Yesterday, the SEC announced that it will host a roundtable discussion on preparations for 24-hour trading in the U.S. equity markets. The roundtable will be held from 10 am to 4 pm ET on September 17 at the SEC’s headquarters and streamed live on SEC.gov. Discussions will address “preparations to support overnight trading, operations and resiliency in a 24-hour market and opportunities and challenges for expansion.” An agenda and list of speakers will be provided at a later date.
The SEC is also seeking public comments on 24-hour trading before the event. The announcement explains how to submit those:
Members of the public who wish to provide their views on 24-hour trading may submit their comments electronically or on paper. Please submit comments using one method only. Information that is submitted will become part of the public record of the roundtable and posted on the SEC’s website. All comments received will be posted without change. Persons submitting comments are cautioned that personal identifying information is not redacted or edited from comment submissions. You should submit only information that you wish to make publicly available. All submissions should refer to File Number 4-913, and the file number should be included on the subject line if email is used.
In June, Nasdaq amended its proposal to impose a new $5 million minimum market cap requirement for continued listing. As John noted, the original proposal would have tied the Hearings Panel’s hands pretty tightly (meaning that it only would have been able to overturn a delisting decision if it found Nasdaq got the math wrong and the company never actually failed to satisfy the minimum market cap requirement). The amended proposal adds a bit more discretion and permits the Hearings Panel to grant an exception for a period not to exceed 180 days from a Staff Delisting Determination for the company to demonstrate that it meets all requirements for initial listing.
On Wednesday, the SEC posted an order granting approval of this proposed rule change, as modified by the June amendment. Here’s more info on the content of the rule change as a reminder:
[P]roposed Nasdaq Rule 5810(c)(1) would provide that a Staff Delisting Determination will inform the company that its securities are immediately subject to suspension and delisting when the company fails to comply with the continued listing requirement for MVLS of at least $5 million under proposed Nasdaq Rules 5450(a)(3) or 5550(a)(6) for a period of 30 consecutive business days (“MVLS Requirement”). In addition, the Exchange proposes to amend Nasdaq Rule 5810(c)(3)(C) to provide that a company would not be entitled to any cure or compliance period if the company failed to comply with the MVLS Requirement and would immediately receive a Staff Delisting Determination.
The Exchange also proposes to add to the list of circumstances in which a request for Hearings Panel review will not stay the suspension of a company’s securities from trading. Specifically, the Exchange proposes to amend Nasdaq Rule 5815(a)(1)(B) to provide that a timely request for a hearing will not stay the suspension of the securities from trading pending the issuance of a written Hearings Panel decision where the company received a Staff Delisting Determination due to a failure to comply with the MVLS Requirement. The Exchange states that, given the difficulties with maintaining fair and orderly markets in such low value companies, it believes it is not appropriate for these companies to continue trading on Nasdaq during the pendency of a Hearings Panel review for deficiencies under proposed Nasdaq Rules 5450(a)(3) or 5550(a)(6).
Finally, the Exchange proposes to adopt Nasdaq Rule 5815(c)(1)(I) to provide that in the case of a company that received a Staff Delisting Determination due to a failure to comply with the MVLS Requirement, the Hearings Panel may reverse a delisting decision where the Hearings Panel determines that the Staff Delisting Determination was in error, or grant an exception for a period not to exceed 180 days from the Staff Delisting Determination for the company to demonstrate that it meets all requirements for initial listing.
As previewed by John, the SEC’s Small Business Capital Formation Advisory Committee held a meeting this week, following up on its April meeting. The agenda focused on modernizing market access and encouraging IPOs and small public company capital formation. Chairman Atkins shared remarks, as did Commissioners Peirce and Uyeda. The morning session included remarks from outside speakers Sue Washer, a Biotechnology Consultant and former CEO of a small-cap, Nasdaq-listed company, and Daniel Zinn, General Counsel and Chief of Staff at OTC Markets Group. Sue Washer’s comments addressed the following:
– Despite the expansion of the private markets, private capital raising continues to be challenging for small issuers
– Shortening SEC review times and waiting periods and making shelf registration available immediately would significantly reduce capital raising challenges and costs for small issuers, who often want to move quickly on a capital raise after a business development, like clinical trial results, or when market conditions are positive
– The vigilence required to comply with the numerous rules restricting public company communication is very challenging for small-cap issuers (in particular, at her company, she had many discussions with outside counsel about whether information was MNPI for purposes of Regulation FD)
– Losing EGC status is very burdensome, especially for companies that are still pre-revenue when they lose that status (for example, her company had to double accounting staff for purposes of SOX 404(b) when, in her view, management’s time should have been focused on clinical trials)
– Analyst coverage is a really critical issue for small companies, and this is an area that needs a lot more attention
Sue and members of the Committee expressed support for the SEC’s recent rule proposals and discussed ways in which they addressed some of the challenges Sue identified.
