Notice2026-08478
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order Instituting Proceedings to Determine Whether To Approve or Disapprove a Proposed Rule Change To Adopt a New Continued Listing Requirement
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
May 1, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 84 (Friday, May 1, 2026)</title>
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[Federal Register Volume 91, Number 84 (Friday, May 1, 2026)]
[Notices]
[Pages 23495-23499]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-08478]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105333; File No. SR-NASDAQ-2026-004]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order
Instituting Proceedings to Determine Whether To Approve or Disapprove a
Proposed Rule Change To Adopt a New Continued Listing Requirement
April 28, 2026.
I. Introduction
On January 13, 2026, the Nasdaq Stock Market LLC (``Exchange'' or
``Nasdaq'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to adopt a new Market Value of Listed Securities
continued listing requirement of at least $5 million. The proposed rule
change was published for comment in the Federal Register on January 29,
2026.\3\ On March 11, 2026, the Commission designated a longer period
within which to take action on the proposed rule change.\4\ The
Commission is instituting proceedings pursuant to Section 19(b)(2)(B)
of the Act \5\ to determine whether to approve or disapprove the
proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 104688 (Jan. 26,
2026), 91 FR 3935 (``Notice''). Comments received on the proposed
rule change are available at: <a href="https://www.sec.gov/rules-regulations/public-comments/sr-nasdaq-2026-004">https://www.sec.gov/rules-regulations/public-comments/sr-nasdaq-2026-004</a>.
\4\ See Securities Exchange Act Release No. 104968, 91 FR 12631
(Mar. 16, 2026). The Commission designated April 29, 2026, as the
date by which the Commission should approve, disapprove, or
institute proceedings to determine whether to disapprove the
proposed rule change. See id.
\5\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposed Rule Change <SUP>6</SUP>
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\6\ All capitalized terms not otherwise defined in this order
shall have the meanings set forth in the Nasdaq Listing Rules.
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Nasdaq Rules require companies listed on the Nasdaq Global Market
(``NGM'') and Nasdaq Capital Market (``NCM'') to maintain certain
minimum continued listing requirements.\7\ Subject to certain
conditions, a company that fails to meet continued listing requirements
generally may submit a compliance plan or receive an automatic cure or
compliance period.\8\ The Nasdaq Rules also set forth specific
circumstances in which a company's securities will be immediately
subject to suspension and delisting.\9\ A company that receives a Staff
Delisting Determination may appeal this decision to a Nasdaq Listing
Qualifications Hearings Panel (``Hearings Panel'').\10\ When the
Hearings Panel review is of a deficiency related to continued listing
requirements, the Hearings Panel may, where it deems appropriate, take
certain actions, including, but not limited to, granting an exception
to the continued listing requirements for a period not to exceed 180
days from the date of the Staff Delisting Determination to regain
compliance, and finding the company has regained compliance with all
applicable listing requirements.\11\
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\7\ See Nasdaq Rules 5450(a) (Continued Listing Requirements for
Primary Equity Securities on NGM) and 5550(a) (Continued Listing
Requirements for Primary Equity Securities on NCM).
\8\ See Nasdaq Rule 5810 (Notification of Deficiency by the
Listing Qualifications Department).
\9\ See Nasdaq Rule 5810(c)(1) (Types of Deficiencies and
Notifications).
\10\ See Nasdaq Rule 5815 (Review of Staff Determinations by
Hearings Panel). A timely request for a hearing ordinarily stays the
suspension of the company's security from trading pending the
issuance of a written Hearings Panel decision. See Nasdaq Rule
5815(a)(1)(B).
\11\ See Nasdaq Rule 5815(c)(1)(A), (E). A company may appeal a
Hearings Panel decision to the Nasdaq Listing and Hearing Review
Council (``Listing Council''). See Nasdaq Rule 5820.
