Notice2025-18140
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1, To Adopt Additional Initial Listing Criteria for Companies Primarily Operating in China
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 19, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 180 (Friday, September 19, 2025)</title>
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[Federal Register Volume 90, Number 180 (Friday, September 19, 2025)]
[Notices]
[Pages 45298-45303]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-18140]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103979; File No. SR-NASDAQ-2025-069]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing of Proposed Rule Change, as Modified by Amendment No.
1, To Adopt Additional Initial Listing Criteria for Companies Primarily
Operating in China
September 16, 2025.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on September 4, 2025, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change. On September 12,
2025, the Exchange filed Amendment No. 1 to the proposed rule change,
which superseded and replaced the proposed rule change in its entirety.
The proposed rule change, as modified by Amendment No. 1, is described
in Items I and II below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change, as modified by Amendment No. 1, from
interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to adopt additional initial listing criteria
for companies primarily operating in China, including the Hong Kong
Special Administrative Region and the Macau Special Administrative
Region. This Amendment No. 1 supersedes the original filing in its
entirety.\3\
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\3\ This Amendment No. 1 is being filed to remove a footer that
was inadvertently included on the document.
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The text of the proposed rule change is detailed below; proposed
new language is italicized and proposed deletions are in brackets.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/nasdaq/rulefilings">https://listingcenter.nasdaq.com/rulebook/nasdaq/rulefilings</a>, and at the principal office of the Exchange.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
[[Page 45299]]
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Since 2020, there has been a sharp increase in the number of
companies from the People's Republic of China (``China'') seeking to
list in the United States, with a record number of Chinese companies
having sought a U.S. listing in 2024 and a continuation of that pace in
2025. U.S. investors have increasingly sought exposure to emerging
market companies as part of a diversified portfolio and Chinese
companies have been drawn to the higher valuations, diverse investor
base, greater liquidity, and overall size of the U.S. capital markets,
which allows companies to raise significantly more capital than they
could in their domestic markets. As a result of these interests,
emerging market companies have sought to raise funds in the U.S. and
list on Nasdaq.
However, amidst this increase, U.S. policymakers and regulatory
agencies have voiced a range of bipartisan concerns regarding the
listing of Chinese companies on American securities exchanges, citing
risks to investors and national security. For example, in December
2020, Congress passed the Holding Foreign Companies Accountable Act,
which was signed into law. Before the passage of this law, Nasdaq also
identified concerns around the audits of Chinese companies and, in
2019, Nasdaq proposed additional requirements applicable to companies
from jurisdictions that do not provide the Public Company Accounting
Oversight Board (``PCAOB'') with access to conduct inspections of
public accounting firms that audit Nasdaq-listed companies.\4\ At the
same time, Nasdaq also proposed two other changes seeking to address
concerns with Chinese companies.\5\
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\4\ Securities Exchange Act Release No. 89027 (June 8, 2020), 85
FR 35962 (June 12, 2020) (SR-NASDAQ-2019-027 [sic]). See also
Securities Exchange Act Release No. 93256 (October 4, 2021), 86 FR
56338 (October 8, 2021) (approving SR-NASDAQ-2020-007 [sic], which
replaced SR-Nasdaq-2019-027 [sic]).
\5\ Securities Exchange Act Release No. 89028 (June 8, 2020), 85
FR 35967 (June 12, 2020) (SR-NASDAQ-2019-026 [sic]) and Securities
Exchange Act Release No. 88987 (June 2, 2020), 85 FR 34774 (June 8,
2020) (SR-NASDAQ-2020-028). These proposals were withdrawn after the
Commission Staff indicated that they would not be approved. See
Letters from Arnold Golub to Vanessa A. Countryman (February 1,
2021) available at <a href="https://www.sec.gov/comments/sr-nasdaq-2020-026/srnasdaq2020026-8324959-228601.pdf">https://www.sec.gov/comments/sr-nasdaq-2020-026/srnasdaq2020026-8324959-228601.pdf</a> (withdrawing SR-Nasdaq-2020-026)
and <a href="https://www.sec.gov/comments/sr-nasdaq-2020-028/srnasdaq2020028-8324961-228602.pdf">https://www.sec.gov/comments/sr-nasdaq-2020-028/srnasdaq2020028-8324961-228602.pdf</a> (withdrawing SR-Nasdaq-2020-028).
