On July 22, 2026, the SEC approved Nasdaq’s proposal (Release No. 34-105971) to adopt a new continued listing requirement based on Market Value of Listed Securities (“MVLS”). Under 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 must maintain an MVLS of at least $5 million.
The new MVLS Requirement represents 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.
The amendments also modify the appeals process. Although a company may appeal a Staff Delisting Determination to the Nasdaq Hearings Panel, a timely appeal will not stay the suspension of trading. As a result, the company’s securities generally will trade in the OTC market while the appeal is pending. The Hearings Panel may, however, grant an exception of up to 180 days from the Staff Delisting Determination for the company to demonstrate that it satisfies all requirements for initial listing—a materially higher standard than the continued listing requirements.
Nasdaq justified the new requirement on the basis that companies with very low market capitalizations frequently experience prolonged financial distress and may present heightened concerns regarding market quality and susceptibility to manipulation. The SEC agreed, relying in part on its own analysis showing that the number of issuers that would have failed the proposed standard increased from two issuers in 2021 to 140 issuers in 2023. The Commission also found that 65% of issuers falling below the $5 million threshold for 30 consecutive business days remained below that threshold after 180 days, with a median MVLS of less than $3.7 million.
The proposal generated substantial comment from issuers, law firms, investor groups, and market participants. Among other things, commenters questioned whether the proposal could result in the delisting of companies experiencing temporary declines in valuation, objected to the absence of a compliance period, and expressed concern that immediate migration to the OTC market could impair liquidity and access to capital. One commenter also submitted an empirical study concluding that many issuers falling below the proposed threshold subsequently recovered. The SEC acknowledged these comments but concluded that the proposal appropriately balanced those concerns against investor protection and market integrity considerations.
Nasdaq-listed companies—particularly smaller issuers—should review the new requirement carefully. Companies approaching the $5 million MVLS threshold should monitor compliance on an ongoing basis, recognizing that no compliance period is available once the 30-business-day threshold is reached. They should also understand that an appeal generally will not prevent trading from moving to the OTC market and that any request for Hearings Panel relief will require the company to demonstrate compliance with Nasdaq’s initial listing standards rather than its continued listing standards.