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The Exchange states that the compliance periods provided to a
company that has failed to maintain compliance with continued listing
requirements are designed to allow time for a company facing temporary
business issues, a temporary decrease in the value of its securities,
or temporary market conditions to take action to come back into
compliance.\12\ However, the Exchange states that it has observed that
some companies, typically those facing conditions related to financial
distress or prolonged operational downturn, are unable regain
compliance with the continued listing requirements for the long-term,
and as a result the market may assign low market values to such
companies.\13\ The Exchange states that it believes when the market
identifies significant problems in a company by assigning a very low
market value, the company is no longer suitable for continued listing
and trading on Nasdaq because the challenges facing such a company,
generally, are not temporary and may be so severe that the company is
unlikely to regain compliance within the compliance period or maintain
compliance thereafter.\14\
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\12\ See Notice, supra note 3, at 3935.
\13\ See id.
\14\ See id. The Exchange also states that it is more difficult
for market makers to make markets in these securities and for there
to be a fair and orderly market. See id.
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Accordingly, the Exchange proposes to adopt Nasdaq Rules 5450(a)(3)
and 5550(a)(6) to require that companies listed on the NGM and NCM,
respectively, maintain a minimum Market Value of Listed Securities
(``MVLS'') \15\ of at least $5 million.\16\ The Exchange also proposes
to modify Nasdaq Rule 5810(c)(1) to add an additional type of
deficiency that would result in an immediate delisting and suspension
from trading on Nasdaq of a company's securities. Specifically,
proposed Nasdaq Rule 5810(c)(1) would provide that a Staff Delisting
Determination will inform the company that its securities are
immediately subject to suspension and delisting when the company fails
to comply with the continued listing requirement for MVLS of at least
$5 million under proposed Nasdaq Rules 5450(a)(3) or 5550(a)(6) for a
period of 30 consecutive business days (``MVLS Requirement''). In
addition, the Exchange proposes to amend Nasdaq Rule 5810(c)(3)(C) to
provide that a company would not be entitled to any cure or compliance
period if the company failed to comply with the MVLS Requirement and
would immediately receive a Staff Delisting Determination.\17\
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\15\ Nasdaq Rule 5005(a)(23) defines ``Market Value'' as the
consolidated closing bid price multiplied by the measure to be
valued. Nasdaq Rule 5005(a)(22) defines ``Listed Securities'' as
securities listed on Nasdaq or another national securities exchange.
\16\ See proposed Nasdaq Rules 5450(a)(3) and 5550(a)(6).
According to the Exchange, the concerns with MVLS of less than $5
million with these companies can be a leading indicator of other
listing compliance concerns. See Notice, supra note 3, at 3936.
\17\ The Exchange also proposes to make non-substantive
conforming changes to Nasdaq Rule 5810(c)(3)(C) regarding failure to
meet continued listing requirements related to MVLS under Nasdaq
Rules 5450(b)(2)(A) and 5550(b)(2).
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The Exchange also proposes to add to the list of circumstances in
which a request for Hearings Panel review will not stay the suspension
of a company's securities from trading. Specifically, the Exchange
proposes to amend Nasdaq Rule 5815(a)(1)(B) to provide that a timely
request for a hearing will not stay the suspension of the securities
from trading pending the issuance of a written Hearings Panel decision
where the company received a Staff Delisting Determination notice due
to a failure to comply with the MVLS Requirement.\18\
[[Page 23496]]
The Exchange states that, given the difficulties with maintaining fair
and orderly markets in such low value companies, it believes it is not
appropriate for these companies to continue trading on Nasdaq during
the pendency of a Hearings Panel review for deficiencies under proposed
Nasdaq Rules 5450(a)(3) or 5550(a)(6).\19\
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\18\ See proposed Nasdaq Rule 5815(a)(1)(B)(ii)f. The Exchange
states that when a company has its securities suspended during a
Hearings Panel's review, its securities would generally trade in the
over-the-counter (``OTC'') market pending the issuance of a written
Hearings Panel decision. See Notice, supra note 3, at 3936.
\19\ See Notice, supra note 3, at 3936.
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Finally, the Exchange proposes to amend Nasdaq Rule 5815(c)(1)(H)
to provide that in the case of a company that received a Staff
Delisting Determination notice due to a failure to comply with the MVLS
Requirement, the Hearings Panel may only reverse a delisting decision
where the Hearings Panel determines that the Staff Delisting
Determination letter was in error and that the company never failed to
satisfy the applicable requirement. In such cases, the Hearings Panel
may not consider facts indicating that the company had regained
compliance under Nasdaq Rule 5815(c)(1)(E), nor may the Hearings Panel
grant an exception under Nasdaq Rule 5815(c)(1)(A) allowing the company
additional time to regain compliance.\20\ Nasdaq states that it
believes it would enhance investor protection to limit the Hearings
Panel's review of these issues to the question of whether Nasdaq staff
made a factual error applying the applicable rule.\21\
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\20\ See proposed Nasdaq Rule 5815(c)(1)(H).