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More recently, bills introduced in Congress have continued to raise
bipartisan concerns \6\ and, in February 2025, the Administration put
forth the ``America First Investment Policy'' outlining concerns with
certain Chinese companies seeking investments in the United States and
describing various actions the Administration would take with respect
to Chinese companies.\7\ In May 2025, the financial officers of 23
states wrote a letter to Chairman Atkins highlighting concerns with the
listing of Chinese companies.\8\ Additionally, it has also been
reported that China's securities regulator, the China Securities
Regulatory Commission, has taken action to prohibit small company
listings in the U.S. based on similar concerns.\9\
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\6\ See, e.g., the PRC Broker-Dealers and Investment Advisers
Moratorium Act, S.2552 (119th Congress); the China Financial Threat
Mitigation Act of 2025, H.R. 1549 and S. 1113 (119th Congress).
\7\ See America First Investment Policy, The White House
(February 21, 2025), available at <a href="https://www.whitehouse.gov/presidential-actions/2025/02/america-first-investment-policy/">https://www.whitehouse.gov/presidential-actions/2025/02/america-first-investment-policy/</a>.
\8\ <a href="https://sfof.com/wp-content/uploads/2025/05/Delisting-Letter.pdf">https://sfof.com/wp-content/uploads/2025/05/Delisting-Letter.pdf</a> (highlighting concerns arising from the PCAOB audit
inspections of major accounting firms in China).
\9\ See China Puts Brakes on US Stock Listings for Homegrown
Companies, Financial Times (February 27, 2025), available at <a href="https://www.ft.com/content/a5640320-7ed3-47c5-b9a1-2c0d600170be">https://www.ft.com/content/a5640320-7ed3-47c5-b9a1-2c0d600170be</a>.
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Nasdaq has also identified concerns with the trading of companies
headquartered, incorporated or whose business is principally
administered in China. For example, nearly 70% of the matters that
Nasdaq has referred to the SEC or FINRA since August 2022 have been
related to trading in Chinese companies, while Chinese companies
represent less than 10% of all Nasdaq listings.\10\ Nasdaq believes
that these concerns are due, in part, to low liquidity in these
companies' securities. Specifically, given the other concerns
identified above about companies from China, when a Chinese company
lists on Nasdaq through an initial public offering (``IPO'') or
business combination with a small offering size or a low public float
percentage, the company may not attract market attention nor develop
sufficient public float, investor base, and trading interest to provide
the depth and liquidity necessary to promote fair and orderly trading.
As a result, the securities may trade infrequently, in a more volatile
manner and with a wider bid-ask spread, all of which may result in
trading at a price that may not reflect their true market value and
make the security more susceptible to manipulation by bad actors. The
risk to investors in such cases may be compounded because regulatory
investigations into price manipulation, insider trading and compliance
concerns may be impeded, and investor protections and remedies may be
limited in such cases, due to obstacles encountered by U.S. authorities
in bringing or enforcing actions against entities and individuals
involved in potentially manipulative trading activities and, if
applicable, the companies and insiders. Collectively, these statements
and findings support the imposition of stricter listing requirements
for Chinese companies.
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\10\ Nasdaq vigorously regulates trading on its marketplace and
brings appropriate enforcement action against its trading members.
However, due to U.S. market structure, where trading in listed
securities takes place across all equities exchanges and on off-
exchange venues, Nasdaq does not have insight into all trading
activity in listed securities and must refer matters involving
cross-market trading to other U.S. regulators, including the SEC and
FINRA.
