[Federal Register Volume 90, Number 171 (Monday, September 8, 2025)]
[Notices]
[Pages 43251-43254]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-17106]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103846; File No. SR-NASDAQ-2025-065]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing of Proposed Rule Change To Amend the Application of
the Minimum Bid Price Rule in Situations Where a Security Does Not
Maintain a Closing Bid Price of Greater Than $0.10 for Ten Consecutive
Trading Days
September 3, 2025.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on August 22, 2025, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the
[[Page 43252]]
Securities and Exchange Commission (``SEC'' or ``Commission'') the
proposed rule change as described in Items I and II, below, which Items
have been prepared by the Exchange. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to modify the application of the minimum bid
price rule in situations where a security does not maintain a closing
bid price of greater than $0.10 for ten consecutive trading days.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rulefilings, and at the principal office of the Exchange.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Nasdaq is proposing to amend Listing Rules 5810 and 5815 to provide
that a company will be issued a delisting letter and its security
suspended from trading on Nasdaq if the security has a closing bid
price of $0.10 or less for ten consecutive trading days.
Nasdaq listing standards require a company's equity securities
listed on the Nasdaq Global Select, Global and Capital Markets to
maintain a closing bid price that is no less than one dollar per share
(the ``Bid Price Requirement'').\3\ Upon a company's failure to satisfy
the applicable Bid Price Requirement, Rule 5810(c)(3)(A) provides for
an automatic compliance period of 180 calendar days for the company to
achieve compliance with the Bid Price Requirement.\4\ Subject to
certain requirements,\5\ a company listed on, or that transfers to, the
Nasdaq Capital Market may be provided with a second 180 day compliance
period. If a company is not eligible for the second compliance period,
or the company is eligible but does not resolve the bid price concern
during the second compliance period, the company is issued a Delisting
Determination under Rule 5810 with respect to that security, which can
be appealed to a Nasdaq Listing Qualifications Hearings Panel. The
Panel can allow a company up to an additional 180 days from the date of
the Delisting Determination for the company to regain compliance,
although trading on Nasdaq would be suspended during the Hearing Panel
review process if the company received the second 180 day compliance
period.\6\
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\3\ Each tier of Nasdaq includes a requirement that specified
securities maintain a $1.00 minimum bid price. See Rule 5550(a)(2)
(Primary Equity Security listed on the Nasdaq Capital Market), Rule
5555(a)(1) (Preferred Stock and Secondary Classes of Common Stock
listed on the Nasdaq Capital Market), Rule 5450(a)(1) (Primary
Equity Security listed on the Nasdaq Global or Global Select
Markets), Rule 5460(a)(3) (Preferred Stock and Secondary Classes of
Common Stock listed on the Nasdaq Global or Global Select Markets).
The $1.00 minimum bid price requirement does not apply to Other
Securities listed pursuant to the Rule 5700 Series, rights,
warrants, convertible debt, and subscription receipts.
\4\ A failure to meet this requirement occurs when a security's
closing bid price is below $1.00 for a period of 30 consecutive
trading days. Compliance is achieved by meeting the applicable
standard for a minimum of 10 consecutive business days during the
applicable compliance period, unless Staff exercises its discretion
to extend this 10-day period as discussed in Rule 5810(c)(3)(H). See
Rule 5810(c)((3)(A).
\5\ Listing Rule 5810(c)(3)(A)(ii) states that if a Company
listed on the Capital Market is not deemed in compliance before the
expiration of the 180 day compliance period, it will be afforded an
additional 180 day compliance period, provided that on the 180th day
of the first compliance period it meets the applicable market value
of publicly held shares requirement for continued listing and all
other applicable standards for initial listing on the Capital Market
(except the bid price requirement) based on the Company's most
recent public filings and market information and notifies Nasdaq of
its intent to cure this deficiency. If a Company does not indicate
its intent to cure the deficiency, or if it does not appear to
Nasdaq that it is possible for the Company to cure the deficiency,
the Company will not be eligible for the second grace period. If the
Company has publicly announced information (e.g., in an earnings
release) indicating that it no longer satisfies the applicable
listing criteria, it shall not be eligible for the additional
compliance period under this rule.
