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Status as of June 2026: The rule is proposed only. It has not been approved by the SEC and it is not in effect. There is no operative date. The agency is still reviewing the proposal, as modified by a June 2026 amendment. [1][3]

Where things stand

Nasdaq filed the proposal on January 13, 2026, and the SEC published it for public comment later that month. In March the SEC extended its review window, and on April 28, 2026 it instituted proceedings to decide whether to approve or disapprove the rule. That step is meaningful: it signals the agency wanted more time and a fuller record before acting. Nasdaq then filed Amendment No. 1 in June 2026, which the SEC noticed for a further round of comment. No approval or disapproval order has issued, so no effective date exists. Anyone writing about the rule today cannot describe it as adopted or in force. [1][2][3]

What the rule would do

The mechanics are simple and severe. A company whose MVLS stays below $5 million for 30 consecutive business days would receive a Staff Delisting Determination and move directly into suspension and delisting procedures. There is no ordinary cure period. That is the heart of the change. Under the current rules, the same kind of shortfall opens a 180 calendar day window to regain compliance. [2][4]

Two further features sharpen the proposal. First, a timely hearing request would not automatically stay the suspension. A company could still appeal to a Hearings Panel, but its securities would generally trade in the OTC market while the appeal runs. Second, the original filing limited the Panel to reversing a delisting only where Nasdaq staff made a factual error and the company never actually failed the threshold. [2][4]

One point of vocabulary matters here. MVLS is a Nasdaq defined metric, not the same thing as ordinary market capitalization or free float. It can include listed shares that are not freely tradable, such as restricted insider holdings. Two supporters of the proposal, SIFMA and Citadel Securities, flagged exactly this, arguing that a public float measure would track real liquidity more closely than MVLS. The distinction is worth keeping in mind when a company estimates how much headroom it actually has above the floor. [6][8]

Current treatment versus the proposed rule

Feature	Current Nasdaq treatment	Under the proposed rule
Trigger	MVLS below the applicable standard for 30 consecutive business days.	MVLS below $5 million for 30 consecutive business days.
Staff action	Deficiency notice.	Staff Delisting Determination.
Cure period	180 calendar days to regain compliance.	No ordinary cure period. Immediate suspension and delisting procedures.
Effect of an appeal	A timely hearing request ordinarily stays the suspension, so the stock keeps trading on Nasdaq during review.	No automatic stay. The stock would generally move to the OTC market while the appeal is pending.
Panel discretion	The Panel may grant added time or find compliance restored in most cases.	Reversal for staff error only, plus, after Amendment No. 1, up to 180 days to prove the company meets all initial listing standards.

How we got here

The proposal has moved through several procedural stages without a final decision. The short version is below. [1][2][3]

Date	Development
Jan 13, 2026	Nasdaq files the proposal (SR-NASDAQ-2026-004).
Jan 29, 2026	SEC notice published in the Federal Register; first comment window opens.
Mar 11, 2026	SEC designates a longer review period.
Apr 28, 2026	SEC institutes proceedings to decide whether to approve or disapprove the rule.
Jun 2026	Nasdaq files Amendment No. 1; SEC notices it for further comment.
Today	Pending. No approval or disapproval order has issued, and the rule is not in effect.

What the June amendment changed

Amendment No. 1 softened one piece and left the rest intact. The revised filing lets the Hearings Panel grant up to 180 days from the Staff Delisting Determination for a company to demonstrate that it meets all requirements for initial listing, a path the original version did not offer. Everything else holds: the $5 million floor, the 30 business day measurement, the Staff Delisting Determination, the loss of the ordinary cure period, and the absence of an automatic stay. [2][3]

The fair characterization is that Nasdaq narrowed the remedy debate without retreating from the enforcement design. A company can now argue for more time, but it must clear the higher initial listing bar to get it, and it does so after trading has already moved off Nasdaq.

Where the comment record splits

The comment letters divide along fairly clear lines. Supporters, including Better Markets, SIFMA, the Security Traders Association, OTC Markets Group, and Citadel Securities, frame the rule as an investor protection and market quality measure, arguing that very low value listings are harder for market makers to support and more vulnerable to manipulation. Opponents, including the Small Public Company Coalition, several law firms such as Kelley Drye, and a number of listed issuers, argue that Nasdaq has not shown a sufficient basis for the rule, that it duplicates protections already in place, and that immediate suspension without a real cure path raises fair procedure concerns. [6][7][8][9]

Notably, several supporters who back the policy still question the metric, which tells you the design is not settled even among those who favor it.

Foreign and APAC issuers

Nothing in the rule text singles out foreign issuers. The $5 million floor applies across the affected tiers, and Nasdaq's home country accommodation for foreign private issuers is limited mainly to governance and certain disclosure items, not to quantitative listing standards. The quantitative floor would therefore apply to foreign private issuers the same way it applies to domestic companies. [5]

The more useful point is practical exposure rather than legal targeting. Companies with thin float, low trading value, or limited US investor demand would feel a hard valuation floor more directly, and several commenters observed that those profiles increasingly include foreign issuers whose primary trading market is in the US. This sits alongside a separate Nasdaq rule, approved by the SEC on May 14, 2026, that requires companies primarily operating in China, including Hong Kong and Macau, to raise at least $25 million in IPO proceeds to list. Read together, the message to APAC issuers is that both the entry gate and the maintenance bar are rising. [11]

The broader 2026 trend

Nasdaq is not acting alone, though the exchanges are not moving in lockstep. NYSE American proposed a similar $5 million market capitalization delisting trigger, then removed that feature in a later amendment while keeping a sharper minimum trading price approach. That proceeding remains pending, with the SEC extending its deadline into the second half of 2026. Combined with the China focused initial listing rule, the pattern is consistent: US exchanges are devoting more attention to listing quality after the IPO and at the lower end of the market value and liquidity spectrum. The emphasis is shifting from approving companies at the gate to disciplining them once inside. [10][11]

What this means for boards and management

If the rule is approved in anything close to its current form, a few practical points follow for issuers near the threshold.

• Watch market value, not only bid price. Many companies monitor the $1 bid price closely but treat overall valuation as a softer signal. A hard MVLS floor would change that, and the 30 business day clock leaves little room to react.

• An appeal would not preserve Nasdaq trading. A move to the OTC market during the appeal can reduce analyst coverage, narrow the investor base, and complicate access to equity and debt capital, all before any panel decision.

• Plan disclosure and capital markets steps earlier. Companies approaching the floor benefit from earlier work on capital raising, investor communications, and the filings that support them, rather than waiting for a determination letter.

• Coordinate the response across functions. A listing event touches D&O risk, SEC and EDGAR filings, transfer agent and shareholder communications, and, for SPAC and de-SPAC companies, the post combination valuation profile. The compressed timeline rewards teams that align these workstreams in advance.

The bottom line

Nasdaq is trying to reclassify a sustained sub $5 million trading value from an ordinary, curable deficiency into a near immediate suspension event, while the SEC continues to test whether that sharper posture is justified and procedurally fair. The rule is not final, and the comment window on the June amendment runs for a set period after its Federal Register publication. Until the SEC acts, the right posture for issuers near the line is preparation, not alarm. [2][3]

This article is provided by First Cover for general information only and is not legal or financial advice. It describes a proposed rule that may change before any final SEC action.