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

<NOTICE> SECURITIES AND EXCHANGE COMMISSION <DEPDOC>[Release No. 34-103979; File No. SR-NASDAQ-2025-069]</DEPDOC> <SUBJECT>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</SUBJECT> <DATE>September 16, 2025.</DATE> Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), <SU>1</SU> <FTREF/> and Rule 19b-4 thereunder, <SU>2</SU> <FTREF/> 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 On September 12, 2025, the Exchange filed Amendment No. 1 to the proposed rule change, which superseded and replaced the proposed rule change in its entirety.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. <FTNT> <SU>1</SU>  15 U.S.C. 78s(b)(1). </FTNT> <FTNT> <SU>2</SU>  17 CFR 240.19b-4. </FTNT> <HD SOURCE="HD1">I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change</HD> 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. <SU>3</SU> <FTREF/> <FTNT> <SU>3</SU>  This Amendment No. 1 is being filed to remove a footer that was inadvertently included on the document. </FTNT> 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 <E T="03">https://listingcenter.nasdaq.com/rulebook/nasdaq/rulefilings,</E> and at the principal office of the Exchange. <HD SOURCE="HD1">II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change</HD> 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. <HD SOURCE="HD2">A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change</HD> <HD SOURCE="HD3">1. Purpose</HD> 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. <SU>4</SU> <FTREF/> At the same time, Nasdaq also proposed two other changes seeking to address concerns with Chinese companies. <SU>5</SU> <FTREF/> <FTNT> <SU>4</SU>  Securities Exchange Act Release No. 89027 (June 8, 2020), 85 FR 35962 (June 12, 2020) (SR-NASDAQ-2019-027 [sic]). <E T="03">See also</E> 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]). </FTNT> <FTNT> <SU>5</SU>  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. <E T="03">See</E> Letters from Arnold Golub to Vanessa A. Countryman (February 1, 2021) available at <E T="03">https://www.sec.gov/comments/sr-nasdaq-2020-026/srnasdaq2020026-8324959-228601.pdf</E> (withdrawing SR-Nasdaq-2020-026) and <E T="03">https://www.sec.gov/comments/sr-nasdaq-2020-028/srnasdaq2020028-8324961-228602.pdf</E> (withdrawing SR-Nasdaq-2020-028). </FTNT> More recently, bills introduced in Congress have continued to raise bipartisan concerns  <SU>6</SU> <FTREF/> 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. <SU>7</SU> <FTREF/> In May 2025, the financial officers of 23 states wrote a letter to Chairman Atkins highlighting concerns with the listing of Chinese companies. <SU>8</SU> <FTREF/> 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. <SU>9</SU> <FTREF/> <FTNT> <SU>6</SU>   <E T="03">See, e.g.,</E> 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). </FTNT> <FTNT> <SU>7</SU>   <E T="03">See America First Investment Policy,</E> The White House (February 21, 2025), available at <E T="03">https://www.whitehouse.gov/presidential-actions/2025/02/america-first-investment-policy/.</E> </FTNT> <FTNT> <SU>8</SU>   <E T="03">https://sfof.com/wp-content/uploads/2025/05/Delisting-Letter.pdf</E> (highlighting concerns arising from the PCAOB audit inspections of major accounting firms in China). </FTNT> <FTNT> <SU>9</SU>   <E T="03">See China Puts Brakes on US Stock Listings for Homegrown Companies,</E> Financial Times (February 27, 2025), available at <E T="03">https://www.ft.com/content/a5640320-7ed3-47c5-b9a1-2c0d600170be.</E> </FTNT> 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. <SU>10</SU> <FTREF/> 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. <FTNT> <SU>10</SU>  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. </FTNT> 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 g ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 36k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━