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For these reasons, and as described more fully below, Nasdaq
proposes to require that a Chinese company must offer a minimum amount
of securities in a firm commitment offering in the United States to
public holders that will result in gross proceeds to the company of at
least $25 million. Nasdaq also proposes to adopt comparable changes for
companies seeking to list in connection with de-SPAC transactions,
direct listings, and that are currently trading on the OTC market or
another national securities exchange.
I. Identification of Companies Based in China
Nasdaq is proposing to adopt a new listing requirement for
companies based in China. More specifically, proposed Rule 5210(l)
would apply to a company that is headquartered or incorporated in China
(including the Hong Kong Special Administrative Region and the Macau
Special Administrative Region) or whose business is principally
administered in one of those jurisdictions. A company's business will
be considered to be principally administered in a jurisdiction if: (1)
the company's books and records are located in that jurisdiction; (2)
at least
[[Page 45300]]
50% of the company's assets are located in such jurisdiction; (3) at
least 50% of the company's revenues are derived from such jurisdiction;
(4) at least 50% of the Company's directors are citizens of, or reside
in, such jurisdiction; (5) at least 50% of the Company's officers are
citizens of, or reside in, such jurisdiction; (6) at least 50% of the
Company's employees are based in such jurisdiction; or (7) the Company
is controlled by, or under common control with, one or more persons or
entities that are citizens of, reside in, or whose business is
headquartered, incorporated, or principally administered in such
jurisdiction.\11\
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\11\ Several of these factors are also already used by Nasdaq
rules to determine whether a company's business is principally
administered in a ``Restrictive Market.'' See Listing Rule
5005(a)(37). The additional factors that Nasdaq would consider when
determining whether a business is principally administered in China
are supported by Nasdaq's experience in applying the Restrictive
Market definition and SEC guidance regarding foreign private issuer
status, which suggests that a foreign company may consider certain
factures including the locations of: the company's principal
business segments or operations; its board and shareholders'
meetings; its headquarters; and its most influential key executives
(potentially a subset of all executives). See Division of
Corporation Finance of the SEC, Accessing the U.S. Capital Markets--
A Brief Overview for Foreign Private Issuers (February 13, 2013),
available at <a href="https://www.sec.gov/divisions/corpfin/internatl/foreign-private-issuersoverview.shtml#IIA2c">https://www.sec.gov/divisions/corpfin/internatl/foreign-private-issuersoverview.shtml#IIA2c</a>.
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Nasdaq believes Chinese companies carry a risk that substantial
participation by Chinese investors, combined with insiders retaining
significant ownership, does not promote sufficient investor base and
trading interest to support fair and orderly trading in the secondary
market. Therefore, the new listing requirements, specifically for
Chinese companies, are intended to increase investor protections and
ensure sufficient liquidity exists for meaningful price discovery
therefore supporting investor confidence in these emerging markets
companies. Nasdaq will consider the seven elements holistically,
recognizing that there are various factors to consider when determining
where a company conducts its principal business activities.
For example, Company X could be incorporated in Country Y and its
headquarters could be located in Country Z, while at least half of its
senior management, employees, and assets are located in China. If
Company X applies to list its Primary Equity Security on Nasdaq in
connection with an IPO, Nasdaq would consider Company X's business to
be principally administered in China, and Company X would therefore be
subject to the proposed additional requirements applicable to a Chinese
company.
II. Minimum Offering Size for an IPO
The substantive change being proposed is to adopt new Rule 5210(l),
which would require that a Chinese company must offer a minimum amount
of securities in a Firm Commitment Offering \12\ in the United States
to Public Holders \13\ that will result in gross proceeds to the
company of at least $25 million. Nasdaq also proposes to adopt
comparable changes for companies seeking to list in connection with de-
SPAC transactions, direct listings, and that are currently trading on
the OTC market or another national securities exchange. A company that
falls under proposed Rule 5210(l) will also need to comply with all
other applicable listing requirements.
