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Dec 15 (Reuters) – Equity listings on the Nasdaq fell about 80% this year, as the appetite for new issues took a hit from extreme volatility in the stock market, sparked by the Federal Reserve’s war on inflation.

A total of 156 companies listed their shares on the bourse this year, raising nearly USD 15 billion in initial public offerings, a far cry from 743 firms that raised USD 180 billion in what was a blockbuster 2021, data from the exchange operator showed.

The slump in the IPO activity comes as US stock markets wobbled through much of the year due to a spate of selloffs as the Fed took an aggressive stance on interest rates.

The US central bank on Wednesday raised rates as expected, but rattled investors by saying rates would remain higher for longer.

The Fed’s policy-setting committee projected it would continue raising rates to above 5% in 2023, a level not seen since a steep economic downturn in 2007, quashing hopes that the central bank would hit the brakes on its hiking-cycle early next year.

The year has been especially brutal for technology firms as rising interest rates have boosted yields on government securities, making high-growth shares less attractive. That has also weighed on technology IPOs, which generally form the bulk of US listings.

For the year, the technology-heavy Nasdaq index is down 28%, well below a 16.2% decline in the S&P 500 .SPX index and a 6.5% drop in blue-chip Dow Jones Industrial Average index.

The year also saw a big drop in the listings of blank-check companies, as regulatory concerns and their free-falling share price seemed to have cooled Wall Street’s hottest investment trend of 2021. In total, 68 SPACs listed on the exchange in 2022, compared with 110 a year earlier.

The lull in the IPO market is expected to spill over into the first half of 2023, Nasdaq’s chief executive officer Adena Friedman said last month, while adding that it would pick up in the second half of the year.

(Reporting by Mehnaz Yasmin and Akash Sriram in Bengaluru; Editing by Anil D’Silva)

 

NEW YORK, Dec 14 (Reuters) – The US Securities and Exchange Commission on Wednesday voted to propose some of the biggest changes to American equity market structure in nearly two decades, aimed at boosting transparency and fairness while increasing competition for individual investors’ stock orders.

The proposals include requiring marketable retail stock orders to be sent to auctions before they are executed, a new standard for brokers to show they get the best possible executions for client orders, and lower trading increments and access fees on exchanges, the SEC said.

“We feel that these reforms, if enacted, will ultimately help the price discovery process and save investor’s money,” said Joe Saluzzi, co-manager of trading at Themis Trading.

“Allowing orders to interact with each other, rather than segmenting them, will enhance competition and yield better prices.”

Opening up individual investor orders that can be immediately executed to competitive auctions could lead to “significantly” better prices for investors, the SEC said. Under current practice, retail brokers send most such orders to wholesale brokers, sometimes for a fee.

“The competitive shortfall could be worth about USD 1.5 billion annually, compared with current practice — money that could go back into retail investors’ pockets,” said SEC Chair Gary Gensler.

The changes, if adopted, would represent the biggest shakeup to stock market rules since the SEC introduced Regulation National Market System in 2005, which was aimed at modernizing and enhancing an increasingly fragmented and largely electronic marketplace.

Ronan Ryan, president and co-founder of exchange operator IEX Group Inc said the reforms were a “constructive and positive effort to improve transparency, increase competition, and ensure that investors can access the best prices available in the market.”

“It has been 17 years since the existing equity rules were adopted, and since that time, the stock market has seen significant change – including the advent of high-frequency trading, a dramatic decline in displayed liquidity on exchange, and a substantial rise in off-exchange trading,” said Ryan.

“Modernizing regulation ensures that market competition among brokers, market makers, and exchanges continues to benefit investors.”

The order competition rule, which would require marketable retail orders to be sent to auctions, could lead to more such orders being matched on exchanges, like the Nasdaq NDAQ.O or Intercontinental Exchange Inc’s New York Stock Exchange, rather than by wholesale brokers, like Citadel Securities and Virtu Financial.

Nasdaq said it believes in “transparent, fair, efficient, competitive and inclusive markets and that it looks forward to reviewing the SEC’s proposals.

