Public Markets and Corporate Growth

House of Representatives

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One of the greatest benefits of a well-functioning public market is its ability to generate new jobs. 92 percent of job growth in a company occurs post IPO. Access to the public market, not just private capital, provides the most significant opportunity for permanent access to capital "and the deepest pool of liquidity in the world", a currency for m+a, liquidity for employees and investors, all while providing transparent disclosure to protect investors.

NYSE Euronext is focused on raising and implementing recommendations to bring down the barriers and costs of going public in the U.S. (see my recent post on the recommendations of the IPO Task Force). We have been vocal on our support for increasing the threshhold for Regulation A offerings, creating a regulatory "on ramp" for a new category of emerging growth issuers, and advocating ideas to promote access to capital for small and medium sized businesses.

This week, we also testified before the U.S. House of Representatives on "How Roadblocks in Public Markets Prevent Job Creation on Main Street." (Click here for the testimony). Highlighted in that testimony is building the case for wider spreads, particularly for new and smaller issuers. The concern focuses particularly around a lack of liquidity for smaller issuers and the lack of sufficient analyst coverage to attract long-term investors. NYSE advocates for a market-wide pilot program with wider spread increments for less liquid securities as a mechanism to address these problems. We need to provide greater incentive to trade and provide research coverage for the companies that need it most, something we lost in the transition towards decimalization and penny spreads. While our markets have become very cheap to trade, we may have gone too far to eliminate the very economics which supported our emerging growth companies and IPOs.

We encourage our regulators and politicians to focus on fixing our public markets as one of the greatest engines for job creation.

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