Nasdaq Eliminates Sub-$4 Initial Listing Path On The Nasdaq Capital Market

On October 7, 2026, the Securities and Exchange Commission (the “SEC”) posted notice of Nasdaq’s proposed rule change (File No. SR-NASDAQ-2026-082) to amend Nasdaq Listing Rule 5505 to require a minimum $4 price in all instances for initial listings on the Nasdaq Capital Market. Currently, Nasdaq allows companies to list on the Nasdaq Capital Market at a price between $2 and $4 if they meet additional requirements that place the security within an exclusion from the definition of “penny stock” under Rule 3a51-1(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act’). This path, called the “Alternative Price Requirement” and found in Listing Rule 5505(a)(1)(B), allows:

• a minimum closing price of $3 per share for companies that meet the Equity or Net Income Standards under Nasdaq Listing Rules 5505(b)(1) or (b)(3); or
• a minimum closing price of $2 per share for companies that meet the Market Value of Listed Securities Standard under Nasdaq Listing Rule 5505(b)(2).

In both cases, the company must also show one of the following: (i) net tangible assets above $2 million, if it has operated continuously for at least three years; (ii) net tangible assets above $5 million, if it has operated for less than three years; or (iii) average revenue of at least $6 million over the last three years.

Nasdaq first adopted the Alternative Price Requirement to compete with NYSE American, which, at the time, was the only other exchange allowed to list companies priced below $4. NYSE American has since changed its own rule to remove sub-$4 listings, a change the SEC approved in March 2026. Under Nasdaq’s proposal, Rule 5505(a)(1)(B) will be deleted and every company listing under the Initial Listing Standards will need a minimum stock price of $4, which is consistent with the initial listing requirements of other national securities exchanges.

Effect on Companies Using the Alternative Price Requirement

Companies that originally listed under the Alternative Price Requirement will stay listed. Therefore, Nasdaq is retaining Nasdaq Listing Rule IM-5505-2, which requires Nasdaq to publish on its website a list of any such company that:

• no longer meets the net tangible assets or revenue test under the Alternative Price Requirement, and
• does not qualify for any other exclusion from penny stock status under Rule 3a51-1 under the Exchange Act.

Nasdaq will keep this list on its website for as long as any company that could be subject to the condition remains listed. A company stops being treated as having listed under the Alternative Price Requirement once it has (i) closed at $4 or more for at least five consecutive business days and (ii) at the same time met all other initial listing criteria.

Timing and Transition

The rule change became effective upon filing and Nasdaq intends to make it operative 30 days after the September 30, 2026 filing date, which is about October 30, 2026. Nasdaq says this period will let companies that have already taken substantial steps to list under the current rules finish the process. Within 60 days of the filing, the SEC may temporarily suspend the rule change if it finds that doing so is necessary or appropriate in the public interest, to protect investors, or otherwise to further the purposes of the Exchange Act. If it suspends the rule, the SEC must start proceedings to decide whether to approve or disapprove it.

How To Comment

Interested persons may send comments to the SEC by either of these methods: online, through the SEC’s internet comment form; or by email to rule-comments@sec.gov, with file number SR-NASDAQ-2026-082 in the subject line. Comments are due 21 days after the notice is published in the Federal Register.