Citadel Securities said in a statement that “any proposed changes must provide demonstrable solutions to real problems while avoiding unintended consequences that will hurt American investors.”

Firms that benefit from the status quo, such as wholesalers and retail brokers that receive payments from them, will likely fight the SEC’s proposals, said Stephen Hall, Better Markets’ Legal Director and Securities Specialist.

“It is imperative that the SEC resist industry pressure, carefully consider all stakeholder input, and finalize a set of rules that will truly help investors at long last to get a better deal on Wall Street,” said Hall.

The SEC also voted to propose requiring brokers to provide more information on the quality of their customer trades, while also expanding the number of firms that must file the order execution reports.

The proposed changes will be put up for public comment until at least March 31 before the regulator moves to finalize the rules, which will also be voted on.

The regulator also voted to expand disclosures around the trading of company shares by insiders, such as executives and directors, that have received equity-based compensation.

(Reporting by John McCrank; Additional reporting by Sinead Carew and Caroline Valetkevitch; Editing by Marguerita Choy and Stephen Coates)

 

NEW YORK, Dec 14 (Reuters) – US stocks closed lower in volatile trading on Wednesday following a policy announcement by the Federal Reserve that raised interest rates by an expected 50 basis points, but its economic projections see higher rates for a longer period.

The central bank raised interest rates by half a percentage point on Wednesday and projected at least an additional 75 basis points of increases in borrowing costs by the end of 2023, as well as a rise in unemployment and a near-stalling of economic growth.

The Fed’s latest quarterly summary of economic projections shows US central bankers see the policy rate – now in the 4.25%-to-4.5% range – at 5.1% by the end of next year, according to the median estimate of all 19 Fed policymakers, up from the 4.6% view at the end of September.

In comments after the statement, Fed Chair Jerome Powell said it was too soon to talk about cutting rates as the focus is on making the central bank’s policy stance restrictive enough to push inflation down to its 2% goal.

Economic data on Tuesday, which showed cooling consumer inflation for November, had heightened expectations a move by the Fed to halt rate hikes might be on the horizon next year.

“They may be using these sort of very aggressive dot plot forecasts to take any steam out of the easing that has gone on in the last couple of months,” said Rhys Williams, chief strategist at Spouting Rock Asset Management in Bryn Mawr, Pennsylvania, said of Feb policymakers.

“Conditions have eased, and that is their way of jawboning they are not going to let any easing really happen until they see unemployment go up.”

The Dow Jones Industrial Average fell 142.29 points, or 0.42%, to 33,966.35, the S&P 500 lost 24.33 points, or 0.61%, to 3,995.32 and the Nasdaq Composite dropped 85.93 points, or 0.76%, to 11,170.89.

Nearly all of the 11 major S&P sectors ended the session in negative territory, with healthcare .SPXHC the sole advancer. Financials .SPSY, down 1.29%, were the worst performing sector.

Despite the Fed statement, US Treasury yields were slightly lower after initially jumping in the wake of the announcement.

The strategy of aggressive interest rate increases by major central banks around the world this year has increased worries the global economy could be pushed into a recession and weighed heavily on riskier assets such as equities this year.

Each of the three major averages on Wall Street are on track for their first yearly decline since 2018, and their biggest yearly percentage decline since the financial crisis of 2008.

Tesla Inc. (TSLA) slipped 2.58% after a Goldman Sachs analyst trimmed the price target for the electric-vehicle maker’s stock.

Charter Communications Inc. (CHTR) tumbled 16.38% as brokerages cut their price targets following the telecom services firm’s mega-spending plans for a higher-speed internet upgrade.

Volume on US exchanges was 12.15 billion shares, compared with the 10.55 billion-share average for the full session over the last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 1.39-to-1 ratio; on Nasdaq, a 1.42-to-1 ratio favored decliners.

The S&P 500 posted eight new 52-week highs and two new lows; the Nasdaq Composite recorded 82 new highs and 223 new lows.

(Reporting by Chuck Mikolajczak; editing by Jonathan Oatis)