On July 22, 2026, the United States Securities and Exchange Commission (SEC”) approved The Nasdaq Stock Market’s (“Nasdaq”) proposed rule setting a $5 million Market Value of Listed Securities (“MVLS”) requirement for all companies listed on The Nasdaq Global Select Market, The Nasdaq Global Market and The Nasdaq Capital Market. MVLS is calculated as the consolidated closing bid price of a share multiplied by the number of shares listed on Nasdaq or another national securities exchange.
The SEC received significant feedback both positive and negative. While many commentators agree that low-priced securities are more likely to be the subject of fraud and manipulation, other commentators pointed out that the risk of fraud and manipulation is not proportional to the impact of delisting on such smaller companies without other clear evidence that such companies are financially distressed.
In particular, one commenter stated that “[i]f fraud or manipulation risk is disproportionately concentrated among particular issuer profiles, a targeted, risk-based response focused on those characteristics would be more precise and far less damaging than a blanket market-value trigger applied to all issuers regardless of domicile, governance structure, or compliance history.”
Under the new rule, if a company has an MVLS below $5 million for 30 consecutive business days, Nasdaq will issue a staff delisting determination, immediately suspend trading of the company’s securities and commence delisting proceedings. Such delisted securities would likely then begin trading in the over-the-counter markets.
Nasdaq did not provide for a cure period to regain compliance with the MVLS requirement as they do for many other compliance violations and a request for a Nasdaq Listing Qualifications Hearings Panel review does not automatically stay the suspension of trading. Further, the Nasdaq Hearings Panel review is limited to instances where Nasdaq made an error or, in limited circumstances, they may grant an exception for a period not to exceed 180 days from the Staff Delisting Determination for the company to demonstrate that it meets all requirements for initial listing, which are generally more stringent than the continued listing requirements.
Nasdaq states that it believes that the proposed change balances its obligation to protect investors while allowing a company whose operational and financial difficulties are indeed temporary to demonstrate to an independent Hearings Panel that continued listing is appropriate. A company may appeal a Hearings Panel decision to the Nasdaq Listing and Hearing Review Council.
The SEC release can be found here: https://www.sec.gov/files/rules/sro/nasdaq/2026/34-105971.pdf