The SEC has rejected plans from the New York Stock Exchange to broaden the universe of companies able to use a direct listing on its exchange.

As the listing home of Spotify Technology SA and Slack Technologies Inc., the Intercontinental Exchange Inc.-owned exchange operator has executed two of the three direct listings in the U.S. over the last two years. The IPO alternative allows companies to transfer their shares onto a national securities exchange for trading without having to go through many of the hoops associated with a traditional IPO.

NYSE had hoped to make the direct listing mechanism available to a wider array of companies through a series of rule proposals it floated in late November. However, the SEC appears to have questions about those changes.

"We remain committed to evolving the direct listing products," a NYSE spokesperson said in a statement. "This sort of action is not unusual in the filing process and we will continue to work with the SEC on this initiative."

A spokesperson for the SEC did not immediately respond to a request for comment.

Direct listings have captivated interest across Wall Street and Silicon Valley in recent months as private market investors such as venture capitalists have grown increasingly worried about the costs of going public through an IPO. Industry participants say there could be as many as five direct listings in 2020, with many pegging Airbnb Inc. as a likely candidate to use the method in its expected public-market debut.

Under its proposal, NYSE wanted to allow companies to raise principal capital by selling shares of their own in a direct listing, the key feature of running a regular IPO. It sought to ease its distribution requirements as well in order to make the direct listing model more accessible to companies with smaller private shareholder bases.

"We're constantly thinking about ways we can evolve our offerings to meet the demands of the marketplace," NYSE Vice Chairman and Chief Commercial Officer John Tuttle said in an interview after the exchange submitted its plans with the SEC in November.