The July 22, 2026 order approving Nasdaq’s new $5 million Market Value of Listed Securities continued-listing standard has been automatically stayed after notices of intention to petition for Commission review were filed. The stay arose by operation of SEC Rule of Practice 431(e); the full Securities and Exchange Commission did not make a separate decision to stay the rule and has not yet ruled on the merits.
As a result, the new $5 million MVLS requirement is not presently effective. Nasdaq-listed companies remain subject to the continued-listing rules that were in effect before the July 22 delegated approval order unless and until the Commission orders otherwise.
What Happened
On July 22, 2026, the SEC’s Division of Trading and Markets, acting under delegated authority, approved Nasdaq’s proposed rule change, as modified by Amendment No. 1. The approval order is Exchange Act Release No. 34-105971, File No. SR-NASDAQ-2026-004.
On July 29, 2026, Cemtrex, Inc. and the Small Public Company Coalition filed notices of intention to petition the Commission for review of the delegated action. The SEC’s Deputy Secretary then notified Nasdaq that, under Rule 431(e), the July 22 approval order was stayed until the Commission orders otherwise.
Why the Word “Automatically” Matters
The stay does not reflect a Commission determination that Nasdaq’s proposal is unlawful, unnecessary, or inconsistent with the Exchange Act. Nor does it represent a Commission decision affirming the objections raised by petitioners. The filing of the notices triggered the stay automatically under Rule 431(e).
The Commission may ultimately affirm, modify, set aside, or remand the delegated action. Until it acts, however, the July 22 approval order remains stayed.
What the New Rule Would Require
If the approval order becomes effective, Nasdaq companies would be required to maintain a Market Value of Listed Securities, or MVLS, of at least $5 million. A company that remained below $5 million in MVLS for 30 consecutive business days would receive a Staff Delisting Determination and would become immediately subject to suspension and delisting.
Unlike many Nasdaq deficiencies, the new standard would not provide an automatic cure or compliance period before the Staff Delisting Determination. A timely request for a hearing would not stay the trading suspension.
Which Nasdaq Markets and Rules Are Affected?
The standard is not limited to the Nasdaq Capital Market. It applies to companies listed on all three Nasdaq tiers:
- Nasdaq Global Select Market;
- Nasdaq Global Market; and
- Nasdaq Capital Market.
The proposal approved under delegated authority would:
- adopt new Nasdaq Rule 5450(a)(3) for the Nasdaq Global Market, which also governs continued listing on the Nasdaq Global Select Market (existing Rule 5450(a) contains paragraphs (1) and (2), so the proposal appends the MVLS requirement as paragraph (3));
- adopt Nasdaq Rule 5550(a)(6) for the Nasdaq Capital Market;
- amend Rule 5810(c)(1) to make a failure to maintain $5 million in MVLS for 30 consecutive business days an immediate suspension-and-delisting deficiency;
- amend Rule 5810(c)(3)(C) to deny the ordinary cure or compliance period for this deficiency;
- amend Rule 5815(a)(1)(B) so a hearing request would not stay the suspension; and
- adopt Rule 5815(c)(1)(I), permitting a Hearings Panel to reverse an erroneous determination or grant up to 180 days for the company to demonstrate compliance with all applicable initial listing requirements.
How MVLS Is Calculated
Nasdaq Rule 5005(a)(23) defines “Market Value” as the consolidated closing bid price multiplied by the measure being valued. Rule 5005(a)(22) defines “Listed Securities” as securities listed on Nasdaq or another national securities exchange.
Accordingly, MVLS is generally calculated as:
MVLS = Consolidated Closing Bid Price × Number of Listed Securities
MVLS is different from Market Value of Unrestricted Publicly Held Shares. The $5 million rule measures the market value of the company’s listed securities, not merely its unrestricted public distribution.
Was the Rule Ever Operative Between July 22 and July 29?
The July 22 approval order did not specify a delayed operative or implementation date. The delegated approval therefore became effective when issued, subject to the automatic stay triggered on July 29 when the notices of intention to petition for review were filed. The SEC then notified Nasdaq that the order was stayed by operation of Rule 431(e).
