Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To Modify Certain Initial Listing Requirements

<NOTICE> SECURITIES AND EXCHANGE COMMISSION <DEPDOC>[Release No. 34-104450; File No. SR-NASDAQ-2025-068]</DEPDOC> <SUBJECT>Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To Modify Certain Initial Listing Requirements</SUBJECT> <DATE>December 18, 2025.</DATE> <HD SOURCE="HD1">I. Introduction</HD> On September 4, 2025, 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”)  <SU>1</SU> <FTREF/> and Rule 19b-4 thereunder, <SU>2</SU> <FTREF/> a proposed rule change to modify certain initial and continued listing requirements in Nasdaq Listing Rules 5405, 5505, 5810, and 5815. The proposed rule change was published for comment in the <E T="04">Federal Register</E> on September 19, 2025. <SU>3</SU> <FTREF/> On September 25, 2025, pursuant to Section 19(b)(2) of the Act, <SU>4</SU> <FTREF/> the Commission designated a longer period within which to take action on the proposed rule change. <SU>5</SU> <FTREF/> On December 11, 2025, the Exchange filed Amendment No. 1 to the proposed rule change, which superseded the original proposed rule change in its entirety. <SU>6</SU> <FTREF/> The Commission is publishing this notice to solicit comments on the proposed rule change, as modified by Amendment No. 1, from interested persons and is approving the proposed rule change, as modified by Amendment No. 1, on an accelerated basis. <FTNT> <SU>1</SU>  15 U.S.C. 78s(b)(1). </FTNT> <FTNT> <SU>2</SU>  17 CFR 240.19b-4. </FTNT> <FTNT> <SU>3</SU>   <E T="03">See</E> Securities Exchange Act Release No. 103982 (Sept. 16, 2025), 90 FR 45280 (“Notice”). Comments received on the Notice are available at: <E T="03">https://www.sec.gov/comments/sr-nasdaq-2025-068/srnasdaq2025068.htm.</E> </FTNT> <FTNT> <SU>4</SU>  15 U.S.C. 78s(b)(2). </FTNT> <FTNT> <SU>5</SU>   <E T="03">See</E> Securities Exchange Act Release No. 104057, 90 FR 47028 (Sept. 30, 2025). The Commission designated December 18, 2025, as the date by which the Commission shall approve, disapprove, or institute proceedings to determine whether to disapprove the proposed rule change. <E T="03">See id.</E> </FTNT> <FTNT> <SU>6</SU>  Amendment No. 1 to the proposed rule change revised the proposal by: (1) removing the proposed modifications to Nasdaq Rules 5810 and 5815 that would have accelerated suspension and delisting of any company that becomes non-compliant with certain quantitative listing requirements and has a market value of listed securities of less than $5 million for a period of 10 consecutive business days (“Accelerated Suspension and Delisting Proposal”); (2) providing additional description and support for certain aspects of the proposal; and (3) making other technical and non-substantive changes for readability. The full text of Amendment No. 1 can be found on the Commission's website at: <E T="03">https://www.sec.gov/comments/sr-nasdaq-2025-068/srnasdaq2025068-683867-2114774.pdf.</E> </FTNT> <HD SOURCE="HD1"> II. Description of the Proposed Rule Change, as Modified by Amendment No. 1  <E T="51">7</E> <FTREF/> </HD> <FTNT> <SU>7</SU>  All capitalized terms not otherwise defined in this order shall have the meanings set forth in the Nasdaq Listing Rules. </FTNT> Nasdaq Listing Rules require that a company applying for initial listing on the Exchange must have a minimum Market Value of Unrestricted Publicly Held Shares (“MVUPHS”). <SU>8</SU> <FTREF/> 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>9</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>10</SU> <FTREF/> <FTNT> <SU>8</SU>  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. <E T="03">See</E> Nasdaq Rule 5005(a)(46). <E T="03">See also</E> Nasdaq Rules 5005(a)(23), 5005(a)(35), 5005(a)(38), and 5005(a)(47) for the definitions of “Market Value,” “Publicly Held Shares,” “Restricted Securities,” and “Unrestricted Securities.” The Exchange states that, like other liquidity requirements, the MVUPHS standard 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. <E T="03">See</E> Notice, <E T="03">supra</E> note 3, at 45281. </FTNT> <FTNT> <SU>9</SU>   <E T="03">See</E> Nasdaq Rules 5405(b)(1)(C), 5405(b)(2)(C), 5405(b)(3)(B), and 5405(b)(4)(B). </FTNT> <FTNT> <SU>10</SU>   <E T="03">See</E> Nasdaq Rules 5505(b)(1)(B), 5505(b)(2)(C), and 5505(b)(3)(C). For a Company listing in