Notice2025-23811
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Provide Nasdaq With Limited Discretion To Deny Initial Listing to Certain Companies
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
December 29, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 245 (Monday, December 29, 2025)</title>
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[Federal Register Volume 90, Number 245 (Monday, December 29, 2025)]
[Notices]
[Pages 60829-60832]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-23811]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104464; File No. SR-NASDAQ-2025-104]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Provide Nasdaq With Limited Discretion To Deny Initial Listing to
Certain Companies
December 19, 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 December 12, 2025, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
The Commission is publishing this notice to
[[Page 60830]]
solicit comments on the proposed rule change 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 provide Nasdaq with limited discretion to
deny initial listing to companies, even where the applicant meets all
stated listing requirements.
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
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
Recently, Nasdaq has observed problematic or unusual trading in
certain listed companies. Further, the Commission has imposed temporary
trading suspensions pursuant to Section 12(k) of the Act on several
listed securities based, generally, on concerns about potential
manipulation in the securities effectuated through recommendations made
to investors by unknown persons via social media to purchase, hold,
and/or sell the securities. The Commission stated its belief that these
recommendations appear to be designed to artificially inflate the price
and volume of the securities and that the public interest and the
protection of investors require a suspension of trading in the
securities.\3\ In most cases, the affected securities were listed for
less than one year.
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\3\ See, e.g., Securities Exchange Act Releases 34-104112
(September 26, 2025) (Smart Digital Group, Limited), 34-104113
(September 26, 2025) (QMMM Holding Limited), 34-104163 (October 3,
2025) (Etoiles Capital Group Co., Ltd.), 34-104164 (October 3, 2025)
(Platinum Analytics Cayman Limited), 34-104165 (October 3, 2025)
(Pitanium Limited), 34-104166 (October 8, 2025) (Empro Group Inc.),
34-104167 (October 8, 2025) (NusaTrip Incorporated), 34-104168
(October 16, 2025) (Premium Catering (Holdings) Limited), 34-104169
(October 22, 2025) (Robot Consulting Co., Ltd.), 34-104176 (November
11, 2025) (Charming Medical Limited), 34-104180 (November 14, 2025)
(MaxsMaking Inc.), 34-104317 (December 4, 2025) (Robot Consulting
Co., Ltd.) (collectively, the ``Commission Suspension Orders'').
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The Commission Suspension Orders generally appear to be based on
activities of third parties, and there are no specific allegations in
the Commission Suspension Orders against the companies, or persons
associated with the companies, as being involved in the potentially
manipulative trading activity. Nasdaq's listing requirements, which
these companies satisfied both at the time of listing and on an ongoing
basis, are based on the characteristics of the company itself and the
securities it seeks to list. Likewise, Nasdaq Rule 5101, in conjunction
with IM-5101-1, provides some discretion to deny listing where the
company itself has engaged in misconduct or where an individual with a
history of regulatory misconduct is associated with the company.\4\
Nasdaq Rule 5101 does not allow denial of a listing based on the
potential for one or more unaffiliated third parties to engage in
misconduct impacting a company's securities.\5\ The Commission is
obliged to set aside a decision to deny listing that does not comport
with Nasdaq rules.\6\ Therefore, Nasdaq requires additional authority
to exercise discretion to deny a listing based on the potential for one
or more third parties to engage in misconduct impacting a company's
securities. Similarly, Nasdaq rules do not presently allow it to deny
listing to a company based on its review of trading patterns of other
companies with similar characteristics or based on considerations
related to the company's advisors, and it requires additional authority
to exercise discretion to do so.\7\
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\4\ See Listing Rule IM-5101-1. In approving the predecessor to
Rule 5101, the Commission stated that it believed the rule change
provided ``greater assurance [to existing or prospective investors]
that the risk associated with investing in Nasdaq is market risk
rather than the risk that the promoter or other persons exercising
substantial influence over the company is acting in an illegal
manner.'' Exchange Act Release No. 34151 (June 3, 1994), 59 FR 29843
(June 9, 1994) at 29845; id. at 29844, citing as the reason for the
proposed rule concerns about ``an increase in recent years in the
number of applications for inclusion in Nasdaq by issuers that are
managed, controlled or influenced by persons with a history of
significant securities or commodities violations.''
\5\ See id. at 29845 (noting concerns raised during the comment
process that ``discretion accorded the NASD was unlimited and could
lead the NASD to exclude an issuer from Nasdaq on a basis wholly
unrelated to the legitimate concerns of administering Nasdaq.'')
\6\ 15 U.S.C. 78s(f).
\7\ Cf. Section 104.00 of the NYSE Listed Company Manual and
Section 201 of NYSE American Company Guide requiring that companies
go through a pre-review process before they are permitted to apply
for listing.