\21\ See Notice, supra note 3, at 3936. Under current Nasdaq
Rule 5815(c)(1)(H), the Hearings Panel is prevented from granting an
exception or considering facts indicating that a company has
regained compliance where a company whose business plan is to
complete one or more acquisitions, as described in Nasdaq Rule IM-
5101-2, fails to satisfy (i) the requirement set forth in Nasdaq
Rule IM-5101-2(b) and Nasdaq Rule 5452(a)(3) to complete one or more
business combinations within 36 months of the effectiveness of its
initial public offering (``IPO'') registration statement; or (ii)
the requirements for initial listing immediately following a
business combination as required by Nasdaq Rule IM-5101-2. In these
situations, the Hearings Panel may only reverse a delisting decision
where the Hearings Panel determines that the Staff Delisting
Determination letter was in error and that the company never failed
to satisfy the requirement. See Nasdaq Rule 5815(c)(1)(H).
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III. Proceedings To Determine Whether To Approve or Disapprove SR-
NASDAQ-2026-004 and Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \22\ to determine whether the proposed rule
change should be approved or disapproved. Institution of such
proceedings is appropriate at this time in view of the legal and policy
issues raised by the proposed rule change. Institution of proceedings
does not indicate that the Commission has reached any conclusions with
respect to any of the issues involved. Rather, as described below, the
Commission seeks and encourages interested persons to provide
additional comment on the proposed rule change to inform the
Commission's analysis of whether to approve or disapprove the proposed
rule change.
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\22\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Act,\23\ the Commission is
providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings to allow for additional
analysis of, and input from commenters with respect to, the proposed
rule change's consistency with the Act, and in particular, Section
6(b)(5) of the Act, which requires, among other things, that the rules
of a national securities exchange be 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, and not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers; \24\ and Section 6(b)(7) of the Act, which
requires, among other things, that the rules of an exchange provide
fair procedure for the prohibition or limitation by the exchange of any
person with respect to access to services offered by the exchange.\25\
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\23\ Id.
\24\ 15 U.S.C. 78f(b)(5).
\25\ 15 U.S.C. 78f(b)(7).
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The development and enforcement of meaningful listing standards
\26\ by 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. Meaningful listing
standards are also important given investor expectations regarding the
nature of securities that have achieved an exchange listing, and the
role of an exchange in overseeing its market and assuring compliance
with its listing standards.\27\
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\26\ This reference to ``listing standards'' refers to both
initial and continued listing standards.
\27\ See, e.g., Securities Exchange Act Release Nos. 88716 (Apr.
21, 2020), 85 FR 23393 (Apr. 27, 2020) (SR-NASDAQ-2020-001) (Order
Approving a Proposed Rule Change To Modify the Delisting Process for
Securities With a Bid Price at or Below $0.10 and for Securities
That Have Had One or More Reverse Stock Splits With a Cumulative
Ratio of 250 Shares or More to One Over the Prior Two-Year Period);
88389 (Mar. 16, 2020), 85 FR 16163 (Mar. 20, 2020) (SR-NASDAQ-2019-
089) (Notice of Filing of Amendment No. 1 and Order Granting
Accelerated Approval of a Proposed Rule Change, as Modified by
Amendment No. 1, To Amend Rule 5815 To Preclude Stay During Hearing
Panel Review of Staff Delisting Determinations in Certain
Circumstances). See also Securities Exchange Act Release No. 81856
(Oct. 11, 2017), 82 FR 48296, 48298 (Oct. 17, 2017) (SR-NYSE-2017-
31) (Notice of Filing of Amendment No. 1 and Order Granting
Accelerated Approval of a Proposed Rule Change, as Modified by
Amendment No. 1, To Amend the Listed Company Manual To Adopt Initial
and Continued Listing Standards for Subscription Receipts) (stating
that ``[a]dequate standards are especially important given the
expectations of investors regarding exchange trading and the
imprimatur of listing on a particular market'' and that ``[o]nce a
security has been approved for initial listing, maintenance criteria
allow an exchange to monitor the status and trading characteristics
of that issue . . . so that fair and orderly markets can be
maintained'').
