Notice of Filing of Proposed Rule Change to Adopt a New Continued Listing Requirement

Summary

SIFMA provided comments to the U.S. Securities and Exchange Commission (SEC) in response to the proposal by The Nasdaq Stock Market LLC to adopt a new continued listing requirement for the Nasdaq Global Market and Nasdaq Capital Market tiers.

Excerpt

SIFMA ¹ respectfully submits this letter to the U.S. Securities and Exchange Commission (the “Commission”) in response to the proposal (“Proposal”) by The Nasdaq Stock Market LLC (“Nasdaq”) to adopt a new continued listing requirement for the Nasdaq Global Market and Nasdaq Capital Market tiers. ² If the Proposal is adopted, Nasdaq would suspend trading and immediately delist any company with a Market Value of Listed Securities (“MVLS”) ³ below $5 million for 30 consecutive days.

SIFMA commends Nasdaq for its ongoing review of its initial and continued listing standards, which has resulted in some incremental improvements to its listing rules. ⁴ However, we reiterate that Nasdaq should continue to review its listing rules and make targeted changes to enable it to quickly identify, suspend, and delist issuers of low priced securities with little chance of regaining compliance with Nasdaq listing rules so that such companies do not remain listed for indefinite periods while failing to meet Nasdaq’s rule requirements. ⁵

As noted in the Proposal, as a national securities exchange and self-regulatory organization, Nasdaq has an obligation to design its rules “to prevent fraudulent and manipulative acts and practices, 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 . . .” ⁶ Therefore, Nasdaq and other national securities exchanges must continually evaluate the ongoing effectiveness of their initial and continued listing standards. Market participants need to continue to work together to protect investors from the potential fraud, market manipulation, and general harm that has been seen – and that continues to grow more prevalent – with select low priced stocks.