SEC Approves Tougher Nasdaq Listing Requirements for China-Based Firms

It took eight months, three amendments and a formal proceeding, but on May 14, 2026, the Securities and Exchange Commission approved one of the most pointed changes to Nasdaq listing requirements in years. The order, issued under File No. SR-NASDAQ-2025-069, created a separate and higher set of entry tests for companies headquartered, incorporated or principally administered in China, a definition that expressly reaches Hong Kong and Macau.

The approval came on an accelerated basis alongside the publication of Amendment No. 3, which Nasdaq filed on May 1 and which replaced the earlier versions of the proposal. The rule was set to take effect 30 days after the order.

The new Nasdaq listing requirements, path by path

The rule, codified as Nasdaq Rule 5210(l), works by addressing each way a China-based company might come to the exchange.

Initial public offerings. A China-based company listing through an IPO must raise at least $25 million in gross proceeds from a firm commitment offering sold to public holders.

Business combinations. A company becoming listed through a merger, such as a SPAC deal, must show at least $25 million in Market Value of Unrestricted Publicly Held Shares after the combination.

Direct listings. China-based companies may pursue a direct listing only on the Nasdaq Global Select Market. The Global Market and Capital Market are closed to them for that route.

Transfers and uplistings. A company moving from another market, including the over-the-counter market, needs at least one year of trading history there and at least $25 million in Market Value of Unrestricted Publicly Held Shares.

The evidence Nasdaq put forward

The record behind the rule is what makes it notable. According to the release, roughly 70% of Nasdaq’s market manipulation referrals between August 2022 and April 2025 involved Chinese emerging market companies, even though such companies made up less than 10% of Nasdaq listings.

The exchange also examined its own IPO history. Through April 2025, it counted 151 China-based IPOs on Nasdaq. Of those, 143 raised less than $25 million, and nearly half of the small offerings were later cited for compliance problems. That pattern is the direct basis for the $25 million floor: the threshold sits just above where most of the troubled offerings landed.

The $25 million line was not drawn at random; it was drawn just above where the exchange’s own problem cases clustered.

The order also records broader investor protection concerns that the Commission and Nasdaq identified, including susceptibility to manipulative trading, the possibility of undisclosed state influence over issuers, the difficulty of enforcing U.S. judgments against entities based in China, and the limited remedies available to U.S. investors.

A long road to approval

The procedural history shows how contested the proposal was. Nasdaq first filed on September 4, 2025, amended it on September 12, and saw it published in the Federal Register on September 19. On December 18, 2025, the Commission instituted proceedings to decide whether to approve or disapprove, a step that typically signals the agency wants a closer look. Amendment No. 2 followed on April 14, 2026, and Amendment No. 3 on May 1, before the May 14 approval.

Who is affected

The most immediate impact falls on small-cap China-based issuers and the boutique underwriters that have specialized in bringing them to market. Offerings in the single-digit millions, once common on the Capital Market, no longer clear the bar. SPAC sponsors targeting Chinese businesses face a parallel public-float test after closing. Companies trading over the counter that hoped to uplist must now show a full year of trading and meaningful public float.

For investors, the rule is meant to reduce exposure to thinly floated listings that the exchange associated with pump-and-dump patterns. It does not affect China-based companies already listed, which remain subject to the general continued listing rules.

Why it matters beyond China

This was a market-access rule built on jurisdiction rather than size alone, an unusual design for a U.S. exchange. Its approval suggests the SEC is willing to accept location-based distinctions when an exchange backs them with data tying a category of issuer to elevated enforcement and manipulation risk. It also fits a wider 2026 pattern in which Nasdaq tightened rules aimed at small, thinly traded listings.

What to watch

Watch the volume and size of China-based IPO filings in the months after the effective date, whether issuers shift to larger offerings or to other venues, and whether other exchanges adopt similar criteria. Any legal challenge to the jurisdiction-based approach would also be a signal worth following.