Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Listing Rule 5505

Issuing agencies

Full Text

<html>
<head>
<title>Federal Register, Volume 91 Issue 196 (Tuesday, October 13, 2026)</title>
</head>
<body><pre>
[Federal Register Volume 91, Number 196 (Tuesday, October 13, 2026)]
[Notices]
[Pages 65017-65019]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-20808]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-106614; File No. SR-NASDAQ-2026-082]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Listing Rule 5505

October 7, 2026.
    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 30, 2026, 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 solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to a proposal to amend Listing Rule 5505 to 
require a minimum $4 price in all instances for initial listing on the 
Nasdaq Capital Market.
    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.

[[Page 65018]]

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
    Currently, the Exchange allows for companies seeking to list on the 
Nasdaq Capital Market (``NCM'') to list securities priced between $2 
and $4 if the security also meets additional requirements that result 
in the security satisfying an exclusion from the definition of ``penny 
stock'' contained in Exchange Act Rule 3a51-1(g).\3\ Pursuant to 
Listing Rule 5505(a)(1)(B), a company applying to list its securities 
on the NCM may meet the initial listing requirement by having a minimum 
closing price of $3 per share, if the company meets the requirements of 
the Equity or Net Income Standards under Listing Rules 5505(b)(1) or 
(b)(3), or of $2 per share, if the company meets the requirements of 
the Market Value of Listed Securities Standard under Listing Rule 
5505(b)(2), provided that in either case the company demonstrates that 
it has either: net tangible assets (i.e., total assets less intangible 
assets and liabilities) in excess of $2 million, if the issuer has been 
in continuous operation for at least three years; or net tangible 
assets in excess of $5 million, if the issuer has been in continuous 
operation for less than three years; or average revenue of at least $6 
million for the last three years (the ``Alternative Price 
Requirement'').
---------------------------------------------------------------------------

    \3\ 17 CFR 240.3a51-1(g).
---------------------------------------------------------------------------

    Nasdaq initially adopted the Alternative Price Requirement to 
enhance the competition among exchanges--particularly NYSE American LLC 
(``NYSE American''), which was the only other exchange allowed to list 
companies with a price below $4.\4\ However, NYSE American recently 
amended its rule to remove the ability to list securities priced below 
$4.\5\ Similarly, Nasdaq is proposing to remove Listing Rule 
5505(a)(1)(B), and, as a result, require all companies seeking to list 
under the Initial Listing Standards to have a minimum stock price of 
$4.00. The $4.00 standard is consistent with the initial listing 
requirements of other national securities exchanges, whereas the 
current Alternative Price Requirement is generally lower than the 
minimum price required for listing on other national securities 
exchanges.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 51983 (July 7, 
2005), 70 FR 40614 (July 13, 2005) (Penny Stock Rule Amendments 
Adopting Release).
    \5\ See Securities Exchange Act Release No. 105105 (March 27, 
2026), 91 FR 16262 (April 1, 2026) (Order approving SR-NYSEAMER-
2026-02).
---------------------------------------------------------------------------

    Because companies that originally listed under the Alternative 
Price Requirement remain listed, the Exchange is proposing to keep 
Listing Rule IM-5505-2. The rule requires Nasdaq to publish on its 
website a list of any company that initially listed under the 
Alternative Price Requirement, which no longer satisfies the net 
tangible assets or revenue test contained in former Rule 5505(a)(1)(B), 
and which does not satisfy any of the other exclusions from being a 
penny stock contained in Rule 3a51-1 under the Act. Nasdaq will 
maintain this list on its website for as long as any companies remain 
listed that could be subject to that condition.\6\ The Exchange is also 
proposing to include a summary description of former Listing Rule 
5505(a)(1)(B) within Listing Rule IM-5505-2, which describes the price 
requirement that companies that initially list under the Alternative 
Price Requirement must satisfy and Nasdaq's ongoing monitoring of such 
companies for compliance with the penny stock rules. The proposed 
summary is intended to provide clarification for the references to the 
former rule that remain in Listing Rule IM-5505-2. Lastly, the Exchange 
is proposing to make conforming changes to Listing Rule IM-5505-2 to 
clarify that Listing Rule 5505(a)(1)(B) is a ``former'' rule. Nasdaq 
intends to make the proposed rule change operative 30 days after the 
date of the filing. This period will allow companies that have taken 
substantial steps to list under the current rules to complete the 
process.
---------------------------------------------------------------------------

    \6\ Pursuant to IM-5505-2, if a company initially listed under 
the Alternative Price Requirement but subsequently achieved a $4 
closing price for at least five consecutive business days and, at 
the same time, satisfied all other initial listing criteria, the 
company will no longer be considered as having listed under the 
Alternative Price Requirement.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\7\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\8\ 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, by eliminating 
initial listing requirements that may cause securities to become 
susceptible to manipulation. More specifically, Nasdaq believes that 
removing the initial listing requirement that enables companies to list 
securities below $4 will decrease the likelihood that a company will 
trade at low price levels, which will protect investors and the public 
interest. Additionally, the Exchange believes that maintaining a 
summary of former Rule 5505(a)(1)(B) will provide clarification to the 
references to the former rule that are maintained in IM-5505-2.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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. Any company that desires to 
list on the NCM can do so on a non-discriminatory basis as long as the 
company complies with all the applicable Exchange initial listing 
requirements. Additionally, there is no burden to intra-market 
competition because the proposed change will apply to all companies 
that apply to list on the NCM. There is no inter-market burden on 
competition because the proposed amendment is aligned with the rule on 
other exchanges that do not allow for listing of companies below $4 and 
the proposal does not impose any burden on the ability for other 
exchanges to compete.\9\ Additionally, Rule IM-5505-2 will remain 
applicable to companies previously listed under the rule.
---------------------------------------------------------------------------

    \9\ See NYSE American Listed Company Guide Sections 101(a)-
101(d).
---------------------------------------------------------------------------

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.

[[Page 65019]]

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) of the Act \10\ and Rule 19b-
4(f)(6) thereunder.\11\
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
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.
---------------------------------------------------------------------------

    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 change 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#dfadaab3baf2bcb0b2b2bab1abac9facbabcf1b8b0a9"><span class="__cf_email__" data-cfemail="eb999e878ec6888486868e859f98ab988e88c58c849d">[email&#160;protected]</span></a>. Please include 
file number SR-NASDAQ-2026-082 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-2026-082. 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-2026-082 and should be submitted 
on or before November 3, 2026.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-20808 Filed 10-9-26; 8:45 am]
BILLING CODE 8011-01-P


</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>