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As discussed above, the Exchange is proposing to adopt Nasdaq Rules
5450(a)(3) and 5550(a)(6) to require companies listed on the NGM and
NCM, respectively, to maintain a minimum MVLS of at least $5 million.
The Exchange is also proposing to amend Nasdaq Rule 5810(c)(1) to
suspend trading and immediately delist from Nasdaq securities of
companies that do not comply with the MVLS Requirement; and Nasdaq Rule
5810(c)(3)(C), to provide that such companies would not be entitled to
a specified cure or compliance period. Furthermore, the Exchange is
proposing to add Nasdaq Rule 5815(a)(1)(B)(ii)f., and to amend Nasdaq
Rule 5815(c)(1)(H), to set forth the procedures for requesting a
hearing before a Hearings Panel and the scope of the Hearings Panel's
discretion for companies that do not comply with the MVLS Requirement.
Two commenters express general support for the proposal.\28\ One
commenter states that ``highly speculative, low-priced securities have
proliferated in recent years'' and these securities ``pose heightened
risk to investors, including of fraud and manipulative trading
schemes.'' \29\ This
[[Page 23497]]
commenter further states that the proposal ``represents an important
step towards strengthening investor protection and promoting market
integrity by addressing the potential risks posed by low-priced
securities.'' \30\ Another commenter states that the proposal is
``appropriately tailored to identify companies that are not
sufficiently capitalized to warrant continued listing on a national
securities exchange.'' \31\ This commenter also states its agreement
with Nasdaq's statement that the challenges facing companies with a
very low market value are generally not temporary and may be so severe
that the company is not likely to regain or sustain compliance.\32\
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\28\ See Letters from Katie Kolchin, CFA Managing Director, Head
of Equity & Options Market Structure, and Gerald O'Hara Vice
President & Assistant General Counsel, SIFMA, dated Feb. 20, 2026
(``SIFMA Letter''), at 3; Stephen John Berger, Managing Director,
Global Head of Government and Regulatory Policy, Citadel Securities,
dated Mar. 4, 2026 (``Citadel Letter''), at 1. These commenters also
request that the Exchange consider whether using market
capitalization measures that only consider publicly held shares
(i.e., Market Value of Publicly Held Shares and Market Value of
Unrestricted Publicly Held Shares) would be more appropriate to use
in the proposed continued listing standard than MVLS. See SIFMA
Letter at 3; Citadel Letter at 1-2.
\29\ Citadel Letter at 1.
\30\ Id.
\31\ SIFMA Letter at 3.
\32\ See id. (citing Notice, supra note 3, at 3935).
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Other commenters raise concerns regarding the proposed rule
change.\33\ Specifically, several commenters state that the proposal
does not provide empirical evidence in support of the proposed $5
million MVLS threshold, such as evidence demonstrating that issuers
below the proposed threshold are financially distressed or pose
heightened risks to investors that are not already addressed by
existing Nasdaq and Commission requirements.\34\ Additionally, several
commenters state that the proposal overlaps with recently adopted
continued listing rules (e.g., reverse stock split and bid price
requirements) and Exchange proposals designed to the address the same
low-valuation risk factors identified in the proposals.\35\ Several
commenters also state that the proposed $5 million MVLS threshold fails
to consider sector-specific \36\ and situational factors \37\ that may
result in temporary declines in a company's valuation unrelated to its
actual financial health.\38\ Several commenters provided suggested
alternatives to the proposal.\39\
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\33\ See Letters from Chase Newton, dated Feb. 6, 2026 (``Newton
Letter''); Matthew Abenante, President, Strategic Investor Relations
LLC, dated Feb. 7, 2026 (``Strategic Investor Relations Letter'');
Muchun Zhu, Chief Executive Officer, Intercont (Cayman) Limited,
dated Feb. 10, 2026 (``Intercont Letter I''); Qing Yuan Wang, Chief
Financial Officer, Intercont (Cayman) Limited, dated Feb. 10, 2026
(``Intercont Letter II''); Brian L. Ross, Partner, Graubard Miller,
dated Feb. 10, 2026 (``Graubard Miller Letter''); Tingting Zhang,
CEO, Antelope Enterprise Holdings Limited, dated Feb. 11, 2026
(``Antelope Letter''); Siyu Yang, Chief Executive Officer, Baiya
International Group Inc., dated Feb. 12, 2026 (``Baiya Letter'');
Michael A. Adelstein, Partner, Kelley Drye & Warren LLP, dated Feb.
