Nasdaq Champions Smart Regulatory Reform to Strengthen Capital Markets

Over the past quarter-century, the number of publicly traded companies on U.S. exchanges has plummeted by 36%, from approximately 7,000 to just 4,500. In stark contrast, private equity-backed companies have surged by around 475%, increasing from 2,000 to 11,500. Such a significant shift raises concerns about the burden of public company status, which has become increasingly costly and restrictive, stifling growth and competitiveness among U.S. firms. This trend not only diminishes the depth and liquidity of the capital markets but also restricts everyday Americans from participating in the wealth creation spurred by innovation.

In response to these challenges, Nasdaq’s paper outlines several pragmatic and results-oriented regulatory changes designed to restore a more balanced relationship between oversight and accessibility in the public markets. Key recommendations include:

The proposal emphasizes the need for a more efficient proxy process, which includes reforms to proxy access, improvements in proxy plumbing, and updates to shareholder proposal regulations. These changes aim to streamline the way companies engage with their shareholders, ultimately enhancing corporate governance.

Nasdaq advocates for scaling disclosure requirements based on materiality, advocating for streamlined quarterly reporting practices. The goal is to modernize and simplify disclosure expectations for emerging growth companies, accelerated filers, and smaller reporting companies, thereby reducing the regulatory burden on these firms.

Nasdaq calls for smarter regulatory practices, such as ensuring that audits remain relevant and affordable, updating short selling disclosures, and curtailing unproductive litigation practices. By fostering a more level playing field, Nasdaq aims to empower companies while ensuring investor protection and corporate accountability.

Nelson Griggs, President of Nasdaq, highlighted the urgency of these reforms, stating, “The urgency to find solutions to these pain points extends beyond simply maintaining the public company model – it is about America's global competitiveness.” Griggs emphasized the critical role that accessible public markets play in democratizing wealth creation and providing investors the opportunity to support innovative companies.

John Zecca, Executive Vice President and Global Chief Legal, Risk and Regulatory Officer at Nasdaq, echoed this sentiment, stating, “Markets evolve over time, and now is the time to rebalance and modernize the regulatory environment that is tilted too heavily toward burdensome oversight.” He stressed the need for a data-driven, results-oriented regulatory framework that simplifies burdens while enhancing the quality of information available to investors.

The release of this policy paper marks a significant step in Nasdaq’s ongoing advocacy for a more effective and efficient regulatory landscape. By addressing the complexities that hinder public companies and their investors, Nasdaq aims to create an environment conducive to growth, innovation, and economic prosperity.

As Nasdaq continues to champion these reforms, it seeks to not only bolster the capital markets but also fortify the foundations of the American economy for the generations to come. The recommendations presented in this paper may pave the way for a revitalization of public markets, ultimately enhancing job creation and expanding wealth-building opportunities across American society.

For further insights into Nasdaq’s initiatives and policy advocacy efforts, interested parties can visit their dedicated webpage.