Nasdaq Seeks to Head Off Threat of Hundreds of Stock De-Listings

(Bloomberg) -- Hundreds of Nasdaq Inc. traded companies pummeled by the coronavirus pandemic are poised to get a reprieve from rules that could lead to them getting kicked off the exchange.

That’s because Nasdaq wants to give firms whose shares have fallen below $1 more time to bring their prices up before being de-listed. Companies with market values under Nasdaq’s required minimums would also get additional time to rebound, according to a plan the exchange filed Thursday with the Securities and Exchange Commission. Nasdaq asked the regulator to allow the proposal to take effect immediately.

Nasdaq rules normally give companies 180 days to bring their share prices back above $1, or their market capitalizations above its minimum, once a firm is deficient for 30 consecutive days. The plan filed with the SEC would effectively prevent that clock from starting until July 1.

The exchange says that as of April 13, 154 securities had been trading below the $1 threshold for at least 30 days, an increase from the 119 that had hit that threshold in March 2019. Nasdaq indicated there might soon be a significant uptick with 379 more in danger of becoming deficient.

Businesses Decimated

The request comes as Washington races to shore up businesses that are at risk of going under as the economy grinds to a halt. Nasdaq’s plan, which didn’t mention any companies by name, describes the impact that social distancing has on restaurants, entertainment facilities and travel companies.

“One unavoidable consequence of the actions being taken to reduce the spread of COVID-19 is a reduction, or complete interruption, in revenue for many companies,” the exchange operator said in the filing.

While stocks have bounced back from their lows, Nasdaq Stock Exchange President Nelson Griggs said the company wants to get out in front of the issue before it potentially becomes a big problem.

“You’re just seeing these extremely volatile markets,” Griggs said in an interview. “We’re just trying to get ahead of what could be an issue.”

Nasdaq has also started discussing other possible rule changes with the SEC that would help issuers weather the crisis, Griggs said. One area of focus is making it easier and less time-consuming for firms to raise additional capital, he said.

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