SEC Division Issues Order Approving Nasdaq’s New $5 Million Market Value Continued Listing Requirement; Order Subsequently Stayed

On July 22, the SEC’s Division of Trading and Markets, acting pursuant to delegated authority, approved The Nasdaq Stock Market’s (Nasdaq) proposal to adopt a new continued listing requirement based on Market Value of Listed Securities (MVLS). Under proposed new Nasdaq Rules 5450(a)(3) and 5550(a)(6), companies listed on the Nasdaq Global Select Market, Nasdaq Global Market, and Nasdaq Capital Market would need to maintain an MVLS of at least $5 million to remain listed.

On July 29, the Deputy Secretary of the SEC notified Nasdaq that the Commission has received notices of petition for review of the delegated action. As a result, in accordance with Rule 431(e) of the SEC’s Rules of Practice, the July 22 order is stayed until the SEC orders otherwise.

The new MVLS requirement would represent one of the more significant changes to Nasdaq’s continued listing standards in recent years because, unlike most existing quantitative continued listing requirements, it does not provide a compliance period before a company becomes subject to suspension and delisting. A company that remains below the $5 million threshold for 30 consecutive business days will receive a Staff Delisting Determination and will be immediately subject to suspension and delisting. The requirement applies uniformly across all three Nasdaq market tiers.

After the Commission instituted proceedings in April to determine whether to approve or disapprove the proposed rule change, Nasdaq submitted an amendment to allow for an expanded list of circumstances under which the Nasdaq Listing Qualifications Hearings Panel could stay a suspension. The amended proposal apparently addressed key concerns with the proposal; however, the stay to allow for Commission consideration of the appeal of action taken by delegated authority at least delays implementation of the rule.

See our PCAP Blog for further discussion.

On July 21, the SEC's Small Business Capital Formation Advisory Committee held a meeting to discuss ways to modernize market access in order to encourage more IPOs and foster small public company capital formation. An advisory committee comprised of members of the public, the Small Business Capital Formation Advisory Committee provides advice and recommendations on Commission rules, regulations, and policy matters relating to small businesses, including smaller public companies. At the meeting, each of the SEC’s Commissioners spoke. In her remarks, Commissioner Hester Peirce asked the committee for feedback on several areas, including:

• Expected impact of the Commission’s proposed new filer status rules, particularly whether companies seeking newly available Form S-3 eligibility will face any unique operational or infrastructure challenges in taking advantage of it and whether there are additional reforms smaller issuers would like to see that would encourage them to take advantage of the public markets.
• Related to proposed semiannual reporting rules, whether Form 10-Q disclosures play a different role for smaller issuers and their investors than they do for larger companies.
• Identifying specific disclosure items under Regulation S-K that are particularly burdensome for smaller issuers.
• What the SEC can do to create an environment in which smaller public companies get improved research coverage and market making.
• Potential impact of revisions to gun-jumping rules.
• Litigation concerns.

On July 30, the SEC announced that the meeting held on July 21 will reconvene on August 6, 2026, at 1 pm ET, virtually, on SEC.gov.

Separately, on July 27, SEC’s Office of the Advocate for Small Business Capital Formation, an independent office within the agency established by Congress to advance the interests of small businesses, from startups to small public companies, and their investors at the SEC and in the capital markets, released its annual report to Congress. The report highlights policy recommendations from the SEC’s 45th Annual Government-Business Forum on Small Business Capital Formation. Recommendations related to issuers include:

• To promote early-stage capital raising:
  • Expand the accredited investor definition.
  • Create a federal “friends and family” exemption that preempts blue sky laws.
  • Expand government resources to support funding for small businesses.
  • Increase the amount that can be raised under Regulation Crowdfunding.
• To assist growth-stage companies:
  • Preempt blue sky laws for off-exchange secondary trading.
  • Make previously restricted shares available for trading under Rule 144.
  • Advance the INVEST Act.
• To assist small-cap companies and the public markets:
  • Improve public trading for companies traded over-the-counter by requiring more disclosures about short selling, institutional holdings, and insider holdings and transactions.
  • Allow at-the-market offerings for all small public companies.
  • Expand Form S-3 eligibility.
  • Simplify reporting requirements under Regulation A.
  • Implement reforms to reduce costs and liability for smaller public companies.

On July 23, the SEC announced that it will host a public roundtable on September 17 to discuss preparations for potential 24-hour trading in the US equity markets. The roundtable will focus on overnight trading infrastructure, market operations and resiliency, and the opportunities and challenges associated with expanding trading hours. The event will be held at SEC headquarters and streamed live on SEC.gov.

Nasdaq has posted a series of Frequently Asked Questions (FAQs) that address the introduction of expanded trading hours. The Nasdaq Global Trading Hours FAQs cover operational issues associated with trading, including the trading schedule, impact of holidays, settlement dates, market protections, and market data. The FAQs note that the transition to a 23-hour trading day is currently expected to occur on Sunday, December 6, 2026, pending SIP (securities information processor) readiness as well as any applicable SEC rule changes.

A second, more focused set of FAQs addresses Corporate Action Mandatory Regulatory Halt Rules in light of the new trading hours. The FAQs identify corporate actions that require a mandatory regulatory halt in trading and how the halt will work. The trading halt will commence at 8:00 pm ET on the day immediately preceding the market effective date of the applicable corporate action or issuer-related event. Trading will remain halted through the overnight (new) trading session and is eligible to resume through the Nasdaq Halt Cross at 8:00 am ET on the market effective date of the corporate action. The applicable actions/events are:

• Trading symbol change.
• CUSIP change.
• Large dividend (value per share equals at least 25% of closing price).
• Stock splits.
• De-SPAC transactions.
• Spin-offs.
• Security-type change.
• Merger/mandatory exchange.
• Other corporate action or issuer-related event (providing Nasdaq with flexibility to address situations where a halt is deemed necessary to maintain fair and orderly markets or protect investors).

In 2023, California enacted the Climate Corporate Data Accountability Act as reflected in Senate Bill No. 253 (SB 253) requiring the California Air Resources Board (CARB) to adopt regulations to require the reporting and verification of statewide greenhouse gas emissions. In late June, CARB announced that it is updating its regulatory proposal to defer the reporting deadline for entities to report Scope 1 and Scope 2 greenhouse gas emissions from August 10, 2026, to November 10, 2026.

On July 22, the SEC announced that Sam Waldon, Principal Deputy Director of the Division of Enforcement, will depart the agency on July 31, 2026, after more than 14 years at the SEC. He will be succeeded as Principal Deputy Director by Osman Nawaz, who is currently the Chief of the Complex Financial Instruments Unit. Mr. Waldon served as Acting Deputy Director from October 2024 to January 2025 before becoming Acting Director of Enforcement on two occasions in 2025 and 2026. He began his SEC career as a staff attorney and then later became Assistant Chief Counsel and eventually Chief Counsel in the Division of Enforcement from 2022 through 2024.