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\12\ Rule 5005(a)(17) defines ``Firm Commitment Offering'' as
``an offering of securities by participants in a selling syndicate
under an agreement that imposes a financial commitment on
participants in such syndicate to purchase such securities.''
\13\ Rule 5005(a)(36) defines ``Public Holders'' as ``holders of
a security that includes both beneficial holders and holders of
record, but does not include any holder who is, either directly or
indirectly, an Executive Officer, director, or the beneficial holder
of more than 10% of the total shares outstanding.''
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As discussed above, the growing interest from Chinese companies to
list on U.S. exchanges and the increased risk to U.S. investors, given
the limited ability of U.S. regulators to conduct audits and
investigations or bring or enforce actions against entities and
individuals involved in potentially manipulative trading activities in
these securities and, if relevant, many Chinese companies and persons,
create compliance concerns. Further, the Exchange has observed that
Chinese companies listing on Nasdaq in connection with an IPO with an
offering size below $25 million have a higher rate of compliance
concerns. Therefore, the Exchange believes that providing a Firm
Commitment Offering with proceeds to the company of at least $25
million will mitigate the concerns and provide greater support for a
Chinese company's price, as determined through the offering, and will
help assure that there will be sufficient liquidity, U.S. investor
interest and distribution to support price discovery and fair and
orderly trading on the Exchange once a security is listed.
III. Minimum Market Value of Publicly Held Shares for a Business
Combination
In the case of a business combination, as described in Rule 5110(a)
or IM-5101-2, Nasdaq believes that such transactions, when involving
Chinese companies, presents similar risks to U.S. investors as IPOs of
Chinese companies. However, such a business combination would typically
not involve an offering. Therefore, Nasdaq is proposing to adopt a new
Rule 5210(l)(ii) that would impose a similar new requirement as
applicable to IPOs but would reflect that the listing would not
typically be accompanied by an offering. Specifically, proposed Rule
5210(l)(ii) would require a company to have a minimum Market Value of
Unrestricted Publicly Held Shares following the business combination
equal to at least $25 million.
Market Value of Unrestricted Publicly Held Shares excludes
securities subject to resale restrictions from the calculation of
Publicly Held Shares because securities subject to resale restrictions
are not freely transferrable or available for outside investors to
purchase and therefore do not truly contribute to a security's
liquidity upon listing. Nasdaq believes that requiring the post-
business combination entity to have a minimum Market Value of
Unrestricted Publicly Held Shares of at least $25 million would help to
provide an additional assurance that there are sufficient freely
tradable shares and investor interest to support fair and orderly
trading on the Exchange when the target company principally administers
its business in China. Nasdaq believes that this will help mitigate the
unique risks that Chinese companies present to U.S. investors due to
barriers on access to information and limitations on the ability of
U.S. regulators to conduct investigations or bring or enforce actions
against the company and non-U.S. persons, which create concerns about
the accuracy of disclosures, accountability and access to information.
Adopting this additional requirement will help prevent companies from
using a business combination to avoid the requirement being imposed on
initial public offerings.
IV. Direct Listings of Chinese Companies
In the case of a Direct Listing (as defined in Rule IM-5315-1)
Nasdaq is proposing to adopt Rule 5210(l)(iii) which requires a Chinese
company to meet all applicable listing requirements for the Nasdaq
Global Select Market (NGS) and the additional requirements of IM-5315-
1, or the applicable listing requirements for the Nasdaq Global Market
(NGM) and the additional requirements of IM-5405-1. However, a company
that is headquartered or incorporated in the People's Republic of China
(including the Hong Kong Special Administrative Region and the Macau
Special Administrative Region), or
[[Page 45301]]
whose business is principally administered in such jurisdiction, will
not be permitted to list on the NCM in connection with a Direct
Listing.