Next, Daniel Zinn shared some suggestions in his prepared remarks, many of which tracked suggestions in OTC Markets Group’s comment letter on the registered offering reform proposal:
– Expand S-3 access to certain foreign private issuers that operate in jurisdictions with reporting regimes comparable to the U.S. and are located in jurisdictions with U.S. extradition treaties
– Permit ATM offerings under Tier 2 of Regulation A
– Expressly recognize OTCQX and OTCQB as qualifying trading markets for at-the-market (ATM) offerings in the final rule text to promote certainty and ensure those markets are actually utilized to conduct ATM offerings, instead of maintaining a separate list of markets designated by the Commission (though he noted that OTC is “thrilled” that the proposal recognizes OTCQX and OTCQB as qualifying trading markets for this purpose)
– Extend ELI and SELI benefits to certain OTCQX and OTCQB issuers
– Extend federal preemption from state Blue Sky laws to secondary trading in securities issued under Regulation A Tier 2 offerings and eligible OTCQX securities
– Modernize Form S-3 eligibility for former shell companies that provide comprehensive disclosure
Nasdaq has now posted on its Global Trading Hours Hub both general Frequently Asked Questions and Corporate Action FAQs. Here are some FAQs from the general document that got my attention, some of which could be gleaned from the SEC’s notice of Nasdaq’s proposed rule change but are nonetheless helpful to have explicitly confirmed.
What are global trading hours?
To meet rising demand for U.S. equities across the globe, Nasdaq is engaging with regulators to offer nearly continuous trading 23 hours a day, 5 days a week, on the Nasdaq Stock Market. This expanded trading schedule will include a new trading session from 9 p.m. to 4 a.m. ET, together with Nasdaq’s current extended trading hours from 4 a.m. to 9:30 a.m. ET and 4 p.m. to 8 p.m. ET, enabling issuers to more efficiently attract capital from across the globe while enabling investors to broaden access and expand wealth-building opportunities. The U.S. trading hours, from 9:30 a.m. – 4:00 p.m. ET and marked by the Opening and Closing Crosses, will continue to set the prices to drive investor transparency across all hours of market operation.
When will the new session be available on Nasdaq?
The industry’s transition to a 23-hour trading day is currently expected to occur on Sunday, December 6, 2026, pending SIP readiness as well as any applicable SEC rule changes.
How will the existing Nasdaq Stock Market trading hours be impacted?
Currently the Nasdaq stock market operates from 4:00 a.m. to 8:00 p.m. ET. There will be no substantive change to current functionality or operations during this time frame.
How will trade date and settlement be affected?
9:00 p.m. to Midnight: Trades will be reported with the next calendar day’s trade date. Midnight to 8:00 p.m.: Trades will be reported with the current day’s trade date. Settlement terms will be based on trade date as they are today.
Will Nasdaq be available for trading on US exchange holidays?
Yes, if a holiday falls between Monday and Thursday, trading will commence at 9 p.m. ET on the holiday evening. For example, if Monday is a US exchange holiday, trading will begin at 9 p.m. ET on Monday and continue until 8 p.m. ET on Tuesday.
How will corporate actions and dividends be handled?
Pending SEC approval, certain corporate actions and dividends will be effective when trading commences at 9 p.m. ET. Certain corporate actions and distributions as described in the rule will be halted before 9 p.m. ET on the day immediately preceding the effective date and resumed at 8 a.m. ET on the effective date. Nasdaq will send a Trade Halt Code of ‘M1’ to denote Corporate Action.
Corporate Actions and Distributions that would remain halted until 8 a.m. ET:
– Symbol and/or CUSIP Change
– Dividends equal to or greater than 25% of the prior Nasdaq Official Closing Price
– Forward and Reverse Splits
– De-SPACs
– Spin-offs
– Security type change (e.g. preferred to common)
– Merger/Mandatory exchange
– Any other corporate action/event where the Exchange determines a halt is necessary for fair/orderly markets, investor protection, or the public interest
The separate, more detailed FAQs on corporate actions and dividends clarify that the one-hour pause between 8:00 PM and 9:00 PM may be insufficient for the processing of the corporate actions listed above, and this uniform halt period will support consistent processing of these changes, reduce operational risk, promote fair and orderly markets and help avoid confusion, price dislocations and erroneous execution issues.
Last week, the Depository Trust & Clearing Corporation (DTCC) announced that it has successfully converted assets at The Depository Trust Company (DTC) into tokens that were used in trades.
