Nasdaq has submitted a new rule proposal that would give the exchange greater discretion to block IPOs, even when companies technically meet listing standards — if red flags suggest their shares could be vulnerable to market manipulation.
The move reflects growing concern over volatile listings, particularly from opaque jurisdictions, and signals a push to raise transparency standards for companies seeking access to U.S. capital markets.
🔹 What Would Change
Under the proposal, Nasdaq could deny listings after reviewing factors such as:
- The company’s home jurisdiction and shareholder legal protections
- The influence of controlling shareholders or third parties
- The experience and credibility of boards and advisers
- Trading patterns seen in similar past listings
Nasdaq said it needs broader authority to act when there is potential for third-party misconduct affecting a company’s securities.
🔹 Why It Matters
The proposal follows years of investigation into sharp price spikes — often linked to pump-and-dump schemes — particularly among small, China-based IPOs. Some stocks surged up to 2,000% on debut before collapsing days later, inflicting heavy losses on retail investors.
In September, Nasdaq already tightened listing rules by:
- Raising minimum public float requirements
- Speeding up delistings of thinly traded stocks
The latest proposal would further reinforce Nasdaq’s role as a front-line gatekeeper, potentially making U.S. listings more selective but also more credible for long-term investors.