Direct Listings are currently required to comply with enhanced
listing standards pursuant to IM-5315-1 (Nasdaq Global Select Market)
and IM-5405-1 (Nasdaq Global Market). If a company's security has had
sustained recent trading in a Private Placement Market,\14\ Nasdaq may
attribute a Market Value of Unrestricted Publicly Held Shares equal to
the lesser of (i) the value calculable based on a Valuation \15\ and
(ii) the value calculable based on the most recent trading price in the
Private Placement Market.\16\ Nasdaq believes that the price from such
sustained trading in the Private Placement Market for the company's
securities is predictive of the price in the market for the common
stock that will develop upon listing of the securities on Nasdaq and
that qualifying a company based on the lower of such trading price or
the Valuation helps assure that the company satisfies Nasdaq's
requirements. Nasdaq also believes that in the absence of recent
sustained trading in the Private Placement Market, the requirement to
demonstrate a Market Value of Publicly Held Shares of at least $250
million for a company seeking to list on NGS, or that the company
exceeds 200% of the otherwise applicable price-based requirement for a
company seeking to list on NGM,\17\ helps assure that the company
satisfies Nasdaq's requirement by imposing a standard that is more than
double the otherwise applicable standard.
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\14\ A ``Private Placement Market'' is defined as a trading
system for unregistered securities operated by a national securities
exchange or a registered broker-dealer. See Rule 5005(a)(34).
\15\ See IM-5315-1(a)(1).
\16\ See Id. (Nasdaq Global Select Market) and IM-5405-1(a)(1)
(Nasdaq Global Market).
\17\ See IM-5405-1(a)(2) (Nasdaq Global Market).
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Thus, companies listing in connection with a Direct Listing on the
NGM or NGS tiers are already subject to enhanced listing requirements
and Nasdaq believes it is appropriate to permit Chinese companies to
list through a Direct Listing on the NGS or NGM. On the other hand,
while companies listing in connection with a Direct Listing on the
Capital Market are also subject to enhanced listing requirements,
Nasdaq does not believe that these enhanced requirements are sufficient
to overcome concerns regarding sufficient liquidity and investor
interest to support fair and orderly trading on the Exchange with
respect to Chinese companies.\18\ As discussed above, Nasdaq believes
that Chinese companies present unique risks to U.S. investors and
precluding a Chinese company from listing through a Direct Listing on
the Nasdaq Capital Market will help to ensure that the company has
sufficient public float, investor base, and trading interest likely to
generate depth and liquidity necessary to promote fair and orderly
trading on the secondary market. Adopting this additional requirement
also will help prevent companies from using a direct listing to avoid
the requirement being imposed on initial public offerings.
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\18\ For example, the Nasdaq NGSM and NGM require a company to
have at least 1,250,000 and 1.1 million Unrestricted Publicly Held
Shares, respectively, and a Market Value of Unrestricted Publicly
Held Shares of at least $45 million and $8 million, respectively. In
contrast, the Nasdaq Capital Market requires a company to have at
least 1 million Unrestricted Publicly Held Shares and a Market Value
of Unrestricted Publicly Held Shares of at least $5 million.
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V. Transfer of a Chinese Company Listing
Nasdaq notes that other markets do not have comparable requirements
to what is being proposed, and that therefore Chinese companies may
elect to list on those other markets. Nasdaq believes that a Chinese
company initially listing on the over-the-counter (``OTC'') market or
another national securities exchange, and then quickly transferring its
listing to Nasdaq may present similar risks to U.S. investors as IPOs
of Chinese companies. Therefore, Nasdaq proposes Rule 5210(l)(iv) that
would require a Chinese company that transfers its listing from the OTC
Market or from another national securities exchange to first trade on
that other market for at least one year before it is eligible to list
on Nasdaq. This will provide sufficient time for the company to
establish a trading history of operations upon which investors can
rely, and which Nasdaq could consider in determining whether the
company is ready for the rigors of being public company and adhering to
the regulatory requirements.\19\ In addition, like the requirement
proposed for companies listing in connection with a business
combination, Nasdaq proposes that these seasoned companies, which will
be listing without an offering, have a minimum Market Value of
Unrestricted Publicly Held Shares of at least $25 million.
