The Nasdaq markets can be seen in New York City during the morning trade on April 7, 2025.
Michael M. Santiago | Getty pictures
Beijing – The Nasdaq exchange in the USA plans the listing requirements that make it more difficult for small Chinese companies after a flood of tiny initial public offers in New York.
As part of the proposed changes, companies that mainly work in China have to accept at least 25 million dollars of initial public offers to appear on the stock exchange, Nasdaq said local time late Wednesday.
The move comes as tensions between the United States and China, which simmer and as Nasdaq, the financial market are confronted with broader questions.
“It will be more difficult for small Chinese companies to make IPO [on the] Nasdaq under the new rule, “said Winston Ma, extraordinary professor at the Nyu School of Law.
Since the episode of the New York Listing of Ride-Haying Company Didi in 2021, there have been only a few great Chinese stock exchange. In 2024, 35 companies listed in New York and listed in New York, around twice as high as the 17 US microcap listings, Renaissance Capital said in December.
Microcaps usually refer to shares with market capitalizations between 50 and 300 million US dollars, which means that companies have only received a few million in the first Availment.
The change of rule is “positive,” said Gary Dvorchak, managing director of the blues shirt Group, on whose business Chinese companies advise on stock exchange approaches. “I think it will convey more trust that companies do this for legitimate reasons, and there is less likely that games are played with the stock and the companies are really protected.”
NASDAQ found that the Chinese lists are a higher risk because we are unable to take legal steps against companies and people who are involved in potentially manipulative trading activities in these securities.
“In addition, the exchange has determined that Chinese companies that list a higher compliance concern in connection with an IPO with an offer size of less than 25 million US dollars on Nasdaq,” said Nasdaq.
The US Securities and Exchange Commission officially approved Nasdaq's proposal. Companies that already existed in the IPO process would then have 30 days to complete the process according to previous rules, said Nasdaq, while all subsequent lists would have to comply with the changes.
The New York Stock Exchange, which usually only treats larger stock exchanges, said that it “always had the platinum standard with regard to listing requirements, and we are pleased that others will raise their own bar.”
The SEC and China's Securities Regulatory Commission did not respond to CNBC's request for a comment.
Cooking tensions?
The listing request from the NASDAQ is “another example of the multitude of possibilities that become business, trade and investment relationships between the two countries more complex and difficult,” said Stephen Olson, a senior fellow at Isasof Ishak Institute.
In fact, the rule change of the New York Exchange came to the announcement of Beijing late Wednesday that some US fiber optic producers would start new punitive tariffs on Thursday.
“China says: We are ready to fight fire with fire,” said Olson. “The commercial armistice is just a temporary patch. It could collapse at any time.”
The Chinese Ministry of Commerce cited a six-month investigation in which some US exporters of China had distributed anti-dumping levies by selling a modified version of the optical fiber.
New York Issue Quarted Optical Fiber Producer Corning Is now a 37.9 %%
For his overall business, Corning China was the largest source of income outside the United States and, according to the company results report, made 32% of his total sales of 2024.
“Corning has and not ever to hand over products in China, still try to avoid these measures,” a spokesman for Corning told CNBC via e -mail. The company does not expect significant effects on the business, since “it is imported very small amounts of glass fibers imported in China, which will expand the tasks that will expand this”.
“We are still full of the Chinese market for optical communication and our employees at our many locations in China,” said the company.
The US trade department did not immediately answer a request for comments.
China has a deficit of 57 million US dollars of fiber fiber trade with the United States in the first seven months this year.
This imbalance may have to “act the technical pretext,” said Tianchen Xu, Senior Economist at Economist Intelligence Unit and found that the objects that import China from the USA are largely advanced and thus expensive per subject.
“The exchange of fires [between the U.S. and China] is continued in many ways, ”predicts XU, who could derail plans for a meeting between the President of the two countries.
The decision came a day after the revocation of Washington Taiwan Semiconductor Manufacturing Co's Approval to send important chipmaking devices and technologies to the production plant in China.
China's optical fiber tariff “Signales displeasure” for the recent US steps to limit the access of Beijing to advanced chips and participation in the underwater supply chain, said Alfredo Montufar-Helu, managing director of the advisory company Greenpoint.
However, the tariff is “sufficient and reserved to destroy months of trade negotiations. And also serves as a memory that China's lever goes beyond rare earth,” said Montufar-Helu.
Years of growth in the examination
While China tried to promote domestic financial development, it was also interested in controlling capital outflows, including overseas shares. New guidelines in the past three years have necessary Chinese companies to obtain the approval of the Securities Regulation for Lists abroad, especially if their company has a large domestic user base.
In the states, the move of Nasdaq has been a big step in the growing regulatory exam in tiny Chinese stock exchange groups in recent years.
The draftsmen for IPOs with market capitalizations below 600 million US dollars over four years tripled to 12% in 2020, the Hong Kong Stock Exchange and the local securities regulatory authority said in a joint statement in May 2021.
In November 2022, the regulatory authority of the financial industry in the United States warned investors of “significant unusual price increases the day after the IPO of certain small cap emitters, most issuers in other countries”. China was mentioned in the announcement.
Finra added that “consideration” about how foreigners Nationals opened up to the US broker dealers to invest in IPOS, and then “manipulative orders and trade to increase the aftermarket prices”.
In a Finra podcast on November 12, 2024, Peter Gonzalez from the Special Investigations informed that the “Ramp and Dump” programs have developed – now weeks or months after the IPO instead of just a few days.
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Correction: This story has been updated to think that the Nasdaq are planning to oblige Chinese companies to collect at least 25 million dollars in initial public offers in order to divide them on the stock exchange.