Let’s Make Nasdaq Great Again
Originally published in Forbes: Let’s Make Nasdaq Great Again
Policymakers in Washington have spent the past year emphasizing the need to reinvigorate the U.S. IPO market. The Securities and Exchange Commission has focused on reducing regulatory friction, accelerating the registration statement review process and encouraging more companies to access the public markets. That message has become increasingly explicit in recent months. At this year’s SEC Speaks conference, Chairman Paul Atkins and Commissioners Mark Uyeda and Hester Peirce outlined a consistent approach centered on modernizing outdated rules, reducing unnecessary compliance burdens and making it easier for companies to go public. The emphasis was on clarity over complexity, materiality over excess disclosure and rulemaking over regulation by enforcement.
However, access to the public markets is not determined in Washington alone. The exchanges, which ultimately control listing approval, have been moving in a different direction. Nasdaq, in particular, has introduced a more discretionary and qualitative approach to evaluating companies seeking to list. The result is a growing disconnect within the IPO ecosystem, one that is beginning to reshape the path for emerging growth companies. While it may be becoming easier to complete the SEC process, securing a listing has become less predictable, highlighting that getting public and getting listed are no longer the same thing.
The SEC’s Push To Reignite The IPO Market
For several years, policymakers have expressed concern that the U.S. IPO pipeline has slowed relative to historical norms. The number of publicly listed companies has declined significantly from its peak in the late 1990s, while many growth-stage businesses have chosen to remain private for longer.
In response, regulatory efforts have increasingly focused on reducing barriers to entry.
Chairman Atkins and others have emphasized the importance of strengthening the ecosystem for emerging growth companies and microcap issuers, which have traditionally served as an entry point to the public markets and a key driver of capital formation and innovation. Recent remarks from SEC leadership have framed this as a question of balance within the regulatory framework, with a focus on ensuring that disclosure requirements remain appropriately scaled and do not disproportionately burden smaller issuers relative to larger, more established companies.
Consistent with that approach, the SEC’s modernization efforts have therefore centered on returning disclosure to first principles, with a renewed emphasis on materiality and the core purpose of investor information. The underlying premise is straightforward: If disclosure requirements are more focused, transparent and less burdensome, more companies may choose to access the public markets. For companies that are prepared, the SEC process is no longer the primary bottleneck it once was.
A Different Direction At The Exchanges
While the SEC has focused on streamlining disclosure review, the exchanges, particularly Nasdaq, have been tightening their listing frameworks.
In December 2025, Nasdaq implemented Rule IM-5101-3, granting the exchange expanded discretionary authority to deny initial listings even when companies satisfy existing quantitative and qualitative standards. The rule permits Nasdaq to evaluate whether a company’s securities may be susceptible to manipulation or otherwise present risks to market integrity.
At the same time, both Nasdaq and the New York Stock Exchange have introduced additional and continued listing requirements in recent years. These include higher minimum offering sizes, more stringent public float expectations and increased scrutiny of ownership concentration and governance structures.
Taken together, these developments have layered a more qualitative and discretionary review process onto what was historically a largely rules-based framework. These are necessary changes and reflect a broader effort to strengthen and upgrade the market. The challenge is not the rules themselves but how they are applied, particularly whether that application can be systematic, efficient and predictable without creating prolonged delays.
The Structural Disconnect
The modern IPO process now involves two distinct gatekeepers, but they are no longer equal.
The SEC reviews a company’s registration statement to ensure that investors receive full and fair disclosure. Once that process is complete and the registration statement is declared effective, a company is permitted to offer its securities to the public. However, trading cannot begin until the exchange approves the listing.
Historically, satisfying numerical listing standards and completing the SEC review process was generally sufficient to secure listing approval. That assumption, however, no longer appears to hold. Companies that move efficiently through the SEC process are increasingly encountering additional layers of scrutiny at the exchange level. In practice, this has extended timelines, introduced additional diligence requirements and created greater uncertainty around final listing approval.
From within the emerging growth pipeline, the shift has become increasingly visible. Companies that have cleared disclosure review are now spending additional weeks, and in some cases months, navigating exchange-level considerations before listing.
The Emerging Growth Paradox
The tension becomes more pronounced when considering which issuers are benefiting from the current regulatory approach.
Policy discussions have consistently emphasized the importance of supporting emerging growth companies and microcap issuers. These companies have long been viewed as critical participants in the broader capital markets ecosystem.
Yet the practical effects of recent changes suggest a different outcome.
Efforts to streamline the SEC review process tend to benefit larger issuers whose offerings already attract institutional demand and whose governance structures and ownership profiles are familiar to exchanges. These companies are generally able to move through both stages of the process with relative efficiency.
Emerging growth companies face a more complex path. Even where disclosure review proceeds efficiently, exchange-level scrutiny has become more detailed and more discretionary. The result is a widening divergence between the experience of larger IPOs and that of smaller, growth-oriented issuers.
The Impact On The IPO Pipeline
The effects of the new rule became visible almost immediately.
In 2025, 134 microcap and emerging growth IPOs were completed in the United States. Of those transactions, 101 involved foreign private issuers, many originating from Asia. Following the implementation of Nasdaq’s expanded discretionary authority, the pace of approvals slowed markedly. From early December through late February, Nasdaq went approximately 78 days without approving a single microcap IPO, a gap that is unusual in the context of modern capital markets.
As I observed in a recent Dow Jones article, “How One Rule Is Reshaping the Emerging-Growth IPO Market,” pauses of this length are less consistent with a temporary lull in demand than with a structural change in how emerging growth listings are being evaluated. In a more discretionary regime, slowdowns tend not to appear through formal rejection but through delay, extended review cycles and selective approvals. The absence of activity during what is typically one of the most active periods of the year therefore suggests not a closed market but a more selective one.
For market participants accustomed to a steady cadence of deal flow at the start of the year, the slowdown points to a meaningful change in listing dynamics rather than a cyclical pause.
Aligning Policy With Market Reality
None of these developments implies that exchanges are acting inappropriately.
The microcap segment has experienced periods of volatility, and regulators have legitimate concerns regarding market manipulation, concentrated ownership structures and the potential risks to retail investors.
At the same time, the effectiveness of broader policy objectives depends on coordination across institutions. Efforts to accelerate disclosure review may have limited impact if listing approval processes become more complex, less predictable or more time-consuming.
Making Nasdaq Great Again
Nasdaq has long positioned itself as the exchange of choice for growth companies. Its market has historically served as the primary entry point for emerging growth issuers seeking access to U.S. capital.
That role is now being tested.
The exchange’s shift toward greater discretion and heightened scrutiny reflects necessary steps to strengthen market integrity and investor confidence. The direction is not the issue. The challenge is ensuring that these standards are applied systematically, efficiently and predictably for companies moving through the listing process. Those concerns are real and not new.
But access and integrity are not mutually exclusive.
If the goal is to make IPOs great again, then the focus cannot stop at improving the SEC process. It must also address how Nasdaq is applying its listing standards in practice. That effort will require alignment not just from Nasdaq but also from policymakers, Congress and the broader market, including advisors who operate within the IPO pipeline every day. A more efficient framework, one that preserves market integrity while allowing companies to move through the listing process with clarity and speed, is achievable. But it will require coordinated effort.
Making IPOs great again will ultimately depend on making Nasdaq great again, not by lowering standards but by ensuring those standards are applied in a way that is efficient, consistent and predictable in real time.