By: Jeffrey Koeppel
On April 28, 2026, the Securities and Exchange Commission (“SEC”) issued an order instituting proceedings under Section 19(b)(2)(B) of the Securities Exchange Act of 1934, delaying Nasdaq’s previously proposed Market Value of Listed Securities continued listing standard of at least $5 million for the Nasdaq Global and Nasdaq Capital markets.
Pursuant to the order, the SEC is seeking additional comments from interested parties to determine whether to approve or disapprove the proposed rule changes. Comments are due by May 22, 2026, with rebuttals due by June 5, 2026.
Overview of the Proposed Nasdaq Rule Changes
On January 13, 2026, Nasdaq proposed a sweeping overhaul of its continued listing standards for companies listed on the Nasdaq Global Market and Nasdaq Capital Market. The proposal represents a structural shift away from remediation-based compliance toward immediate enforcement for low-valuation issuers.
The rule proposal can be found here.
Core Requirement: $5 Million MVLS Threshold
Nasdaq proposes to adopt new Listing Rules 5450(a)(3) and 5550(a)(6), requiring listed companies to maintain a minimum Market Value of Listed Securities (“MVLS”) of at least $5 million. MVLS is calculated as the consolidated closing bid price multiplied by the number of listed securities.
- Non-compliance would be triggered if MVLS falls below $5 million for 30 consecutive business days.
Immediate Suspension and Delisting
The most consequential feature of the proposal is immediate trading suspension and delisting upon failure to meet the MVLS requirement for 30 consecutive business days.
Elimination of Cure Periods
Nasdaq explicitly proposes to amend Rule 5810(c)(3) to deny any compliance or cure period for MVLS deficiencies. This marks a sharp departure from existing Nasdaq rules, which typically provide issuers grace periods to regain compliance for deficiencies caused by temporary conditions.
Nasdaq’s rationale is that companies with persistently low market value often face structural, not temporary, challenges, making recovery unlikely.
Significant Restrictions on Appeal Rights
The proposal also narrows procedural protections under Rule 5815(a)(1)(B)(ii)(f):
- A hearing request would not stay trading suspension, meaning securities would be removed from Nasdaq immediately and would immediately start to trade on the over-the-counter market during any appeal.
- The Nasdaq Hearings Panel could only reverse a delisting if it determines that the Staff Delisting Determination letter was in error and that the company never failed to satisfy the applicable requirement, not based on subsequent compliance or mitigating factors.
This effectively eliminates discretionary relief by the Hearing Panel, which is currently a key feature of Nasdaq’s listing framework.
Nasdaq’s Stated Rationale
Nasdaq asserts that the proposal is designed to:
- Improve market quality and liquidity, noting that extremely low-value securities are difficult for market makers to support.
- Remove issuers experiencing prolonged financial distress that are unlikely to regain compliance.
- Enhance investor protection by preventing trading in companies perceived as fundamentally impaired.
Key Takeaways
- The proposal (if adopted) would represent a fundamental tightening of Nasdaq’s continued listing standards for the Nasdaq Global Market and Nasdaq Capital Market, with immediate enforcement mechanisms.
- It would materially increase listing and ongoing compliance risk, particularly for smaller issuers.
- The SEC’s decision to institute proceedings indicates that approval is uncertain and that significant aspects of the proposal may be contested.
- Interested market participants should expect continued regulatory developments and consider submitting comments before the May 22, 2026 deadline.
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