Nasdaq is proposing penny stock regulation changes to speed up and tighten delisting for non-compliant companies, according to a filing released on its website on Thursday.
Nasdaq-listed companies must close above $1. Companies that miss this requirement for 30 trading days are non-compliant with listing rules and have 180 days to comply.
Penny stocks usually cost less than $1 each.
After 180 trading days, the company can request a second 180-day compliance window if its stock price doesn’t rise above $1.
After the second compliance period, companies with stocks under $1 can appeal to Nasdaq’s hearings panel, which delays delisting until a hearing.
Nasdaq will stop companies from trading on its platforms if their share price is below $1 after 360 trading days if the amendments pass, eliminating the chance to appeal.
It also wants to delist any firm whose share price has fallen below $1 and has had a reverse stock split within a year.
After a volatile week, technology stocks led U.S. stocks higher on Friday.
According to the Tuesday filing, some corporations, notably those in financial trouble or extended operational downturns, have repeated stock splits.
“Nasdaq believes that such behavior is often indicative of deep financial or operational distress within such companies rendering them inappropriate for trading on Nasdaq for investor protection reasons,” the exchange said in a filing.