connection with an initial public offering (“IPO”), including through the issuance of American Depository Receipts, these requirements must be satisfied from the offering proceeds. <E T="03">See</E> Nasdaq Rules 5405(b)(1)(C), 5405(b)(2)(C), 5405(b)(3)(B), 5405(b)(4)(B), 5505(b)(1)(B), 5505(b)(2)(C), and 5505(b)(3)(C). </FTNT> The Exchange recently modified the liquidity requirements for the initial listing of companies listing in conjunction with an IPO such that shares registered for resale are no longer counted for purposes of satisfying the minimum MVUPHS requirement. <SU>11</SU> <FTREF/> As a result, a new company listing in connection with an IPO must meet the MVUPHS requirement based on shares being sold in the offering. <SU>12</SU> <FTREF/> The Exchange states that, following this change, it has observed an increase in the number of companies applying for initial listing based on Nasdaq's net income-based requirements, which require a lower MVUPHS than the other standards. <SU>13</SU> <FTREF/> The Exchange states that it has observed problematic trading in companies with low public floats and liquidity, and the Exchange is concerned that companies initially listing with just $5 million or $8 million MVUPHS on the Nasdaq Capital or Global Market, respectively, may not trade in a manner supportive of price discovery. <SU>14</SU> <FTREF/> <FTNT> <SU>11</SU>   <E T="03">See</E> Securities Exchange Act Release No. 102622 (Mar. 12, 2025), 90 FR 12608 (Mar. 18, 2025) (SR-NASDAQ-2024-084) (Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To Modify Certain Initial Listing Requirements). </FTNT> <FTNT> <SU>12</SU>  The Exchange states that when it made this change, it did not increase any of the numeric requirements for MVUPHS under any of the listing standards. <E T="03">See</E> Notice, <E T="03">supra</E> note 3, at 45281. </FTNT> <FTNT> <SU>13</SU>   <E T="03">See id.</E> The Exchange states that, prior to the new rule taking effect, less than one-third of companies on the Nasdaq Capital Market listed under the Net Income Standard. <E T="03">See id.</E> at 45281, n.7. Since March 2025, when the change requiring companies to satisfy the MVUPHS requirement by proceeds of the IPO took effect, nearly three-quarters of companies listing on the Nasdaq Capital Market have listed under the Net Income Standard. <E T="03">See</E> Amendment No. 1, <E T="03">supra</E> note 6, at 6, n.11. </FTNT> <FTNT> <SU>14</SU>   <E T="03">See</E> Notice, <E T="03">supra</E> note 3, at 45281. </FTNT> Accordingly, the Exchange proposes to modify Nasdaq 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. <SU>15</SU> <FTREF/> The Exchange also proposes to modify Nasdaq Rule 5405(b)(1)(C) to increase the minimum MVUPHS for companies listing under the Income Standard on the Nasdaq Global Market from $8 million to $15 million. <SU>16</SU> <FTREF/> The Exchange states that it believes that these proposed changes will help ensure that there is a sufficient initial pool of liquidity available to support liquid trading on the Exchange. <SU>17</SU> <FTREF/> <FTNT> <SU>15</SU>  The Exchange states that this change will align the MVUPHS requirement across all of the initial listing standards on the Nasdaq Capital Market. <E T="03">See id.</E> </FTNT> <FTNT> <SU>16</SU>  The Exchange states that this change will avoid having a lower standard on the Nasdaq Global Market than on the Nasdaq Capital Market. <E T="03">See id.</E> </FTNT> <FTNT> <SU>17</SU>   <E T="03">See id.</E> </FTNT> The Exchange states that the proposed change will become operative 30 days after approval by the Commission. <SU>18</SU> <FTREF/> <FTNT> <SU>18</SU>   <E T="03">See id.</E> at 45282. </FTNT> <HD SOURCE="HD1">III. Discussion and Commission Findings</HD> After careful review, the Commission finds that the proposed rule change, as modified by Amendment No. 1, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange. <SU>19</SU> <FTREF/> In particular, the Commission finds that the proposed rule change, as modified by Amendment No. 1, is consistent with Section 6(b)(5) of the Act, <SU>20</SU> <FTREF/> which requires, among other things, that the rules of an exchange be designed to prevent fraudulent and manipulative acts and practices, ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 23k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━