Growth Strategies

NYSE: $15M Market Cap Enough for Listing

With many companies falling below the $25 million listing standard, the Big Board temporarily lowers it by $10 million.
Stephen TaubJanuary 23, 2009

Some small public companies with eroding market capitalization will have one less thing to worry about for the next three months.

On Friday the New York Stock Exchange announced a temporary relaxation of the market-cap threshold required in order to remain listed. Through April 22, companies whose average global market capitalization over 30 consecutive trading days falls below $15 million will be promptly delisted. That level is 40 percent lower than the standard threshold of $25 million.

The move “will enable companies of suitable size and quality to remain listed during current difficult market conditions,” said Richard Ketchum, chief executive officer of NYSE Regulation Inc. All of the exchange’s other criteria for continued listing will remain unchanged.

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The Big Board explained that because of recent steep declines in trading prices of many securities, the number of listed companies with a market cap below $25 million has grown significantly higher than the historical norm. However, it did not say how many.

“The Exchange believes that, in many cases, these companies have experienced precipitous stock price declines because of these unusual market conditions, rather than company-specific problems,” it asserted. It added it believes these companies’ market cap likely will increase as the current market turbulence passes.

The NYSE also noted that it has chosen to temporarily lower this listing standard rather than to impose a complete moratorium on application of the standard because it continues to believe that companies whose market capitalization deteriorates to a level below $15 million are not suitable for continued listing on the Exchange.

The rule change is immediately effective. It is subject to a 30-day operative delay under Securities and Exchange Commission rules, but the Exchange said it has asked the SEC to waive the operative delay and expects the request to be approved shortly.