On April 28, 2026, the Securities and Exchange Commission (SEC) instituted proceedings to determine whether to approve a Nasdaq Stock Market LLC (Nasdaq) proposed rule change that would require listed companies to maintain a minimum Market Value of Listed Securities (MVLS)^[1] of at least $5 million.

Under the proposed rule, which was filed by Nasdaq with the SEC on Jan. 13, 2026, listed companies that fail to maintain a MVLS of at least $5 million for 30 consecutive business days would be subject to immediate delisting and suspension from trading (i.e., there would be no cure period to regain compliance). Nasdaq’s rationale for the rule is that very low market capitalization companies are unsuitable for trading on an exchange (as opposed to over-the-counter), that companies that fall below $5 million in MVLS are extremely unlikely to recover, and that removing such companies from listing protects investors by, among other things, removing the seal of approval that Nasdaq listing provides. Listed companies may appeal such a de-listing determination, but the companies’ securities would be suspended from trading on Nasdaq during the pendency of such appeal, which would likely make the initial delisting effectively fatal for most affected companies.

The SEC is soliciting additional comments to inform its analysis and has not yet reached any conclusions with respect to the proposed rule. To date, while certain commenters expressed support for the proposed rule, others raised concerns, such as that the proposed rule overlaps with recently adopted Nasdaq rule changes (e.g., limitations on reverse stock splits and minimum bid price requirements) designed to address low market value companies listed on the exchange and that the proposed rule might encourage manipulative trading and market abuse to drive down a listed company’s stock and ultimately cause the company to be delisted. Due to these and other concerns that were expressed by commenters, the SEC has indicated that it will take time for additional analysis and consideration of the proposed rule.

^[1]The terms “Market Value” and “Listed Securities,” are defined in Nasdaq Rules 5005(a)(23) and 5005(a)(22), respectively. MLVS is roughly equivalent to market capitalization.