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Frequently Asked Questions
 How does Nasdaq consider Future Priced Securities, including securities with variable conversion or exercise terms, in connection with initial listing?
Identification Number 1968
Nasdaq Rule IM-5635-4 describes the impact on listed companies of Future Priced Securities, which are securities with variable conversion terms where the conversion price floats with the market price of the common stock. In the case of a Future Priced Security, the lower the price of the company's common stock at the time of conversion, the greater the number of shares into which the Future Priced Security is convertible.
 
In Nasdaq’s experience, the issuance of Future Priced Securities is often followed by a decline in the common stock price, creating additional dilution to the existing holders of the common stock. Such a price decline may allow holders to convert the Future Priced Security into a large number of the company's common stock, sell those shares, and further depress the price of common stock.
 
In reviewing these arrangements in connection with a company’s application for initial listing, Nasdaq will consider the potential dilutive effect of the instrument, generally assuming conversion at the maximum possible dilution over the shortest applicable period.
 
As a result, where a company has issued and outstanding Future Priced Securities, Nasdaq will consider whether the terms of the security appropriately limit potential dilution (for example, with an issuance cap and/or floor conversion price) and the potential impact of the security under multiple Nasdaq listing standards, including the requirement to demonstrate a bid price of at least $4 per share.
 
Depending on the facts and circumstances, Nasdaq may also view a Future Priced Security structure as raising public interest concerns under the Rule 5100 Series, rendering the common stock inappropriate for listing on Nasdaq.
 
Nasdaq generally expects an immediately convertible or exercisable Future Priced Security to include a fixed floor price on conversion or exercise of at least $4.00. In order to properly reflect the potential dilutive effect, such floors must be subject to adjustment for reverse stock splits and other changes to the company's capital structure.
Publication Date*: 7/21/2026 Mailto Link Identification Number: 1968
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