Is Sarbox Deterring IPO Filings?

Anuj Gangahar of The Financial Times posted the news that ever enemy of shareholder friendly laws, and strong SEC rulings see as their worst nightmare. New York will once again pass London in the amount of money that is raised in IPOs.

Money raised through stock market debuts in New York is set to hit levels not seen since the dotcom boom, with $51.3bn raised this year on the NYSE and Nasdaq combined, according to figures from Dealogic, the data provider. In London, debuts on the London Stock Exchange and Aim have raised $45.8bn in the year to date.

However the U.S. seems to have been edged out in the number of deals but not materially. This suggests that a few outlying large deals are not tilting the numbers.

However, London just eclipses New York in terms of the number of companies that have come to market this year, with 208 deals compared with 202 in New York.

The NYSE used to cede certain listings to the NASDQ as many firms did not meet their strict standards to list on the big board. Today competition is global, and much of the game is moving east to attract Chinese and Indian companies to list that are seeking new and large pools of liquidity.

Market turmoil is not helping the exchanges on either side of the puddle.

In the past two weeks, 11 companies that had planned to float their shares on U.S. stock exchanges have either withdrawn or postponed their deals.

This comes after a dozen IPOs, which had expected to raise a total of $2.5bn, were pulled in October.

Markets fluctuate, and as they do, news of companies pulling their IPOs is no surprise. The real issue debated among politicians and financial experts has been whether or not the Sarbox rules are too stringent to attract new listings. The answer after a few years is no.

Competition is healthy and creates an overall larger global marketplace. We have written before about the importance of Sarbox and recently about how global uniformity of financial reporting would narrow borders further, and increase the ability of investors to make informed decisions.

As investment managers and designers of indexes, we seek transparency, accuracy and uniformity across industries and borders in reporting.

The number of listings and dollars raised is proving that Sarbox is not the deterrent that its detractors claim that it is. Looking back on previous posts of ours, we supply the conclusion we knew all along: non-U.S. firms willing to file and list in the U.S. are awarded a premium for doing so.

Disclosure: Mr. Corn is CEO of Clear Indexes LLC which publishes the Clear Global Exchanges, Brokers and Asset Managers Index licensed for the ETF (EXB). Mr. Corn owns shares of (EXB).