SEC Publishes Nasdaq Rule Change Clarifying Timeline for Stayed $5 Million Listing Requirement
Nasdaq’s $5 million continued listing rule remains stayed, but a new filing provides clarity on when the 30-business-day compliance period would begin if the stay is lifted.
On October 5, 2026, the Securities and Exchange Commission (SEC) published a Notice of Filing and Immediate Effectiveness concerning a Nasdaq rule change that clarifies how the exchange would calculate the compliance period under its proposed $5 million Market Value of Listed Securities (MVLS) continued listing requirement.
Importantly, the underlying $5 million MVLS rule remains stayed while the full Commission conducts its review. The October 5 notice does not lift that stay or represent a new approval of the underlying listing standard. However, the filing provides additional insight into how Nasdaq intends to implement the rule if it ultimately takes effect, with potentially significant implications for smaller Nasdaq-listed companies.
Background: Nasdaq’s $5 Million Rule Remains Stayed
On July 22, 2026, the SEC’s Division of Trading and Markets approved Nasdaq’s proposed rule establishing a $5 million minimum MVLS continued listing requirement. The rule would subject companies whose MVLS falls below $5 million for 30 consecutive business days to a Staff Delisting Determination, with the opportunity to appeal to a Nasdaq Hearings Panel.
Following the approval, petitions for Commission review triggered an automatic stay on July 29, 2026. On September 11, the full Commission granted the petitions for review and continued the stay pending further order. As a result, the $5 million MVLS continued listing requirement is not currently being enforced.
The Commission’s review remains ongoing, and no deadline has been established for a final decision.
What Nasdaq’s Latest Filing Clarifies
Nasdaq’s September 25 filing addresses an important question: If the stay is lifted, when would the exchange begin counting the 30 consecutive business days used to determine noncompliance?
Under the new timing provision, Nasdaq would begin measuring a company’s MVLS on the first business day following termination of the stay.
The filing also clarifies that two periods would be excluded from the calculation:
- The period between the SEC’s original July 22 approval and the July 29 automatic stay.
- The entire period during which the stay remains in effect.
This means that companies would not have days accumulated toward the 30-business-day threshold during either period.
For example, Nasdaq explained that if the stay had ended on September 24, 2026, the measurement period would have begun on September 25. A company would become subject to a Staff Delisting Determination only after its MVLS remained below $5 million for 30 consecutive business days.
The key takeaway: If the rule ultimately takes effect, Nasdaq would begin a new measurement period rather than counting days from before or during the stay.
What Does the October 5 SEC Notice Mean?
The October 5 notice states that Nasdaq’s timing rule change became effective upon filing. However, that procedural development should not be confused with approval or implementation of the underlying $5 million MVLS requirement.
Nasdaq submitted the timing provision as an immediately effective rule filing under Section 19(b)(3)(A)(iii) of the Securities Exchange Act of 1934 and Rule 19b-4(f)(6). Although Nasdaq requested a waiver of the customary 30-day operative delay, the October 5 notice does not expressly confirm that the waiver was granted. The SEC also retains the authority to temporarily suspend the timing rule within 60 days of filing and institute further proceedings.
The Commission is accepting public comments on the timing provision, with the deadline falling 21 days after publication of the notice in the Federal Register.
What This Means for Nasdaq-Listed Companies
For smaller public companies, particularly those with market values approaching or falling below the proposed $5 million threshold, the latest development provides greater clarity about the potential implementation timeline. It does not, however, resolve the larger question of whether the underlying listing standard will ultimately be permitted to take effect.
The full Commission continues to review the July 22 approval order and could uphold, modify, or disapprove the rule. If the Commission ultimately disapproves the underlying rule, Nasdaq has indicated that the related timing provision would not be applied.
In the meantime, Nasdaq-listed companies should continue to monitor their MVLS, evaluate their continued listing position, and remain informed about developments that could affect their ability to maintain an exchange listing.
The Bigger Picture for Emerging Growth Companies
The proposed $5 million MVLS requirement has generated significant attention across the emerging growth ecosystem because of its potential consequences for smaller public companies. While the October 5 filing addresses a procedural question, it does not change the fundamental issues currently before the Commission.
The $5 million rule remains stayed. The full Commission’s review remains ongoing. And the ultimate outcome remains uncertain.
For emerging growth companies, boards of directors, management teams, and market participants, continued attention to these developments remains essential.
Lucosky Brookman LLP continues to closely monitor Nasdaq listing standards, SEC rulemaking, and regulatory developments affecting capital formation and access to the U.S. public markets.