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Nasdaq is concerned about the allegedly manipulative trading taking
place in listed securities and that pending applicants, despite meeting
all listing requirements, have characteristics similar to those subject
to the Commission's trading suspensions and therefore may be
susceptible to similar manipulation. While Nasdaq proposed certain
changes to the listing requirements in September 2025,\8\ those changes
remain pending \9\ and Nasdaq believes that additional rules would help
to address the concerns identified in the Commission Suspension Orders.
For example, Nasdaq may identify similarities between companies seeking
initial listing and the advisors to the companies that are the subject
of the Commission Suspension Orders (including auditors, underwriters,
law firms, brokers, clearing firms, or other professional service
providers). For another example, Nasdaq may consider the impact of
foreign laws on the potential recourse available to U.S. regulators or
investors in the event of misconduct. Accordingly, Nasdaq proposes to
adopt a new rule, IM-5101-3, providing Nasdaq with authority under Rule
5101 to deny initial listing based on factors that could make the
listed security susceptible to manipulation related to concerns Nasdaq
and other regulators have identified with previously listed companies
that are similarly situated to the company or based on considerations
related to the company's advisors (including auditors, underwriters,
law firms, brokers, clearing firms, or other professional service
providers), even where the applicant meets all stated listing
requirements.
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\8\ Exchange Act Release No. 103982 (September 16, 2025), 90 FR
45280 (September 19, 2025) (SR-Nasdaq-2025-068); Exchange Act
Release No. 103979 (September 16, 2025), 90 FR 45298 (September 19,
2025) (SR-Nasdaq-2025-069).
\9\ Exchange Act Release No. 104058 (September 25, 2025), 90FR
46973 (September 30, 2025) (designating December 18, 2025, as the
date the Commission shall either approve or disapprove, or institute
proceedings to determine whether to disapprove, SR-Nasdaq-2025-069).
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The proposed rule change includes a series of non-exclusive factors
that Nasdaq will consider in determining whether to apply this
discretion. These factors include the following:
<bullet> where the company is located, including the availability
of legal remedies to U.S. shareholders in that jurisdiction, the
existence of blocking
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statutes, data privacy laws and other laws in foreign jurisdictions
that may present challenges to regulators seeking to enforce rules
against the company, the ability of parties to conduct comprehensive
due diligence in that jurisdiction, and the transparency of regulators
in the jurisdiction;
<bullet> whether a person or entity exercises substantial influence
over the company \10\ and, if so, where that person or entity is
located, including the availability of legal remedies to U.S.
shareholders in that jurisdiction, the existence of blocking statutes,
data privacy laws and other laws in foreign jurisdictions that may
present challenges to regulators seeking to enforce rules against the
person or entity, the ability of parties to conduct comprehensive due
diligence in that jurisdiction, and the transparency of regulators in
the jurisdiction;
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\10\ Nasdaq believes it is important to consider the location of
a person or entity that exercises substantial influence over the
company to ensure that such individuals and entities are accountable
to shareholders and regulators, as appropriate.
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<bullet> whether the expected public float and dissemination of the
share distribution, based on a review of underwriter, broker and
clearing allocations and consideration of prior deals involving those
service providers, at the time of the IPO and post offering, raises
concerns about adequate liquidity and potential concentration;
<bullet> whether there are issues concerning the company's advisors
(including auditors, underwriters, law firms, brokers, clearing firms,
or other professional service providers), based on factors including,
but not limited to, whether the advisor has been reviewed by applicable
regulators and, if so, what were the results of those reviews;
[cir] if the company's advisor is a new entity, whether the
advisor's principals were involved with other firms with a regulatory
history;
<bullet> whether any of the company's advisors were involved in
prior transactions where the securities became subject to a pattern of
concerning or volatile trading;
<bullet> whether the company's management and Board has experience
or familiarity with U.S. public company requirements, including
regulatory and reporting requirements under Nasdaq rules and federal
securities laws;
<bullet> whether there are any FINRA, SEC or other regulatory
referrals related to the company or its advisors, which can be included
in the record of the matter and, if applicable, the results of those
referrals;
<bullet> whether the company currently has, or recently has had, a
going concern audit opinion and, if so, what is the Company's plan to
continue as a going concern; and
<bullet> whether there are other factors that raise concerns about
the integrity of the Company's board, management, significant
shareholders, or advisors.