\6\ See Rule 5815(c) and Rule 5815(a)(1)(B)(ii)d.
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The bid price rules provide that these compliance periods may be
truncated or foregone under certain circumstances. For example,
pursuant to Rule 5810(c)(3)(A)(iii), if a company's security is already
non-compliant with the Bid Price Requirement and thereafter has a
closing bid price of $0.10 or less for 10 consecutive trading days (the
``Low Price Requirement''), Nasdaq must issue a Delisting Determination
with respect to that security, notwithstanding any otherwise available
compliance period, including the aforementioned 180 day compliance
periods pursuant to Rule 5810(c)(3)(A).
Based on Nasdaq's experience with the rules, Nasdaq is proposing
modifications to the Low Price Requirement to better protect investors.
Immediate Delist Determination
First, Nasdaq proposes to modify the Low Price Requirement such
that once a company's security has a closing bid price below $0.10 for
ten consecutive days, Nasdaq will issue a Staff Delisting Determination
under Rule 5810 and the company will be ineligible for any compliance
periods otherwise permitted by the rules. This differs from the current
rule, which requires a company to first be non-compliant with the Bid
Price Requirement (i.e., having had a closing bid price below $1.00 for
30 consecutive days) before the additional provisions of the Low Price
Requirement take effect to truncate any remaining compliance period. As
such, the proposed change will accelerate the time when a Delisting
Determination is sent in instances where a security's price quickly
declines from above $1.00 to below $0.10.
Nasdaq believes that such situations are indicative of deep
financial or operational distress within such company, and that the
challenges facing such companies, generally, are not temporary and may
be so severe that the company is not likely to regain compliance. As
such, Nasdaq believes for investor protection reasons that it is
appropriate to accelerate the time when the delisting letter is sent in
these cases.
Suspension From Trading
Furthermore, Nasdaq believes that it is not appropriate for these
very low-priced securities to continue trading on Nasdaq during the
pendency of the Hearings Panel review process following receipt of a
Staff Delisting Determination. Instead, Nasdaq proposes to amend Rule
5815 to establish that in these situations the stay provisions are not
applicable and that the company's securities will be suspended from
trading on Nasdaq during the pendency of any Hearing Panel's review.
Specifically, Nasdaq proposes to adopt Listing Rule
5815(a)(1)(B)(ii)e. to provide that notwithstanding the general rule
that a timely request for a hearing shall ordinarily stay the
suspension and delisting action pending the issuance of a written panel
decision, a request for a hearing shall not stay the
[[Page 43253]]
suspension of the securities from trading where the matter relates to a
request made by a company that has failed to comply with the Low Price
Requirement (as revised by the other change in this filing). Nasdaq
proposes to further clarify that compliance with the Low Price
Requirement can be achieved by meeting the applicable standard (i.e.,
$1.00) for a minimum of 10 consecutive business days, unless Staff
exercises its discretion to extend the 10 business day period pursuant
to its authority to do so under Rule 5810(c)(3)(H).
A company that is suspended under the proposed rule could appeal
the Delisting Determination to a Hearings Panel, but its securities
would trade in the over-the-counter market while that appeal is
pending. Pursuant to Listing Rule 5815(c)(1)(A) the Hearings Panel will
continue to have discretion, where it deems appropriate, to provide an
exception for up to 180 days from the date of the Delisting
Determination for the company to regain compliance with the Low Price
Requirement. Pursuant to Listing Rule 5815(c)(1)(E) the Hearings Panel
will also continue to have the authority to find the company in
compliance with all applicable listing standards and reinstate the
trading of the company's securities on Nasdaq.
