Nasdaq's $25 million floor, and who it really sorts for.

On 14 May the SEC approved Nasdaq's new rule setting a $25 million floor on IPO proceeds for China-based issuers. Read as a wall, it looks like a door closing on the Asia-to-US trade. Read as a filter, it is the most useful thing a regulator has done for that trade in a decade.

Let me start with what the rule actually says, because most of the coverage has flattened it into a headline number. On 14 May 2026 the SEC approved a Nasdaq proposal first filed last September, after three amendments and a long run of delays. The new standard, Nasdaq Rule 5210(l), becomes effective in the middle of this month. It does four things at once.

A China-based company doing an IPO must now run a firm-commitment offering that delivers at least $25 million of gross proceeds to public holders. A China-based company coming in through a business combination must show a minimum market value of unrestricted publicly held shares of $25 million after the deal. Direct listings onto the Nasdaq Global Market and Capital Market are off the table entirely; the only direct-listing route left runs through the Global Select Market, where the thresholds are far higher. And a company transferring in from the OTC market or another exchange has to have traded there for at least a year first, again with $25 million of unrestricted public float.

The part that will catch people out is the definition. “China-based” here is not a passport question. It covers companies headquartered or incorporated in China, including Hong Kong and Macau, and companies principally administered from there. But it also reaches further on a list of factors Nasdaq can apply at its discretion: where the books and records sit, whether at least half the assets are in China, whether at least half the revenue is derived there, and whether a majority of directors, officers, or employees are citizens of or resident in China. Common control counts too.

The number is not the point. The number is just the toll. The definition is the road.

Why the regulator drew this line

The SEC was unusually direct about its reasoning, and the figure it cited is the one worth remembering. Between August 2022 and April 2025, roughly 70 percent of Nasdaq's enforcement referrals to the SEC and FINRA for market manipulation involved Chinese companies, even though those companies were under 10 percent of Nasdaq's listings over the same window. Since last September the Commission has suspended trading in fourteen issuers, many tied to the mainland or Hong Kong, and it has stood up a Cross-Border Task Force inside its enforcement division to chase exactly this pattern.

Nasdaq's own theory of the problem is a structural one, and it is the sentence operators should underline. Small offering sizes, low public-float percentages, and a thin investor base are what make a stock easy to manipulate. Pump-and-dump needs a small float to work. A $4 million raise with a handful of holders is not a capital markets event, it is a setup. The $25 million floor is the cheapest, bluntest way to take that setup off the menu.

That is the read most of the market is missing. This is not protectionism dressed as prudence. It is a liquidity rule wearing a geography label. The geography label is there because the data clustered there, not because Washington decided Asian companies cannot list. The companies that lose access under this rule are, overwhelmingly, the ones that should never have had it.

What it does to the corridor we work in

We run the Kuala Lumpur, Hong Kong, Singapore corridor into Nasdaq and NYSE. So the natural question for us is narrow and practical: does this rule help or hurt the kind of company we would actually put capital behind? The answer is that it helps, and it helps in three specific ways.

First, the floor matches our own bar. We do not back companies that can only scrape a few million off a thin book. The whole premise of the way we invest is that a listing has to clear with real proceeds, real institutional demand, and enough float to trade properly on the other side. A company that cannot credibly raise $25 million in a firm-commitment offering was never a company we would have underwritten to the bell. The rule has simply written our internal screen into the rulebook.

Second, the broad definition rewards knowing exactly where a company lives. A Malaysian or Singaporean founder whose operations, revenue, board, and control genuinely sit in Southeast Asia is in a cleaner position today than they were in April, because the manipulation tail that used to taint the whole “Asia small-cap” comp set is being legislated out. But a regional company that quietly has the majority of its assets, revenue, or directors in Hong Kong or the mainland can be pulled under the China-based standard whether or not its holding company is incorporated somewhere friendlier. Mapping that, honestly and early, is now part of the underwrite. It is precisely the kind of work that happens at our first gate, not at the prospectus stage.

A company that cannot credibly raise $25 million was never a company we would have walked to the bell. The rule just wrote our screen into the rulebook.

Third, the direct-listing ban and the one-year seasoning on transfers close the back doors. For a long time the cheap route to a Nasdaq ticker was a side entrance: a direct listing with no real raise, or a quick hop from the OTC market. Those routes are now shut or slowed to a crawl. What is left is the front door, namely a properly underwritten, firm-commitment IPO with a book that real investors actually subscribe. That is the only path we have ever run, and it is now close to the only path there is.

The cost, and who actually pays it

I do not want to pretend there is no cost here. There is. Genuinely small but legitimate companies, the ones with a real business and a clean story but a modest balance sheet, will find the US market harder to reach for a while. For some of them the honest answer is that a US listing was always the wrong first venue, and that Bursa's ACE Market or a Hong Kong listing is the more rational starting point, with Nasdaq as a later step once scale catches up. We have been telling founders some version of that for years. The rule now says it with more force.

But the heavier cost falls on the intermediaries who built a business out of volume, namely the shops that took a small fee to push thin listings through a side door and disengaged the moment the bell rang. That model is the actual target here, and it should be. It is the same model that produces the post-listing wreckage we get called in to clean up: companies with no float, no coverage, no governance cadence, drifting toward a delisting notice within eighteen months. A floor that stops those listings from happening in the first place is doing our future selves a favour.

What this means for us

We do not pitch for mandates, we select them, and the way we select has not changed because of this rule. We still underwrite before we commit, we still say no at the first gate more often than we say yes, and we still measure a company against the exchange it is genuinely ready for rather than the one its deck aspires to. What the $25 million floor changes is the backdrop. The market we operate in is being cleared of its worst actors by the regulator itself, which means the legitimate Asia-to-US story gets cleaner comparables, a lower manipulation discount, and a more discerning investor on the other side of the table.

That is good for the founders we back, and it is good for the capital that backs us. A higher floor is not a smaller opportunity. It is a better-sorted one. And being well sorted, on the right side of a line drawn by the exchange we list into, is worth more than being early through a door that was always going to be bricked up.