By giving Nasdaq the authority to exercise discretion in this
manner, Nasdaq believes it can better address situations where a
company satisfies Nasdaq's listing requirements, but has
characteristics similar to other companies' securities where trading
problems were observed and could make the company susceptible to
manipulation. While Nasdaq may not otherwise have access to the facts
underlying problematic or unusual trading that takes place across
multiple U.S. exchanges as well as off-exchange, the factors will help
identify situations where similar characteristics exist that are likely
to create conditions that could allow problematic or unusual trading to
also occur in the applicant's securities. Moreover, the proposed rule
change will also give Nasdaq the authority to consider the involvement
of advisors to the company and gatekeepers in other transactions that
had problematic or unusual trading, and to take action to deny initial
listing to a company involved with these entities.
When Nasdaq uses its authority to exercise discretion to deny
listing, Nasdaq Staff will issue a written determination describing the
basis for its decision. A Company must, within four business days from
the date of Staff's written determination, make a public announcement
in a press release or other Regulation FD compliant manner about the
receipt of the determination and the Rule(s) upon which the
determination is based, describing each specific basis and concern
identified by Nasdaq in reaching its determination.\11\ The Company may
within seven calendar days of when its application is denied seek
review by a Hearings Panel, as set forth in Rule 5815.
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\11\ Rule 5815(i)(2).
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This proposed rule change is immediately effective, and Nasdaq
proposes to apply the proposed rule to all companies currently in the
application process.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\12\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\13\ 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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\12\ 15 U.S.C. 78f(b).
\13\ 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.\14\ In particular, the Commission has stated:
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\14\ Securities Exchange Act Release No. 102622 (March 12,
2025), 90 FR 12608 (March 18, 2025) (approving SR-Nasdaq-2024-084
adopting initial listing liquidity requirements for companies
applying to list or uplist on the Nasdaq Global Market or Nasdaq
Capital Market).
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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.\15\
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\15\ Id. at 12609.
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Nasdaq believes that granting limited additional discretion to deny
initial listing to companies, even when an applicant meets all stated
listing requirements, is consistent with the requirements in Section
6(b)(5) of the Exchange Act. As noted, Nasdaq has observed trading
patterns in certain securities--such as price swings unrelated to
company news--and the Commission has issued multiple suspension orders
alleging market manipulation in similar circumstances. The proposed
factors will help provide transparency to situations where Nasdaq
believes an applicant's securities may be more susceptible to
manipulation, based on comparable characteristics or the involvement of
similar advisors. Accordingly, Nasdaq believes that adopting this
additional authority is consistent with the requirements to protect
investors and the public interest. Further, while Nasdaq's use of this
discretion may prevent some companies that otherwise meet the stated
listing requirements from listing, such distinction between companies
is not unfair because the affected companies will exhibit traits that
increase their susceptibility to manipulation or share advisors with
companies that previously demonstrated problematic or unusual trading
patterns. Therefore the proposed
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rule change is consistent with Section 6(b)(5).
Nasdaq also believes that any impact on competition among companies
as a result of the proposed rule change is necessary in furtherance of
the investor protection goals of the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The proposed rule change will
not impose any burden on competition among exchanges, since other
exchanges either already have, or are able to adopt, similar rules
providing them with discretion to deny initial listing. The proposed
rule change may impose a burden on companies that are denied listing,
but this burden is necessary to protect investors and the public
interest, which is a primary purpose of the Act.
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
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \16\ and Rule
19b-4(f)(6) \17\ thereunder.
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\16\ 15 U.S.C. 78s(b)(3)(A)(iii).
\17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \18\ normally
does not become operative prior to 30 days after the date of filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\19\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange asked
that the Commission waive the 30-day operative delay so that the
proposal may become operative immediately upon filing. The Exchange
states that waiver of the 30-day operative delay will immediately
provide the Exchange with additional authority to exercise discretion
to deny initial listing based on factors that could make the listed
security susceptible to manipulation. The Exchange further states that
applying this authority to any companies that may otherwise seek to
list during the 30-day period could potentially minimize subsequent
manipulative trading in those companies' securities. For these reasons,
the Commission believes that waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest.
Accordingly, the Commission hereby waives the 30-day operative delay
and designates the proposal operative upon filing.\20\
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\18\ 17 CFR 240.19b-4(f)(6).
\19\ 17 CFR 240.19b-4(f)(6)(iii).
\20\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or 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 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#94e6e1f8f1b9f7fbf9f9f1fae0e7d4e7f1f7baf3fbe2"><span class="__cf_email__" data-cfemail="6d1f180108400e0200000803191e2d1e080e430a021b">[email protected]</span></a>. Please include
file number SR-NASDAQ-2025-104 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-2025-104. 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 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-2025-104 and should be submitted
on or before January 20, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-23811 Filed 12-23-25; 8:45 am]
BILLING CODE 8011-01-P
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