Nasdaq proposes to make the proposed rule change operative 45 days
after Commission approval. As described in Rule 5810(c)(3)(A)(iii), a
company will be considered non-compliant with the Low Price Requirement
if it has a closing bid price of $0.10 or less for ten consecutive
trading days after the operative date. Notwithstanding the foregoing,
the rule change will not apply to any company that has received a
Delisting Determination for failure to satisfy the bid price
requirements under Rule 5810(c)(3)(A) and has appeared before a Nasdaq
Listing Qualifications Hearings Panel on or before the operative date,
in which case any such company is not subject to the rule change for
the duration of the Panel's jurisdiction.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\7\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\8\ in particular, in that it is designed to promote
just and equitable principles of trade, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general to protect investors and the public interest,
by enhancing Nasdaq's listing requirements and immediately issuing a
Delisting Determination and suspending from trading any securities that
are non-compliant with the Low Price Requirement. In that regard,
Nasdaq has observed that the challenges facing such companies generally
are not temporary and may be so severe that the company is not likely
to regain compliance with the Bid Price Requirement. Moreover, the
price concerns with these companies can be a leading indicator of other
listing compliance concerns, and these companies often become subject
to delisting for other reasons during the compliance periods.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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While listed, these securities are exempt from the ``Penny Stock
Rules,'' \9\ which provide enhanced investor protections to prevent
fraud and safeguard against potential market manipulation. In
particular, the Penny Stock Rules generally require that broker-dealers
provide a disclosure document to their customers describing the risk of
investing in Penny Stocks and approve customer accounts for
transactions in Penny Stocks. Nasdaq believes that an exemption from
these Penny Stock requirements may not be appropriate for consistently
low-priced stocks because these securities may have similar
characteristics to Penny Stocks. Nasdaq therefore believes it is
appropriate to subject these securities to heightened scrutiny given
the availability of the exemption to securities listed on Nasdaq.
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\9\ See Exchange Act Rules 3a51-1, 17 CFR 240.3a51-1, and 15g-1
to 15g-100, 17 CFR 240.5g-1 et seq.
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Nasdaq also believes that the proposal to amend Listing Rule
5815(a)(1)(B)(ii) to provide that a hearing request shall not stay the
suspension of the securities from trading when the matter relates to a
request made by a company that has failed to maintain compliance with
the Low Price Requirement is designed to protect investors and the
public interest. In particular, this change will prevent continued
trading on Nasdaq in such company's securities until an independent
Hearings Panel reviews the Delisting Determination and determines
whether trading on Nasdaq is appropriate.
Finally, Nasdaq believes the proposed rule changes further the
objectives of Section 6(b)(7) of the Act in that it continues to
provide a fair procedure for companies subject to these enhanced
listing requirements. These companies can seek review of a Delisting
Determination from a Hearings Panel, which can find that the company is
in compliance with Nasdaq's rules or can afford the company additional
time to regain compliance, and a company can appeal the Hearings Panel
decision to the Nasdaq Listing and Hearing Review Council.\10\ Allowing
a 45-day operative delay before the new rule becomes effective allows
companies at various stages of the process to prepare for the new rule
once it is approved, including by seeking to effect a reverse stock
split, if necessary. As a result, Nasdaq believes that the proposed
rule appropriately balances the need for appropriate listing standards
with the statutory requirement to protect investors and the public
interest.
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\10\ See Listing Rules 5815 and 5820, respectively.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. While Nasdaq does not believe
there will be any impact on competition from the proposed change, any
impact on competition that does arise will be necessary to better
protect investors, in furtherance of investor protections, which is a
central purpose of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission shall: (a) by order approve
or disapprove such proposed rule change, or (b) institute proceedings
to determine whether the proposed rule change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
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Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-NASDAQ-2025-065 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-NASDAQ-2025-065. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the filing will be available for inspection and
copying at the principal office of the Exchange. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection. All submissions
should refer to file number SR-NASDAQ-2025-065 and should be submitted
on or before September 29, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-17106 Filed 9-5-25; 8:45 am]
BILLING CODE 8011-01-P