Nasdaq’s Proposed $5 Million MVLS Rule and NYSE American’s Proposed Listing Standard: A Structural Shift for Small-Cap Issuers

In January 2026, both Nasdaq and NYSE American proposed changes that, taken together, would materially reshape the listing landscape for smaller public companies. While each proposal addresses different stages of the listing lifecycle—continued listing for Nasdaq and initial listing for NYSE American—the combined effect signals a decisive move toward faster removal of thinly capitalized issuers and fewer remediation pathways.

Nasdaq: A Compressed Timeline to Delisting

Nasdaq has proposed a new continued listing standard requiring issuers with a class of securities listed on the Global and Capital Markets to maintain at least $5 million in Market Value of Listed Securities (MVLS) (the “Proposed Nasdaq Rule”). If an issuer fails to meet that threshold for 30 consecutive business days, trading on Nasdaq is immediately suspended, with delisting to follow. Unlike the current framework, which typically provides up to 180 days to regain compliance, the Proposed Nasdaq Rule eliminates any cure period for MVLS deficiencies.

Perhaps more significantly, securities would be suspended even during an appeal, and appeals would be limited to correcting calculation errors. In practical terms, that removes the ability to use the appeal process to preserve exchange trading while pursuing corrective measures.  Several comment letters noted that the elimination of the cure period affords issuers no due process and runs counter to the Securities Exchange Act of 1934 “fair procedure” requirement.

The Proposed Nasdaq Rule would take effect 60 days after SEC approval. Although the SEC has not announced a specific approval timeline, market participants report that Nasdaq has been positioning this proposal as an investor-protection measure, which may support a relatively streamlined review. Many practitioners are preparing for possible effectiveness on March 16, 2026, subject to SEC action, with the 30-day compliance period commencing on March 17, 2026.

NYSE American: A Quieter but Comparable Shift

NYSE American has proposed amendments to its initial listing standards that would increase the required market value of publicly held shares to approximately $15–$20 million (depending on the applicable listing pathway) and impose a $4 minimum share price at the time of listing. These entry changes alone signal a higher capitalization floor for smaller companies seeking exchange access.

More consequential—and less discussed—is NYSE American’s separate proposal (SR-NYSEAMER-2025-72) to amend its continued listing standards to require a minimum $5 million global market capitalization measured over a 30-trading-day period (the “NYSE American Proposal”). As drafted, the NYSE American Proposal does not provide for a compliance plan or cure period if the requirement is not met.  However, as noted by at least one comment letter, the NYSE American Proposal at least provides an issuer a right to appeal, which is not limited in basis to a Nasdaq calculation error.  The NYSE American Proposal states several times that allowing this right of appeal is consistent with the Exchange Act’s “fair procedure” requirement.

Another distinction between the two proposals is one that is technical rather than philosophical. The NYSE American Proposal measures compliance using a 30-trading-day average, which dampens single-session volatility. The Proposed Nasdaq Rule instead applies a strict 30-consecutive-business-day trigger. The averaging methodology may modestly smooth market fluctuations, but both frameworks materially shorten the runway for issuers operating near the margin.Viewed together, the proposals narrow the structural buffer historically available to micro-cap companies. Issuers hovering near minimum capitalization levels would be subject to parallel $5 million market value thresholds across exchanges, with limited opportunity to stabilize before suspension or delisting procedures are triggered.

Notably, the Proposed Nasdaq Rule has drawn substantially more attention in industry alerts and commentary. The difference appears driven more by visibility than substance. Nasdaq publicly positioned its rule within a broader market-integrity narrative and, given its larger issuer base, commands greater coverage. The NYSE American Proposal, by contrast, has moved forward through the Federal Register process with comparatively less public focus, despite advancing a similar tightening of standards.

In substance, however, both exchanges are moving in the same direction: toward higher capitalization expectations and reduced tolerance for prolonged market-value deterioration among small-cap issuers.

The Practical Impact: Reduced Flexibility and Increased Market Sensitivity

The more consequential development is structural. Under the current regime, issuers facing listing deficiencies often rely on cure periods to execute reverse splits, complete capital raises, or restructure their balance sheets. The Proposed Nasdaq Rule would compress that timeline dramatically. A sustained market downturn—particularly for thinly traded issuers—could trigger delisting risk even absent operational deterioration.

Because MVLS is market-driven, volatility itself becomes a compliance risk. For issuers hovering near the proposed $5 million threshold, proactive monitoring and contingency planning will become critical. Boards of directors may wish to reassess authorization for reverse splits, shelf readiness, and financing flexibility well in advance of any deficiency notice.

Looking Ahead

If adopted substantially as proposed, these changes will accelerate the pace at which small-cap issuers lose exchange status and reduce the procedural safeguards that have historically provided breathing room. Issuers with MVLS in the single-digit millions should be evaluating their exposure now rather than waiting for final SEC action.

We are monitoring the SEC approval process closely and expect further clarity on timing in the coming weeks. In the interim, issuers near relevant thresholds should consider enhanced market-value monitoring and scenario planning to mitigate the risk of sudden suspension.

Contact Clark Hill

If this development is of interest to your business or if you have questions regarding the content of this alert, please contact any member of Clark Hill’s Capital Markets and Securities group for additional details and strategic guidance.

• Jeny Zarmon (jzarmon@clarkhill.com; 202.640.6680)
• Victoria Bantz (vbantz@clarkhill.com; 303.943.9279)
• Jim Groth (jgroth@clarkhill.com; 312-701-6830)
• Randy Katz (rkatz@clarkhill.com; 213-417-5310)
• Sander Zagzebski (szagzebski@clarkhill.com; 213-417-5175)

This publication is intended for general informational purposes only and does not constitute legal advice or a solicitation to provide legal services. The information in this publication is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this information without seeking professional legal counsel. The views and opinions expressed herein represent those of the individual authors only and are not necessarily the views of Clark Hill PLC. Although we attempt to ensure that postings on our website are complete, accurate, and up to date, we assume no responsibility for their completeness, accuracy, or timeliness.