12, 2026 (``Kelley Drye & Warren Letter''); Fraser Atkinson, CEO,
GreenPower Motor Company Inc., dated Feb. 16, 2026 (``GreenPower
Letter''); Brian Glaspy, dated Feb. 12, 2026 (``Glaspy Letter'');
Sullivan & Worcester LLP, dated Feb. 17, 2026 (``Sullivan &
Worcester Letter''); Meeshanthini Dogan, Chief Executive Officer,
Cardio Diagnostics Holdings, Inc., dated Feb. 17, 2026 (``Cardio
Diagnostics Letter''); Bradley J. Wilhite, Co-Founder & Managing
Partner, Ascendiant Capital Markets, LLC, dated Feb. 17, 2026
(``Ascendiant Letter''); Robert Mittman, Leslie Marlow, Melissa
Palat Murawsky, and Brad Shiffman, Blank Rome LLP, dated Feb. 18,
2026 (``Blank Rome Letter''); Mark Reynolds, Chief Financial
Officer, GeoVax Labs, Inc., dated Feb. 18, 2026 (``GeoVax Labs
Letter''); Jeffrey Church, CFO, Imunon, Inc., dated Feb. 18, 2026
(``Imunon Letter''); Dr. Siaw Tung Yeng, Co-Founder and Co-CEO,
Mobile-health Network Solutions, dated Feb. 18, 2026 (``Mobile-
health Letter''); Adial Pharmaceuticals, Inc., dated Feb. 18, 2026
(``Adial Letter''); Justin Stiefel, CEO, IP Strategy Holdings, Inc.,
dated Feb. 18, 2026 (``IP Strategy Letter''); Marc Indeglia, Small
Public Company Coalition, dated Feb. 19, 2026 (``Small Public
Company Coalition Letter''); Steve Shum, CEO, INVO Fertility, Inc.,
dated Feb. 19, 2026 (``INVO Letter''); Sanjeev Luther, President and
CEO, Ernexa Therapeutics Inc., dated Feb. 19, 2026 (``Ernexa
Letter''); Rebecca Byan, CFO, HCW Biologics, Inc., dated Feb. 19,
2026 (``HCW Letter''); Michael Messinger, Chief Financial Officer,
SeaStar Medical, dated Feb. 19, 2026 (``SeaStar Letter'); James E.
Kras, Chairman & CEO, Edible Garden AG Incorporated, dated Feb. 19,
2026 (``Edible Garden Letter''); Dave A. Donohoe Jr., Donohoe
Advisory Associates LLC, dated Feb. 19, 2026 (``Donohoe Letter'');
Chris Kohler, SCWorx Corp. WORX, dated Feb. 19, 2026 (``SCWorx
Letter''); Chip Patterson, General Counsel, MacKenzie Realty
Capital, Inc., dated Feb. 19, 2026 (``MacKenzie Realty Letter'');
Brad Hauser, President and Chief Executive Officer, Autonomix
Medical, Inc., dated Feb. 19, 2026 (``Autonomix Letter''); Andrew
Simpson, CEO, Heart Sciences, dated Feb. 19, 2026 (``Heart Sciences
Letter''); Neil Dey, President & CEO, Bluejay Diagnostics, Inc.,
dated Mar. 6, 2026 (``Bluejay Letter''); Marc Indeglia, Small Public
Company Coalition, dated Mar. 19, 2026 (``Small Public Company
Coalition Letter II''); Xin Zuo, dated Mar. 20, 2026 (``Zuo
Letter'').
\34\ See Blank Rome Letter at 5; Adial Letter at 4; IP Strategy
Letter at 10-11; Small Public Company Coalition Letter at 2, 6-7, 13
and 28. One of the commenters cites a report by Professor Craig M.
