New issuers have been overlooked in the US equity market
reform debate, but volatility is a bigger concern for them than
the market being down.
Nasdaq OMX has been talking to would-be issuers about
market structure and who is providing liquidity, the exchange's
executive vice president of transaction services, Eric Noll
told delegates at Sifmas annual meeting on November
Issuers are an unusual category of market participants
and one that we as an industry probably dont spend a lot
of time addressing, and probably should spend more time talking
about, he said.
Last years so-called flash crash and the August
volatility have steered these companies focus to market
structure. Its something that CFOs have not spent a
lot of time in the past worrying about, but they do spend a
tremendous amount of time worrying about it now, said
Unstable markets are a bigger deterrent to initial public
offerings (IPOs) than the sluggish market. Volatility has
been the biggest issue, even more than the market being
down, said Michael Kaplan, co-head of Davis Polk &
Wardwells global capital markets group.
The US IPO market effectively shutdown in August following
the months record price swings. No company was willing to
take the risk following the Dow Jones closing 400 points either
way for four consecutive days.
It makes it very hard to
do a deal and get a price as you dont have the
confidence, particularly with an IPO which can be marketed it
for up to two and a half weeks, of what is the market will look
like during that period, Kaplan said.
Since the volatility dampened around three weeks ago some
IPOs have launched and there are now a number in the market;
nine this week
according to the WSJ.
Noll said small-cap companies looking to list have the
biggest concerns, and are anxious about how liquidity is
provided outside of the top 100 names. Nasdaq is speaking with
them on how to make exchanges a better way to raise