Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change To Modify Certain Initial and Continued Listing Requirements

<NOTICE> SECURITIES AND EXCHANGE COMMISSION <DEPDOC>[Release No. 34-103982; File No. SR-NASDAQ-2025-068]</DEPDOC> <SUBJECT>Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change To Modify Certain Initial and Continued Listing Requirements</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 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. <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 modify certain initial and continued listing requirements. 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> Nasdaq is proposing to amend Listing Rules 5405(b)(1)(C) and 5505(b)(3)(C) to increase the minimum Market Value of Unrestricted Publicly Held Shares (“MVUPHS”) requirement for companies listing under the net income standard on the Nasdaq Global and Capital Markets, respectively, to $15 million. Nasdaq is also proposing to suspend from Nasdaq trading and immediately delist (rather than providing a compliance period) any company that becomes non-compliant with one or more of the listing requirements contained in Rule 5450 or Rule 5550 and that has a Market Value of Listed Securities of less than $5 million. <HD SOURCE="HD3">Minimum $15 Million MVUPHS for Initial Listing</HD> Nasdaq Listing Rules require a company to have a minimum Market Value of Unrestricted Publicly Held Shares. For initial listing on the Nasdaq Global Market, a company must have a minimum MVUPHS of $8 million under the Income Standard, $18 million under the Equity Standard, and $20 million under either the Market Value or Total Assets/Total Revenue Standards. <SU>3</SU> <FTREF/> For initial listing on the Nasdaq Capital Market, a company must have a minimum MVUPHS of $5 million under the Net Income Standard, and $15 million under either the Equity or Market Value of Listed Securities Standards. <SU>4</SU> <FTREF/> Unrestricted Publicly Held Shares are shares that are not held by an officer, director or 10% shareholder of the company and which are not subject to resale restrictions of any kind. <SU>5</SU> <FTREF/> <FTNT> <SU>3</SU>   <E T="03">See</E> Listing Rules 5405(b)(1)(C), 5405(b)(2)(C), 5405(b)(3)(B), and 5405(b)(4)(B). </FTNT> <FTNT> <SU>4</SU>   <E T="03">See</E> Listing Rules 5505(b)(1)(B), 5505(b)(2)(C), and 5505(b)(3)(C). </FTNT> <FTNT> <SU>5</SU>   <E T="03">See</E> Listing Rule 5005(a)(46). </FTNT> The MVUPHS standard is one of the core liquidity requirements within the Nasdaq listing rules. Like the other liquidity requirements, it is meant to ensure that there is sufficient liquidity to provide price discovery and support an efficient and orderly market for the company's securities. Nonetheless, Nasdaq has observed problems with the trading of smaller company listings more generally and proposes to increase the minimum MVUPHS to help address these concerns. Nasdaq recently modified the liquidity requirements for initial listing such that shares registered for resale are no longer counted as Unrestricted Publicly Held Shares. <SU>6</SU> <FTREF/> As a result, a newly listing company listing in connection with an initial public offering must meet the MVUPHS based on shares being sold in the offering. When Nasdaq made this change, it did not increase any of the numeric requirements for MVUPHS under any of the listing standards. <FTNT> <SU>6</SU>  Securities Exchange Act Release No. 102622 (March 12, 2025), 90 FR 12608 (March 18, 2025) (SR-NASDAQ-2024-084). </FTNT> Following this change, Nasdaq Staff has observed an increase in the number of companies applying for listing based on Nasdaq's net income requirement, which requires a lower MVUPHS than the other standards. <SU>7</SU> <FTREF/> As noted above, Nasdaq Staff has observed problematic trading in companies with low public floats and liquidity, and Nasdaq is concerned that companies initially listing with just $5 million or $8 million MVUPHS on the Nasdaq Capital or Global Markets, respectively, may not trade in a manner supportive of price discovery. In particular, Nasdaq believes that the MVUPHS is an indicator of liquidity and does not believe it is appropriate to require such a significantly lower liquidity threshold for companies simply because they have a minimum level of net income, as opposed to equity or market value. <FTNT> <SU>7</SU>  As noted above, companies listing under the net income standard on the Capital Market tier must have a minimum MVUPHS of $5 million under the Net Income Standard, as opposed to $15 million under the other standards. Prior to the new rule taking effect, less than one-third of companies listed under the net income standard. In about five months since the change requiring companies to satisfy the MVUPHS requirement by proceeds of the initial public offering nearly three-quarters of companies listing on the Capital Market tier have listed under that standard. </FTNT> Accordingly, Nasdaq is proposing to modify Listing Rule 5505(b)(3)(C) to increase the minimum MVUPHS for companies listing under the net income standard on the Nasdaq Capital Market from $5 million to $15 million to align this requirement across all of the listing standards on the Capital Market. In addition, to avoid having the standard on the Nasdaq Global Market be lower than that on the Capital Market, Nasdaq also proposes to modify Listing Rule 5405(b)(1)(C) to increase the minimum MVUPHS for companies listing under the net income standard on the Global Market from $8 million to $15 million. Nasdaq believes that these changes will help ensure that there is a sufficient initial pool of liquidity available to support liquid trading. <HD SOURCE="HD3">Accelerated Suspension and Delisting if MVLS Is Less Than $5 Million</HD> Nasdaq rules have minimum requirements for companies to remain listed and provide compliance periods for companies that fail to maintain compliance with those rules. The compliance periods are designed to allow time for companies to take action to come back into compliance for a company facing temporary business issues, a temporary decrease in the value of its securities, or temporary market conditions. However, Nasdaq has observed that some companies, typically those in financial distress or experiencing a prolonged operational downturn, are unable to regain compliance with the listing requirements for the long-term. The market typically identifies these companies and investors lose interest in the companies, resulting in their having low market values. Nasdaq believes that once the market identifies significant problems in a company otherwise deficient in the listing standards by assigning a very low market value, that company is no longer appropriate for continued trading on Nasdaq because challenges facing such companies, generally, are not temporary and may be so severe that the company is not likely to regain compliance within the prescribed compliance period and sustain compliance thereafter. Moreover, it is more difficult for market makers to make markets in these securities and for their to be a fair and orderly market. While Nasdaq has taken action to enhance its listing standards and more quickly delist certain companies that have repeated failures to maintain compliance with those standards, Nasdaq now proposes further enhancing investor protections by providing for suspension from Nasdaq trading and immediate delisting (rather than providing a compliance period) of any company that becomes non-compliant with a numeric listing requirement, including the bid price, market value of public float, equity, income and total assets/revenue requirements, and that has a market value of listed securities of less than $5 million. To effect this change, Nasdaq proposes to modify Listing Rule 5810(c)(1) to add an additional type of a deficiency that results in immediate delisting and suspension from trading of the company's securities. Specifically, Listing Rule 5810(c)(1) will provide that staff's delisting notice will inform the company that its securities are immediately subject to suspension and delisting when a company is non-compliant with one or more of the listing requirements contained in Rule 5450 or Rule 5550 and the company's Market Value of Listed Securities has failed to maintain a value of at least $5 million for a period of 10 consecutive bus ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 23k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━