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\19\ Companies trading in the OTC Market at the time of
application must also satisfy a minimum average daily trading volume
before listing. See Listing Rules 5405(a)(4) and 5505(a)(5).
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In order to provide companies with a reasonable opportunity to
adjust to the proposed changes, Nasdaq is proposing a delay of 30 days
after approval before the changes become effective. Therefore,
companies listing on or after 30 days from the date the Commission's
approval order must comply with the proposed rules. This will allow
companies that have taken substantial steps to list under the current
rules to complete the process. Nasdaq also proposes to renumber the
remainder of Rules 5210(m)and 5210(n) to ensure consistency in its
rulebook.
VI. Conclusion
Nasdaq believes that the U.S. exchanges can provide U.S. investors
with opportunities to diversify their portfolio by providing exposure
to emerging market companies in China. However, due to heightened risks
identified in the trading of these companies' securities, Nasdaq also
believes it is necessary to increase the requirements for these
companies to list so as to help provide better liquidity in their
securities. Nasdaq believes that the proposed rule changes will enhance
the liquidity available in Chinese companies listing in the United
States, thereby making trading in the secondary market more difficult
to manipulate by bad actors while helping to balance the desirability
of Chinese companies to access U.S. markets with necessary protections
for investors.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\20\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\21\ in particular, in that it is designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to remove impediments to and perfect
the mechanism of a free and open market and a national market system,
and, in general to protect investors and the public interest. Further,
the Exchange believes that this proposal is not designed to permit
unfair discrimination between customers, issuers, brokers, or dealers.
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\20\ 15 U.S.C. 78f(b).
\21\ 15 U.S.C. 78f(b)(5).
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The Commission has previously opined on the importance of
meaningful listing standards for the protection of investors and the
public interest.\22\ In particular, the Commission has stated:
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\22\ Securities Exchange Act Release No. 102622 (March 18 [sic],
2025), 90 FR 12608 (March 12 [sic], 2025) (approving SR-Nasdaq-2024-
084 adopting initial listing liquidity requirements for companies
applying to list or uplist on the NGM or NCM).
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[[Page 45302]]
The development and enforcement of meaningful listing standards for
an exchange is of critical importance to financial markets and the
investing public. Among other things, such listing standards help
ensure that exchange-listed companies will have sufficient public
float, investor base, and trading interest to provide the depth and
liquidity to promote fair and orderly markets.\23\
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\23\ Id. at 12609.
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Nasdaq believes that requiring a $25 million minimum offering size
for Chinese companies seeking to list on Nasdaq through an IPO, a
business combination, direct listing or transfer from the OTC market or
another national securities exchange will improve compliance with the
listing rules and ensure that a security to be listed on Nasdaq has
adequate liquidity, distribution and U.S. investor interest to support
fair and orderly trading in the secondary market, which will reduce
trading volatility and price manipulation, thereby protecting investors
and the public interest. Additionally, Nasdaq believes that permitting
Chinese companies to list on the Nasdaq Global Select Market or the
Nasdaq Global Market, rather than the Nasdaq Capital Market, in
connection with a Direct Listing will ensure that such companies
satisfy more rigorous listing requirements, including the minimum
amount of Publicly Held Shares and Market Value of Publicly Held
Shares, which will help to ensure that the security has sufficient
public float, investor base, and trading interest likely to generate
depth and liquidity sufficient to promote fair and orderly trading,
thereby protecting investors and the public interest. Nasdaq also
believes that extending the $25 million minimum offering size and the
requirement for the company to have traded for at least one year when
transferring from the OTC market or another exchange aligns with
similar listing requirements.\24\
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\24\ See Rule 5110(c)(1)(A).
