no final decisions have been made, officials have expressed a willingness to examine whether modernizations can be achieved without compromising investor interests.

Some critics, particularly from investor advocacy groups, warn that easing regulations could diminish the protections afforded to shareholders. They argue that rigorous disclosure requirements are the bedrock of trust in American markets, and relaxing them may open the door to less oversight and potential abuse. From their perspective, reduced transparency could disadvantage retail investors who rely on frequent and clear information to make informed decisions.

Still, the push from exchanges has gained momentum due to a series of recent high-profile IPO delays and withdrawals. Companies like Stripe, Reddit, and Databricks have all postponed or reconsidered their public listing timelines, reinforcing the belief that the IPO environment in the U.S. may no longer be as attractive as it once was. Meanwhile, markets such as Hong Kong, London, and even Abu Dhabi are actively courting startups with friendlier listing rules and incentive packages.

The proposal to reform public company obligations also comes at a time of rising geopolitical tension, tighter monetary policy, and evolving digital finance trends. Cryptocurrency platforms, blockchain-based trading models, and decentralized finance are challenging the traditional exchange ecosystem, adding urgency to innovation and adaptability.

If a consensus is reached, changes could take the form of a pilot program or phased implementation to test the impact of reduced regulatory burdens on market performance and investor outcomes. Other possible reforms under consideration include changes to shareholder proposal thresholds, proxy rules, and executive compensation disclosure norms.

Ultimately, the dialogue between exchanges and the SEC reflects a broader shift in how the U.S. is trying to future-proof its capital markets. While the desire to ease compliance for companies is clear, so too is the need to maintain the trust of investors who see transparency as a non-negotiable pillar of the system.

For now, all eyes remain on Washington as the regulatory wheels begin to turn. The outcome of these talks could influence the structure of the U.S. public markets for decades to come, determining whether the next generation of tech giants and unicorns chooses Wall Street or looks elsewhere to raise capital.