Lewis that presents an empirical study raising concerns that the
proposal may prematurely delist firms that would otherwise regain
compliance. See Small Public Company Coalition Letter at 3-4, 6-7,
and 28-32 (stating that an empirical analysis indicates ``many firms
that previously fell below the $5 million threshold for 30
consecutive business days ultimately recovered and continued
operating successfully'').
\35\ See Cardio Diagnostics Letter at 2; Small Public Company
Coalition Letter at 9-10; Small Public Company Coalition Letter II
at 1-2; Mackenzie Realty Letter at 1; Donohoe Letter at 6-7; Bluejay
Letter at 3. One commenter states that the Commission must consider
the Exchange's proposal in conjunction with the ``overlapping''
continued listing proposals by the New York Stock Exchange and their
impact together on ``issuer choice, exchange competition, liquidity,
capital formation, and market stability.'' Small Public Company
Coalition Letter II at 1-2 (citing to File Nos. SR-NYSEAMER-2025-72
and SR-NYSEAMER-2026-17).
\36\ See Blank Rome Letter at 3-4; Adial Letter at 2; Imunon
Letter; Donohoe Letter at 4; Mackenzie Realty Letter at 2. One
commenter states that the proposal's disproportionate burden on
small-cap issuers, emerging growth companies, and issuers operating
in developing sectors is an unnecessary burden on competition under
Section 6(b)(8) of the Act. See IP Strategy Letter at 4, 11-12. This
commenter also states that the proposal's failure to distinguish a
company's ``temporary valuation volatility'' and ``materially
different financial profiles'' raises concerns under Sections
6(b)(4) and 6(b)(5) of the Act. See IP Strategy Letter at 2, 7.
\37\ See Strategic Investor Relations Letter at 2; Graubard
Miller Letter at 1-3; Antelope Letter at 2; Baiya Letter at 1;
Kelley Drye & Warren Letter at 2 and 6; Glaspy Letter; Sullivan &
Worcester Letter at 2-3; Blank Rome Letter at 3; GeoVax Letter;
Imunon Letter; Mobile-health Letter; Adial Letter at 2; INVO Letter
at 2; Ernexa Letter at 2; SeaStar Letter at 2; Mackenzie Realty
Letter at 2; Donohoe Letter at 2. One commenter states that
incentivized ``sustained downward price pressure'' in proximity to
the proposed threshold and amplification of ``valuation compression
in otherwise solvent issuers'' implicates Section 3(f) of the Act
and questions whether the proposal will promote efficiency,
competition, and capital formation. See IP Strategy Letter at 5.
\38\ See Strategic Investor Relations Letter at 4; Intercont
Letter I; Intercont Letter II; Blank Rome Letter at 2; HeartSciences
Letter at 2; IP Strategy Letter at 9. One commenter states that
``[m]arket-wide downturns, sector-specific market corrections,
interest rate fluctuations and geopolitical events can materially
impact market capitalization over short intervals.'' Sullivan &
Worcester Letter at 2-3. See also Blank Rome Letter at 3-4; Adial
Letter at 2; Donohoe Letter at 3; IP Strategy Letter at 4-5.
\39\ For example, commenters suggested (1) stricter initial
listing guidelines; (2) use of other quantitative thresholds (e.g.,
involving cash and cash equivalents, net tangible assets, readily
marketable securities or digital assets, or sufficient working
capital); (3) expansion of the MVLS calculation to include
securities that are not listed on the Exchange; (4) qualitative
review on a case-by-case basis; (5) a compliance period to take
corrective action for deficiencies under the proposal; (6) delay of
the effective implementation date; (7) extension of the deficiency
period; (8) use of an averaging methodology for measuring sustained
non-compliance with the minimum $5 million MVLS standard; (9) a
mechanism for considering sector-specific or situational and
qualitative factors; (10) enhanced public disclosures once an issuer
approaches the minimum $5 million MVLS threshold; (11) an enhanced
monitoring mechanism for issuers approaching the threshold; and (12)
additional Hearings Panel considerations before suspension. See
Newton Letter; Bluejay Letter at 3; IP Strategy Letter at 13; Blank
Rome Letter at 6; Adial Letter at 4; Strategic Investor Relations
Letter at 5; Sullivan & Worcester Letter at 3; Blank Rome Letter at
5; Graubard Miller Letter 3; Autonomix Letter at 2; Small Public
Company Coalition Letter at 15.