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While the proposals apply only to Chinese Companies, the Exchange
believes that the proposals are not designed to permit unfair
discrimination among companies because Nasdaq believes that trading in
Chinese companies present unique potential risks to U.S. investors.
Nasdaq has observed that without a larger offering size, such companies
may not develop a sufficient investor base and trading interest to
provide the depth and liquidity necessary to promote fair and orderly
trading, resulting in a security that is illiquid. Nasdaq is concerned
because illiquid securities may trade infrequently, in a more volatile
manner and with a wider bid-ask spread, all of which may result in
trading at a price that may not reflect their true market value.
Less liquid securities also may be more susceptible to price
manipulation, as a relatively small amount of trading activity can have
an inordinate effect on market prices. Price manipulation is a
particular concern when insiders retain a significant ownership portion
of the company. Therefore, Nasdaq believes that it is not unfairly
discriminatory to treat Chinese companies differently under these
proposals because it will help ensure that securities of a Chinese
company listed on Nasdaq have sufficient investor base, and trading
interest to provide the depth and liquidity necessary to promote fair
and orderly markets, thereby promoting investor protection and the
public interest.
Additionally, elements of these proposals are similar to the
current Rule 5210(k), applicable to Restrictive Market Companies,\25\
and the one-year seasoning requirement for companies formed by a
Reverse Merger under current Rule 5110(c)(1)(A), each of which was
found by the Commission to be consistent with the Act.
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\25\ Unlike the requirement for Restrictive Markets, the
proposed rules do not include an alternative allowing companies to
list if the proceeds from the offering would represent at least 25%
of the Company's post-offering Market Value of Listed Securities. In
applying that alternative in connection with the Restrictive Market
requirements, Nasdaq observed that the alternative allowed smaller
companies to list without achieving the liquidity objectives of the
rule.
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Nasdaq believes that implementing a 30-day delay from the date of
the Commission's approval order before the changes become effective
provides companies with an opportunity to adjust to the proposed
changes. The delay is not unfairly discriminatory because it will allow
companies that have taken substantial steps to list under the current
rules to complete the process. Additionally, Nasdaq also proposes to
renumber the remainder of Rules 5210(m) and 5210(n) to ensure
consistency in its rulebook.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule changes will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. While the proposed rule changes
will apply only to companies primarily operating in China (including
the Hong Kong Special Administrative Region and the Macau Special
Administrative Region), Nasdaq and the SEC have identified specific
concerns with such companies that make the imposition of additional
initial listing criteria on such companies appropriate to enhance
investor protection, which is a central purpose of the Act. Any impact
on competition, either among listed companies or between exchanges, is
incidental to that purpose.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission shall: (a) by order approve
or disapprove such proposed rule change, or (b) institute proceedings
to determine whether the proposed rule change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change, as modified by Amendment No. 1, is consistent with the Act.
Comments may be submitted by any of the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#d6a4a3bab3fbb5b9bbbbb3b8a2a596a5b3b5f8b1b9a0"><span class="__cf_email__" data-cfemail="2a585f464f07494547474f445e596a594f49044d455c">[email protected]</span></a>. Please include
file number SR-NASDAQ-2025-069 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-NASDAQ-2025-069. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's
[[Page 45303]]
internet website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). Copies of the
filing will be available for inspection and copying at the principal
office of the Exchange. Do not include personal identifiable
information in submissions; you should submit only information that you
wish to make available publicly. We may redact in part or withhold
entirely from publication submitted material that is obscene or subject
to copyright protection. All submissions should refer to file number
SR-NASDAQ-2025-069 and should be submitted on or before October 10,
2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
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\26\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2025-18140 Filed 9-18-25; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on September 19, 2025.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.