The tokenized trades were processed on July 15 and marked a significant milestone that sets the stage for the DTCC Tokenization Service to launch in October 2026 [. . .] The DTCC Tokenization Service enables the issuance of tokenized representations (also referred to as digital twins) of real-world assets that can be delivered to DTC Participant wallets of choice. The DTC-held securities can be converted between traditional and tokenized forms, allowing DTC Participants to access new liquidity pools and execute digital asset strategies with greater flexibility [. . .] This milestone comes seven months after DTC received a No-Action Letter from the U.S. Securities and Exchange Commission (SEC), authorizing DTC to operate a tokenization service for real-world assets it custodies.
The announcement listed 30 market participant firms, blockchain networks, wallets, exchanges, issuers and applications that participated, including Nasdaq, which issued its own press release regarding its role in this milestone that shares more details.
The Nasdaq Stock Market served as the marketplace where trades were executed for later conversion into tokens at the DTCC [. . .] This event demonstrated that DTCC’s tokenization service can serve as a bridge between mainstream markets and digital markets. Throughout the day, DTCC successfully converted production trades on The Nasdaq Stock Market whereby assets held at The Depository Trust Company (DTC) were converted into tokens held in a digital control account and corresponding member firm wallet. The exercise demonstrated tokenization production in a breadth of use cases, asset classes, and number of participants—paving the way for the launch of DTCC’s Tokenization Service later this year. [. . .]
From Nasdaq’s perspective, this initial run of tokenized asset trades is a significant milestone because it shows that tokenization can occur within existing regulatory frameworks.
As noted above, DTCC’s Tokenization Service is expected to launch in October, so stay tuned.
Our new quick survey seeks input from our members on what AI tools their organizations have adopted for legal purposes and how they’re employing AI in their daily workflows. It also seeks to understand the extent to which organizations have adopted a formal AI usage policy and approach confidential information and privilege or work product implications. Please take a moment to participate!
Yesterday, ISS announced the launch of its Annual Global Benchmark Policy Survey, which ISS notes is “a key component of its annual policy development process exploring potential voting policy changes for 2027 and beyond” and will gather views on “governance and other topics relevant to shareholder voting decisions” from institutional investors, public companies, corporate directors and other interested market constituents.
The survey (links to a full PDF version) includes questions related to the following topics for U.S. markets:
– When board slate elections (where multiple directors are presented as a single voting item) should be considered a governance concern warranting opposition
– The impact of director tenure on independence and how many years is problematic (10+, 12+, 15+, 20+ or something else)
– Changes to a company’s incorporation jurisdiction or governing documents (how to balance benefits the company identifies with changes to shareholder rights)
– Whether to change ISS’s “perpetual withhold” policy when companies maintain certain problematic governance practices after IPO (e.g., multi-class share structures) and which board members an adverse vote recommendation should apply to
– The potential introduction of semi-annual reporting and the possible implications (whether semiannual reporting is not a concern, a positive change, a negative change or something that makes sense for smaller or pre-revenue revenue companies only)
– Whether discretionary bonus programs warrant different sector-specific treatment for financial services companies rather than generally being treated as a concern in the qualitative pay-for-performance evaluation since financial services companies indicate that formulaic bonus structures are incompatible with applicable regulatory and risk management requirements
– How to signal significant concerns regarding executive pay when no say-on-pay vote is on the ballot given that more companies may be exempt if the SEC’s “Filer Status” proposal is adopted (e.g., whether to vote against compensation committee members and which members) and what support level for compensation committee members should be considered a low vote that triggers ISS’s responsiveness policy (the 50% director election threshold or the 70% say-on-pay threshold)
– Whether and when the risk of competitive harm constitutes a compelling rationale for not disclosing forward-looking LTI performance targets
– The appropriate shareholder response when companies reduce their climate-related disclosures due to changes in regulatory reporting requirements or risks
– Whether it is appropriate to expect companies with significant exposure to nature-related risks to disclose information according to a recognized framework like TNFD
The survey is scheduled to close on August 14, 2026, at 5 p.m. ET. In addition to the survey, ISS will conduct a series of regional, topic-specific roundtable discussions.
Yesterday, the Corp Fin Staff issued new Securities Act Rules CFI 260.40 extending the application of the March 2025 Latham no-action letter to Rule 506(c) offerings of tokenized securities that use digital attestations to verify accredited investor status. Here’s the full text of the CFI:
Question: An issuer intends to conduct a Rule 506(c) offering of a tokenized security using the reasonable steps to verify accredited investor status described in the Division’s letter to Latham & Watkins LLP (March 12, 2025). The issuer intends for investors to provide representations to the issuer regarding their accredited investor status and the financing of their minimum investment amount programmatically through the tokenized security via a digital attestation. Does the staff view this as a satisfactory method of providing representations to the issuer for purposes of the position taken in the Latham & Watkins letter?