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Several commenters state that the proposal would impair issuers'
ability to raise capital or obtain debt financing due to heightened
delisting risk.\40\ In particular, some commenters state that the
proposal would have significant negative implications for debt
financing because the risk of delisting may cause lenders to demand
more restrictive covenants, higher pricing, or additional collateral,
or may reduce financing availability altogether.\41\ One
[[Page 23498]]
commenter states that the proposal may incentivize smaller issuers to
seek listing on less regulated venues, rely more heavily on private
capital markets with reduced transparency, or delay or forgo public
listing.\42\ Another commenter states that the proposal may increase
risk to investors by incentivizing companies ``to engage in value-
distorting actions,'' including ``reverse stock splits, overly dilutive
financings, excessive marketing campaigns or premature asset sales.''
\43\
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\40\ See Intercont Letter I; Intercont Letter II; Antelope
Letter at 1; Baiya Letter at 1; Cardio Diagnostics Letter at 2;
GeoVax Letter; Imunon Letter; Mobile-health Letter; Adial Letter at
3-4; Small Public Company Coalition Letter at 4; INVO Letter at 1-2;
Ernexa Letter at 2; HCW Letter at 2; SeaStar Letter at 2; Edible
Garden Letter at 2; Mackenzie Realty Letter at 2; HeartSciences
Letter at 1-2; Donohoe Letter at 3-4; GreenPower Letter; Ascendiant
Letter at 1.
\41\ See Intercont Letter I; Intercont Letter II; Antelope
Letter at 1; Baiya Letter at 1; GeoVax Letter; Mobile-health Letter;
Small Public Company Coalition Letter at 5-6, 15-16; INVO Letter at
1; Ernexa Letter at 1; HCW Letter at 2; SeaStar Letter at 2;
Mackenzie Realty Letter at 2; HeartSciences Letter at 1-2; Donohoe
Letter at 3-4; GreenPower Letter; Ascendiant Letter at 1; Bluejay
Letter at 3. Two commenters express concern that this impact may
extend to companies above the proposed MVLS standard, such as those
companies with under $20 million market value. See Ascendiant Letter
at 1; Small Public Company Coalition Letter at 4.
\42\ See Blank Rome Letter at 5.
\43\ Adial Letter at 4.
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Several commenters state that the rigid $5 million MVLS threshold,
coupled with automatic suspension after 30 consecutive business days,
could increase the potential for manipulative trading and market abuse
in an effort to drive down the value of a company's stock, causing a
company to be delisted.\44\ One commenter states that the threat of
delisting may contribute to and encourage further downward price
pressure, and a company's stock may experience increased volatility and
reduced liquidity in the period leading up to potential delisting.\45\
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\44\ See Small Public Company Coalition Letter at 4-5, 8; IP
Strategy Letter at 3; Graubard Miller Letter at 1; Donohoe Letter at
2; Ascendiant Letter at 1-2.
\45\ See Graubard Miller Letter at 1-3. See also Donohoe Letter
at 2; Small Public Company Coalition Letter at 4-5; IP Strategy
Letter at 5; Ascendiant Letter at 1 (stating that the proposal
``will allow short sellers to engage in coordinated short selling
activities in order to drive the market value of smaller public
companies below $5 million and then keep it below that threshold for
30 consecutive business days'').