That creates a narrow interim period between July 22 and July 29. The approval order required a company’s MVLS to remain below $5 million for 30 consecutive business days before a Staff Delisting Determination could issue. Because fewer than 30 business days elapsed before the order was stayed, the new rule could not have produced a completed 30-business-day deficiency during that interval.
If Nasdaq began monitoring MVLS during that period, the stay prevents the approval order from presently serving as the basis for enforcing the new standard. Any company that received a communication referring to the rule should nevertheless review the communication carefully and confirm its status directly with Nasdaq.
What Relief Would Be Available After a Delisting Determination?
Under the approved proposal, a company could appeal a Staff Delisting Determination to a Nasdaq Hearings Panel, but the appeal would not keep the company’s securities trading on Nasdaq. The securities would generally trade in the over-the-counter market while the appeal remained pending.
The Hearings Panel could reverse the determination if Nasdaq staff made an error. Alternatively, the Panel could grant an exception of up to 180 days from the Staff Delisting Determination for the company to demonstrate that it satisfies all applicable initial listing requirements. Merely restoring MVLS above $5 million would not necessarily be enough.
What the Stay Does Not Do
- It does not invalidate the July 22 approval order permanently.
- It does not mean the Commission has rejected Nasdaq’s policy rationale.
- It does not guarantee that the rule will be modified or withdrawn.
- It does not establish a deadline by which the Commission must resolve the petitions.
- It does not alter Nasdaq’s other existing continued-listing standards.
The Commission may lift the stay, grant review, deny review, affirm the delegated approval, modify the rule, set the approval aside, or remand the matter for further proceedings.
How Long Could Commission Review Take?
Rule 431 does not establish a fixed deadline for the Commission to resolve a petition for review of delegated action. The procedural timetable can therefore vary substantially depending on briefing, requests to lift or continue the stay, Commission action, and the complexity of the issues.
A useful precedent is the NYSE primary direct-listing rulemaking, File No. SR-NYSE-2019-67. The Division of Trading and Markets approved that proposal under delegated authority on August 26, 2020. The Council of Institutional Investors filed a notice of intention to petition for review on August 31, 2020, triggering an automatic stay. The Commission granted review and continued the stay on September 25, 2020, and the full Commission approved the rule on December 22, 2020—approximately four months after the delegated approval.
That precedent does not predict the outcome or timing here, but it illustrates that Commission review can extend for months even when the final result is approval.
Practical Effect for Nasdaq Companies
For now, companies should not treat the new $5 million MVLS requirement as an operative continued-listing standard. Nevertheless, issuers with an MVLS near or below $5 million should continue monitoring the proceeding because the Commission could lift the stay or ultimately approve the rule after review.
Companies should also distinguish the stayed $5 million across-the-board requirement from Nasdaq’s existing MVLS standards under particular continued-listing alternatives. Those existing standards remain in effect and may impose substantially higher thresholds depending on the company’s Nasdaq tier and the continued-listing standard on which it relies.
What Happens Next?
The petitioners must complete the review process under the SEC’s Rules of Practice. The Commission may request briefing and may decide whether to continue, modify, or lift the stay while review proceeds. Nasdaq and other interested parties may also submit arguments concerning the rule.
Until the Commission takes further action, the most accurate description is that the July 22 delegated approval order is automatically stayed and the new $5 million MVLS continued-listing standard is not presently effective.
Conclusion
Nasdaq’s proposed $5 million MVLS standard would materially change the continued-listing framework for low-value issuers by eliminating the customary pre-delisting cure period and allowing trading to be suspended while an appeal is pending. But the rule is not currently operative.
The Division of Trading and Markets approved the proposal under delegated authority on July 22, 2026. Notices of intention to petition for Commission review were filed on July 29, automatically staying the approval order under Rule 431(e). The full Commission has not yet decided the merits.
This article is provided for informational purposes only and does not constitute legal advice. To speak with a Securities Attorney, please contact Brenda Hamilton at 200 E Palmetto Rd, Suite 103, Boca Raton, Florida, (561) 416-8956, or by email at [email protected].
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