Oversight and Governance of Financial Markets of Affirm

Oversight and Governance of Financial Markets
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Oversight and Governance of Financial Markets
Affirm is among the few financial service providers that do not have compound interests or hidden costs for clients. Instead of getting credit cards like in contemporary organizations, Affirm allows consumers to buy products because loans are taken at the point of sale. The business strategy has allowed Affirm to grow drastically since 2012 when it was founded. On Jan. 13, 2021, the company went public with an initial IPO price of $49. The total IPO valuation for the company was estimated to be $11.9 billion. The company owners decided to float the shares in the NASDAQ stock exchange. The organization's success depends on the success and stability of the market. Thus, the current paper aims to elicit how different markets, including Nasdaq, are regulated and how that might impact decisions on the market(s) Affirm can be listed in.
NASDAQ
Nasdaq is an American stock exchange based in New York City. It comes second after the New York Stock Exchange based on the list of stock exchanges by market capitalization of traded shares. This market is regulated by the U.S. Securities and Exchange Commission (SEC). Aside from SEC, NASDAQ is also a self-regulating agency through its internal NASDAQ Investigations and Enforcement Team, which protects the market's integrity by investigating cases of possible misconduct and enforcing the rules of the market's three equities markets. Further, NASDAQ relies on the Financial Industry Regulatory Authority (FINRA), which assists in the operations and regulations of over-the-counter markets and the stock market. Internal self-regulation is ideal because it allows companies like Affirm to conduct business without extensive oversight from government or investigative agencies.
For a company to be listed on NASDAQ, it must meet some requirements. For instance, the company should have attained a shareholder's equity of at least $2 million, float at least 100,000 shares, have a minimum of 300 shareholders, and have a total asset of at least $4 million (NASDAQ 2022). Further, the public float market value should be over $1 million with a $3 minimum bid price of its stock supported by at least two market makers. While these requirements are intended to protect market integrity, they also make it difficult for organizations looking for IPO listing. As already mentioned, NASDAQ is regulated both by the SEC and internal mechanisms. SEC, however, is the leading external enforcement agency that enforces federal securities laws and regulates the industry (SEC, 2022). Violation of SEC requirements can lead to fines and possible delisting from NASDAQ. However, delisting is among the extreme decisions taken by the SEC, which means that the listing of Affirm on NASDAQ could have been motivated by the level of freedom it provides in terms of compliance.
Shanghai Stock Exchange (SSE)
Aside from Nasdaq, SSE is among the major international financial markets and the biggest in Asia. There are two main places where the information on the oversight, rules, and regulations governs SSE. The first place is the market itself, i.e., its website and all the communication channels. This is a crucial sourc...