NYSE American LLC, a subsidiary of NYSE Group, filed a proposed rule change with the Securities and Exchange Commission on January 29, 2026, seeking to amend Sections 101 and 102 of its Company Guide. The amendments focus on enhancing initial listing standards for equity securities, emphasizing liquidity and market stability. Published in the Federal Register on February 4, 2026, this notice invites public comments and represents an effort to address concerns about illiquid securities, volatility, and potential manipulation. By introducing requirements for unrestricted publicly-held shares and higher price thresholds, the proposal could reshape how companies qualify for listing on the exchange, potentially leading to more orderly trading environments.
Background and Purpose of the Proposed Changes
The NYSE American Company Guide sets forth criteria that companies must meet to list their securities initially. Section 101 outlines four primary listing standards, which vary based on factors like earnings, cash flow, market capitalization, and revenue. Section 102 provides additional requirements, such as minimum market prices and publicly-held shares values. The exchange's filing highlights ongoing concerns with liquidity in newly listed securities. Illiquid stocks can experience infrequent trading, high volatility, and wide bid-ask spreads, which may not accurately reflect true market value and could invite price manipulation. As noted in the filing, 'illiquid securities may trade infrequently, in a more volatile manner and with a wider bid-ask spread, all of which may result in trading at prices that may not reflect the security's true market value.'
This proposal builds on observations from the exchange's experience, where companies relying heavily on restricted or pre-existing shares often faced higher volatility post-listing. It draws inspiration from similar rules adopted by Nasdaq, as cited in the filing, including Securities Exchange Act Release No. 86314 from 2019, which approved Nasdaq's adjustments to unrestricted publicly-held shares. The statutory basis, aligned with Section 6(b)(5) of the Securities Exchange Act of 1934, emphasizes protecting investors and promoting fair markets. No prior comments were received, but the SEC is now soliciting input.
Key Amendments to Listing Standards
The proposal introduces several targeted changes to bolster liquidity requirements.
First, it shifts the focus to 'unrestricted publicly-held shares' for market value calculations in Section 101. New definitions are added: 'publicly-held shares' exclude holdings by officers, directors, or 10% beneficial owners, per Rule 13d-3 under the Exchange Act. 'Restricted securities' encompass shares subject to resale limits, such as those from private placements, employee plans, Regulation S offerings, lockup agreements, or Rule 144 restrictions. 'Unrestricted securities' are those without such limits, and 'unrestricted publicly-held shares' combine these concepts. This excludes restricted shares from liquidity assessments, addressing the issue that such securities 'do not truly contribute to a security's liquidity upon listing,' as stated in the filing. Existing standards in Section 101 are updated to use these unrestricted metrics, with a new $15 million threshold moved from Section 102 to Section 101(a).
For companies listing via an initial public offering or underwritten public offering, the proposal mandates at least $15 million in market value of unrestricted publicly-held shares derived solely from offering proceeds. Under Standard 4, this rises to $20 million. The filing explains that pre-existing shares, often held by long-term investors, may not provide the same liquidity as new offering shares, leading to higher volatility. This aligns with Nasdaq's rules, such as Rule 5505(b)(3)(C), and the exchange's data showing smaller offerings correlate with post-listing compliance issues.
Additionally, the minimum stock price is raised to $4.00 per share across all standards in Section 101, up from $3.00 or $2.00 depending on the standard. The filing notes that lower-priced listings are 'more likely over time to trade at abnormally low price levels, which makes them potentially susceptible to manipulation.' This matches NYSE's Section 102.01B and Nasdaq's Rule 5505(a)(1), and supports the penny stock exception under Rule 3a51-1(a)(2).
For Standards 3 and 4, which rely on market capitalization ($50 million and $75 million, respectively), the proposal specifies measurement over 90 consecutive trading days prior to application for over-the-counter or transferring companies, including the $4.00 price requirement. This provides clarity, mirroring NYSE's Global Market Capitalization Test and Nasdaq's Rule 5505(b)(2)(A).
Relevant Legal Precedents and Political Forces
These changes occur in a regulatory landscape shaped by the Securities Exchange Act of 1934, which requires exchanges to design rules that protect investors and prevent manipulative practices. Precedents include Nasdaq's 2019 amendments, approved by the SEC, which introduced similar unrestricted shares definitions to enhance liquidity. The NYSE's own rules have long required a $4.00 price, setting a benchmark for smaller exchanges like NYSE American.
Politically, the proposal reflects broader efforts to strengthen capital markets amid concerns over market integrity, as seen in SEC initiatives under various administrations. While not directly tied to specific legislation, it supports goals of the Jumpstart Our Business Startups Act of 2012, which eased listing for emerging companies but prompted scrutiny of liquidity risks. Perspectives vary: investor advocates may welcome the protections against volatility, while smaller issuers could view the hurdles as barriers to access. Exchange operators argue it levels the playing field without unduly burdening competition, as other markets could adopt similar rules.
Potential Implications
Short-term, the changes could delay or deter some listings, particularly for companies with significant restricted shares or smaller offerings, potentially shifting them to over-the-counter markets. Long-term, enhanced liquidity might attract more institutional investors, fostering stable growth for listed firms. The filing asserts no undue burden on competition, noting uniformity with peers like Nasdaq and NYSE.
From different viewpoints, critics might argue the rules favor larger issuers, limiting opportunities for startups. Supporters, including regulators, emphasize investor protection. The proposal also updates delisting criteria in Section 1003 to use the new definitions, ensuring consistency.
In summary, these amendments represent a proactive step by NYSE American to refine its listing framework, drawing on empirical observations and peer practices to promote more resilient markets. Potential next steps include SEC review and possible approval, with ongoing debates centering on balancing accessibility with safeguards.
