Nasdaq Capital Market

Updated on 2023-08-29T11:54:49.970932Z

What is Nasdaq Capital Market?

The Nasdaq Capital Market refers to one of the market tiers from the three tiers of Nasdaq exchange, consisting of companies that have the smallest levels of market capitalization. The Nasdaq Capital Market may define as a market of equity for the early-stage companies with the lower market capitalization in the Nasdaq Composite Index. The requirements for listing on the Nasdaq Capital Market are less strict in the comparison of two other market tiers of Nasdaq exchange, which principally focus on medium and large-scale companies with the higher market capitalisation.

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Understanding Nasdaq Capital Market

In the Nasdaq Capital Market, Nasdaq stands for National Association of Securities Dealers Automated Quotation, formerly known as the Nasdaq SmallCap Market till 2005, generally small cap stocks that have market capitalization of approximately US $300 million to US $2 billion are listed. The name changed from the Nasdaq SmallCap Market to Nasdaq Capital Market reflected a move in attention to listing companies that require to increase capital. The companies listed in the Nasdaq exchange through three tiers including Nasdaq Capital Market, Nasdaq Global Market, Nasdaq Global Select Market. The Nasdaq Capital Market is known for small-cap companies that have small capitalization. The Nasdaq Global Market formerly a part of Nasdaq-NM for around 1,450 stocks with medium capitalisation. The Nasdaq Global Select Market was formerly part of the Nasdaq-NM with around 1,200 listed companies that have large capitalization.

The requirements of listing for all three tiers need different levels of documentation, number of shareholders and average market capitalization during the preceding month. Companies can shift from one tier to another by time through fulfilling the required requirement. The Nasdaq Global Select usually referred as top tier of the Nasdaq exchange has around 1,200 companies listed, whereas the Nasdaq Capital Market and lower tiers usually referred as lower tiers vary around 1,000 to 1,500 companies each. Sometimes, Nasdaq might reject the initial listing even after fulfilling of the requirements for listing by a company or may apply certain conditions and the companies which are not qualified for the Nasdaq NM are traded on the Nasdaq capital market.

Frequently Asked Questions (FAQs)

What are the requirements for listing in Nasdaq Capital Market?

With the Nasdaq Capital Market, early-stage companies can easily list in the comparison of other large exchanges as they need more excessive requirements. For listing in the Nasdaq Capital Market, companies must fulfill the corporate governance requirements, and financial and liquidity requirements. Companies of the Nasdaq Capital Market are needed to fulfill a net income standard of minimum US $750,000, has 1,000,000 shares as a minimum public float, minimum 300 shareholders, and with specific exceptions a share bid price of minimum US $4.

There are certain criteria that must met by the companies in order to list at first on the Nasdaq Capital Market, like companies have to fulfill minimum one of three listing standards: the market value of listed securities standard, the equity standard, or the total assets/total revenue standard, and all the standards have few requirements like minimum public float, three market makers (MMs) and minimum numbers of shareholders.

According to the equity standard, stockholders of the company are needed equity of US $5 million, whereas the other two standards need US $4 million; and in the equity standard, the operating history of two years is required, where the other standards do not need an operating history. The market value of the registered securities should be US $50 million as a market value of listed securities and US $15 million as a market value of publicly held shares. The net income standard needs US $750,000 as a net income in the last preceding fiscal year or in 2 of the preceding 3 years and has US $5 million as a requirement for market value of publicly held shares.

The Nasdaq Capital Market has an entry fee, which depends on the aggregate number of shares outstanding at the time of listing at first. Additionally, a non-refundable application fee of US $5,000 and US $50,000 in the case of a company has more than 15 million total shares outstanding.

Other than the entry fee, there are inclusive annual fee and other fee that fluctuate according to the type of the securities. Though a company can choose the standard as per their ability of fulfillment of the needed requirements of the standards. The criteria of Nasdaq Capital Market are less strict in the comparison of the other two tiers of the Nasdaq exchange.