Beyond the 25 Cent Threshold

What the NYSE's new delisting rules mean for emerging public companies

Beginning July 1, 2027, a closing price below $0.25 on a single trading day can trigger immediate suspension and delisting proceedings for a security listed on the New York Stock Exchange or NYSE American. The change is more than a new numerical threshold. It raises a broader market-structure question for emerging companies: what happens when a company remains viable and continues to report publicly, but national-exchange listing is no longer the right fit?

For issuers, investors and advisers, the answer requires separating three concepts that are often treated as interchangeable: exchange listing, public-company reporting and secondary-market trading. They are related, but they are not the same.

What the SEC approved

On August 14, 2026, the Securities and Exchange Commission (“SEC”) approved parallel rule changes proposed by the NYSE and NYSE American. Under the new continued-listing requirements:

• If a listed security's closing price falls below $0.25 on any trading day, the exchange may immediately suspend trading and commence delisting proceedings.
• The issuer will not receive the ordinary cure period available for many other continued-listing deficiencies.
• The issuer retains applicable appeal rights, but the trading suspension remains in effect during the appeal.
• The exchanges retain discretion to act before the price falls below $0.25 when a security experiences a precipitous decline to an abnormally low level from which the exchange believes it is unlikely to recover.

The rules were originally expected to take effect on October 1, 2026. The effective date was delayed to July 1, 2027, giving affected issuers additional time to consider measures such as obtaining shareholder approval for a reverse stock split at their 2027 annual meetings.

A reverse stock split addresses price but not necessarily market fit

A reverse stock split can raise the quoted price per share and may help an issuer avoid breaching a minimum-price standard. But it does not, by itself, improve enterprise value, operating performance, investor participation or trading liquidity.

For some companies, preserving a national-exchange listing will remain the correct objective. For others, repeated reverse splits and continuing pressure on trading price may indicate a mismatch between the issuer's stage of development and the market structure in which its shares trade. The strategic question is therefore not only how to remain listed. It is whether the issuer has the ownership, distribution and liquidity architecture appropriate for its current stage.

Delisting does not mean the company stops being public

Exchange listing determines whether a security trades on a particular national securities exchange. Exchange Act registration and SEC reporting obligations arise under separate legal provisions. Secondary trading is a third question governed by its own federal and state requirements, broker-dealer rules and market practices.

Accordingly, delisting from the NYSE or NYSE American does not automatically terminate an issuer's SEC reporting obligations. Nor does it automatically authorize the security to trade on another venue, convert existing shares into blockchain-native securities or eliminate applicable investor-protection requirements.

If the security is not listed on another national securities exchange, it would ordinarily no longer be an NMS stock. Secondary trading may still be possible outside the National Market System, but the issuer, security and intermediaries must satisfy the rules applicable to the chosen structure.

The overlooked market between capital formation and exchange listing

The new $0.25 rule highlights a broader gap in U.S. capital markets. Emerging and development-stage companies may need access to capital and investor liquidity before they are ready for a national securities exchange. Some may later graduate to the NYSE or Nasdaq. Others may remain outside Reg NMS for an extended period, and a limited number may seek an orderly transition after delisting.

Today, that part of the market can be fragmented. Ownership records, custody, distribution, trading and settlement may involve disconnected systems and intermediaries. Investors can face limited access and uneven liquidity, while issuers may lose a direct understanding of their shareholder base.

A regulated, issuer-sponsored architecture could offer a different model. Blockchain-native ownership, regulated custody, transfer-agent recordkeeping, dealer-principal liquidity and integrated settlement can be designed as parts of one market infrastructure rather than as separate services. The objective is not to recreate a national securities exchange or to offer an indiscriminate destination for distressed securities. It is to provide eligible issuers with market infrastructure appropriate to securities designed to trade outside Reg NMS.

Where Ohanae fits

Ohanae is developing regulated market infrastructure for blockchain-native securities markets outside the National Market System (“NMS”). Ohanae Securities LLC, a FINRA-member broker-dealer, is authorized to custody, clear, settle and carry crypto asset securities and to operate as a self-clearing broker-dealer. Ohanae, Inc. is an SEC-registered transfer agent.

Together, these capabilities are intended to support eligible issuers across a broader lifecycle: capital formation, blockchain-native ownership, custody, secondary trading, liquidity, clearing, settlement and recordkeeping. A company may use this type of infrastructure before a potential national-exchange graduation. Subject to regulatory review and issuer- and security-level eligibility, it may also provide a framework for selected companies undergoing an exchange transition.

Eligibility is essential. An issuer-sponsored transition would require corporate authorization, current and reliable disclosure, compatible transfer-agent records, an appropriate share structure, investor onboarding, a credible liquidity plan and compliance with all applicable federal and state requirements. Companies affected by fraud, manipulation concerns or fundamental distress may not be suitable.

A broader issuer lifecycle

The traditional capital-markets narrative often treats exchange listing as the only meaningful destination. A more complete model recognizes multiple stages:

• Capital formation and initial ownership outside Reg NMS.
• Regulated secondary trading for eligible blockchain-native securities
• Potential graduation to the NYSE or Nasdaq when the issuer meets the relevant standards and market conditions support the move.
• A possible issuer-sponsored transition outside Reg NMS if national-exchange listing later ceases to be appropriate.

This is not a claim that every delisted company should migrate to a blockchain market. Most should not. It is a recognition that exchange eligibility, issuer viability and investor access do not always change at the same moment. A regulated market should be capable of distinguishing among them.

What issuers should consider now

Companies trading near the minimum-price threshold should not wait until July 2027 to evaluate their options. Boards and advisers should review trading-price exposure, reverse-split authority, other continued-listing standards, SEC reporting obligations, capital needs, shareholder composition and the availability of appropriate secondary-market infrastructure.

The SEC's approval of the new rules underscores an important principle: national exchanges are entitled to maintain listing standards that protect market quality. It also makes the need for credible, regulated infrastructure outside national exchanges more visible. The future of public markets may not be a single venue or a single path. It may be an issuer lifecycle in which different market architectures serve companies at different stages.

Sources

SEC approval order for NYSE American, Release No. 34-106134

Federal Register publication of the NYSE American approval order

Lowenstein Sandler client alert

Important notice This article is for general educational purposes only and does not constitute legal, investment or other professional advice. The availability of any market structure or service depends on applicable law, regulatory approvals, issuer eligibility and security-level review.

Regulated market infrastructure for blockchain-native securities markets.