Nasdaq is facing opposition from smaller U.S. companies after proposing a new delisting trigger tied to market value, according to Bloomberg. The exchange wants to immediately suspend listed companies whose market capitalization stays below $5 million for 30 days, with delisting to follow. The proposal is aimed at curbing manipulation in microcap stocks, including pump-and-dump activity.
The measure has drawn criticism from domestic small businesses, which argue that thin trading and natural price swings should not automatically be treated as signs of manipulation. They say the rule could make fundraising harder and hurt companies that are still operating normally. Regulators paused the process last month and requested more public feedback.
Bloomberg data shows that more than 190 Nasdaq-listed companies currently have market values at or below $5 million. Roughly one-third are in Asia, while nearly half are based in the United States. Unlike Nasdaq's existing low-price delisting framework, which gives issuers 180 days to regain compliance, the new proposal would not offer a similarly long cure period. NYSE American put forward a comparable $5 million threshold in March, and the U.S. Securities and Exchange Commission also delayed a final decision on that proposal.
Nasdaq has proposed immediately suspending listed companies whose market capitalization remains below $5 million for 30 days, with delisting to follow, according to Bloomberg. The exchange said the change is intended to curb manipulation in microcap stocks, including pump-and-dump schemes.
The proposal has run into opposition from smaller U.S. businesses. Regulators paused the process last month and asked for additional public comment.
More than 190 Nasdaq-listed companies are below the threshold
Bloomberg data shows that more than 190 companies listed on Nasdaq currently have market values of no more than $5 million. About one-third of them are in Asia, and nearly half are in the United States.
Companies opposing the proposal argue that natural price swings caused by thin trading are not the same as market manipulation. They also say the rule could discourage fundraising and end up hurting businesses that are operating normally.
Proposal would allow less time than existing rules
Unlike Nasdaq's current low-share-price delisting rules, which provide a 180-day compliance period, the new proposal would not include a long grace period.
Nasdaq said securities assigned extremely low valuations by the market are more prone to volatility and create an ongoing challenge for fair and orderly trading.
NYSE American also proposed a similar $5 million threshold in March, and the U.S. Securities and Exchange Commission delayed a final vote on that measure as well.
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