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Finally, several commenters raise concerns regarding the removal of
the automatic stay of suspension pending Hearings Panel review and the
limitations on Hearings Panel discretion to review the delisting
determination under the proposal.\46\ One commenter states that the
proposal to amend Nasdaq Rule 5815(a)(1)(B)(ii) to provide that a
hearing request shall not stay the suspension of trading when there is
a deficiency relating to the MVLS Requirement renders appeal rights
``largely illusory'' and that a stay pending appeal is ``a fundamental
safeguard that ensures listed companies receive meaningful review
before suffering the severe consequences of delisting.'' \47\ This
commenter also states that the proposal to amend Nasdaq Rule
5815(c)(1)(H) reduces the Hearings Panel to a ``ministerial function''
and suggests that Nasdaq should allow the Hearings Panel to have full
discretion to consider evidence the company has regained compliance and
grant exceptions to allow additional time.\48\
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\46\ See Strategic Investor Relations Letter at 2-3, 5; Kelley
Drye & Warren Letter at 5; Donohoe Letter at 2-3, 5-6; IP Strategy
Letter at 7-8. One commenter states that the absence of an
opportunity for a hearing without a stay before the Hearings Panel
would violate issuers' rights to procedural due process and the fair
procedure requirement under Section 6(b)(7) of the Act. See Donohoe
Letter at 5-6. See also IP Strategy Letter at 7-8.
\47\ See Strategic Investor Relations Letter at 2-3. See also
Kelly Drye & Warren Letter at 5; Donohoe Letter at 5-6.
\48\ See Strategic Investor Relations Letter at 3 and 5. See
also Kelley Drye & Warren Letter at 5; IP Strategy Letter at 7-8;
Donohoe Letter at 3. The Commission received many comment letters
regarding changes to the index methodology for one of the indexes
offered by Nasdaq Global Indexes. See, e.g., Letters from Farooq
Chaudhry, dated Apr. 14, 2026; Girard Miller, dated Mar. 19, 2026;
and Alex Audet, dated Mar. 16, 2026. These comments are not germane
to the proposal.
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The Commission asks that commenters address the sufficiency of the
Exchange's statements in support of the proposal, which are set forth
in the Notice, in addition to any other comments they may wish to
submit about the proposed rule change. In particular, the Commission
seeks comment on whether the proposal includes sufficient analysis to
support a conclusion that the proposal to immediately suspend and
delist companies that fail to comply with the MVLS Requirement, to
maintain the suspension of such companies' securities from trading
during the pendency of an appeal to the Hearings Panel, and to limit
the Hearings Panel's discretion to reverse a delisting decision to
circumstances involving a factual error is designed to be consistent
with the requirements of Section 6(b)(5) and Section 6(b)(7) of the Act
\49\ or raises any new or novel concerns not previously contemplated by
the Commission.
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\49\ 15 U.S.C. 78f(b)(5) and (7).
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IV. Procedure: Request for Written Comments
The Commission requests that interested persons provide written
submissions of their data, views, and arguments with respect to the
issues identified above, including the issues raised by commenters and
the Exchange's response, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposed rule change
is consistent with Sections 6(b)(5), 6(b)(7) or any other provision of
the Act, or the rules and regulations thereunder. Although there do not
appear to be any issues relevant to approval or disapproval that would
be facilitated by an oral presentation of data, views, and arguments,
the Commission will consider, pursuant to Rule 19b-4 under the Act,\50\
any request for an opportunity to make an oral presentation.\51\
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\50\ 17 CFR 240.19b-4.
\51\ Section 19(b)(2) of the Act, as amended by the Securities
Acts Amendments of 1975, Public Law 94-29 (June 4, 1975), grants to
the Commission flexibility to determine what type of proceeding--
either oral or notice and opportunity for written comments--is
appropriate for consideration of a particular proposal by a self-
regulatory organization. See Securities Acts Amendments of 1975,
Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No. 75,
94th Cong., 1st Sess. 30 (1975).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the proposed rule change should be approved
or disapproved by May 22, 2026. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
June 5, 2026. The Commission asks that commenters address the
sufficiency of the Exchange's statements in support of the proposal, in
addition to any other comments they may wish to submit about the
proposed rule change.
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#f381869f96de909c9e9e969d8780b3809690dd949c85"><span class="__cf_email__" data-cfemail="156760797038767a7878707b6166556670763b727a63">[email protected]</span></a>. Please include
file number
SR-NASDAQ-2026-004 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-2026-004. 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
[[Page 23499]]
publication submitted material that is obscene or subject to copyright
protection.
All submissions should refer to file number SR-NASDAQ-2026-004 and
should be submitted by May 22, 2026. Rebuttal comments should be
submitted by June 5, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\52\
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\52\ 17 CFR 200.30-3(a)(57).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2026-08478 Filed 4-30-26; 8:45 am]
BILLING CODE 8011-01-P
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