Answer: Yes. The staff notes that it will be important for the issuer to ensure that it retains sufficient records of the process used via the token standard protocol to verify accredited investor status. See Securities Act Release No. 9415 (July 10, 2013) (noting that “it will be important for issuers and their verification service providers to retain adequate records regarding the steps taken to verify that a purchaser was an accredited investor”).
Issuers are also reminded that whether an issuer has taken reasonable steps to verify that a purchaser is an accredited investor is an objective determination by the issuer (or those acting on its behalf), in the context of the particular facts and circumstances. See Securities Act Release No. 9415 (July 10, 2013); and Securities Act Rules CFIs 256.35 and 256.36. [July 21, 2026]
Dave’s reference to the phrase “if it’s free, it’s for me” in a blog last week reminded me of a continuing ed program my mom attended in Chicago for dental hygiene credit when I was nine years old. It’s a weird thing to remember, but it had quite an impact on our household. For starters, whatever my mom learned there caused her to become a vegetarian. (And vegan briefly. While I aspire to a plant-based diet now, at the time, that meant my brother and I ate cereal for dinner for a few months.) Plus, the speaker (who was vegan) had a favorite saying that got a lot of “airtime” in our house: “What’s the best kind of food? Free food!” (Meaning, even though he ate plant-based all other times, he would gladly partake in animal products when free.) I guess we all really love free stuff!
Luckily, with tomorrow’s FREE webcast, you don’t need to compromise your chosen diet or anything else! Our speakers will be serving up information you need to know on the SEC’s Registered Offering Reform proposal, including real-world implications, areas of uncertainty, and key issues to watch as the SEC’s proposal moves toward adoption. Good for your pocketbook, your career and your clients!
So, whether you’re a member or not, tune in tomorrow at 2:00 pm Eastern for our webcast “The SEC’s Registered Offering Reform Proposal: What You Need to Know Now” to hear from Valian Afshar, Chief, Office of Rulemaking in the SEC’s Division of Corporation Finance, Sonia Gupta Barros, Partner at Sidley, Edwin O’Connor, Partner at Goodwin, Ted Yu, Associate Director (Specialized Policy and Disclosure) in the SEC’s Division of Corporation Finance, and Dave Lynn, Partner at Goodwin and Senior Editor here at TheCorporateCounsel.net.
Topics include:
– Key changes to Form S-3 eligibility
– Expanded communications flexibility
– Modernization of registration processes and shelf offerings
– Impacts on capital-raising strategy
– Transition timing, open questions and practical implementation considerations
Current members of TheCorporateCounsel.net automatically have access. Non-members can register for the free stream here. (The on-demand version of the webcast will only be available to current members.)
As usual, we will apply for CLE credit in all applicable states (with the exception of SC and NE, which require advance notice) for this one-hour webcast. You must submit your state and license number prior to or during the live program. Attendees must participate in the live webcast and fully complete all the CLE credit survey links during the program. You will receive a CLE certificate from our CLE provider when your state issues approval, typically within 30 days of the webcast. All credits are pending state approval.
This program will also be eligible for on-demand CLE credit when the archive is posted, typically within 48 hours of the original air date. Instructions on how to qualify for on-demand CLE credit will be posted on the archive page.
Last Friday, Dave blogged about the SEC’s new e-delivery rulemaking proposal, which would permit, but not require, covered entities to use e-delivery as the default method of delivery for covered information under specified conditions. This Morgan Lewis alert goes into detail on what the proposed Regulation E-Delivery would mean for “covered entities.”
“Covered entities” are “virtually every entity with SEC-mandated delivery obligations,” including public companies.
“Covered information” is “information required to be delivered under the Securities Act, Exchange Act, Investment Company Act, Advisers Act, Trust Indenture Act, or other federal securities laws,” including “prospectuses, proxy statements, annual reports, shareholder reports, trade confirmations, Form CRS, privacy notices, investment adviser brochures, and tender offer materials.”
Two permissible methods of delivery include direct delivery and a statement of availability.
For materials that do not contain personal financial information (PFI), covered entities would be permitted to deliver the materials directly to an electronic address, such as via email attachments, documents embedded in emails, or a similar direct electronic transmission.
Reg E-Delivery generally would disallow direct email delivery for materials containing PFI. Instead, covered entities would be permitted to send a statement notifying recipients that materials are available through a secure website after completion of a process reasonably designed to protect personal financial information (e.g., password authentication). This approach also could be used for materials that do not contain PFI [. . .]
Covered entities generally would be required to:
– provide prominent disclosure regarding electronic delivery;
– permit recipients to opt out at any time;
– provide paper copies upon request free of charge;
– permit recipients to update their electronic address without charge;
– maintain written procedures to identify and remediate failed electronic deliveries;
– maintain website availability standards for electronically delivered materials; and
– comply with specified content, timing, and formatting requirements for electronic communications.
In the next blog, I’ll share specifics regarding the delivery of proxy materials and prospectuses.
