Joseph Lucosky, Managing Partner of Lucosky Brookman, a renowned law firm specializing in microcap IPOs and Nasdaq/NYSE listings, is at the forefront of changing the landscape for companies looking to go public. In June 2023, Cboe Global Markets introduced its U.S. market, Cboe US, as an alternative for businesses seeking a senior exchange for their IPOs, challenging the duopoly of Nasdaq and NYSE.
Nasdaq currently dominates the micro-cap market, with 89.6% of IPOs in 2023 compared to NYSE’s 10.4%. However, with Cboe entering the scene, companies now have another option for listing their securities on a senior exchange. Cboe offers similar benefits to Nasdaq and NYSE, providing growth companies with a potentially friendlier platform for achieving their going public goals.
Cboe, a seasoned player in options trading and home to over 650 ETFs, has positioned itself as a viable option for microcap to mid-cap companies in a challenging listing and fundraising environment. While both Nasdaq and Cboe have stringent listing requirements, Cboe’s practical application of these criteria sets it apart and makes it more streamlined for issuers and their advisors.
Key listing requirements for both Nasdaq and Cboe include stockholders’ equity, share price, public float, and number of shareholders. What differentiates Cboe from Nasdaq is its approach to these requirements, such as not applying a “burn rate” calculation for stockholders’ equity and allowing reverse stock splits for achieving minimum bid price, making it more issuer and transaction-friendly.
Cboe’s flexibility in allowing leak-out agreements for part of the public float, accommodating anchor investors in IPOs, and simplifying round lot holder requirements make it a compelling choice for companies looking to go public. While Nasdaq remains the preferred option for microcap companies, Cboe’s competitive advantages and issuer-friendly criteria may attract more companies, investment bankers, and investors in the future. As Cboe continues to build out its third senior exchange platform, it appears to be heading in the right direction for companies seeking alternative listing options.
