Nasdaq is setting stricter listing rules, introducing new minimum requirements for companies that want to join the exchange. The new rules state that companies must have a public float of at least $15 million. For Chinese companies, the challenges are even greater, as they need a minimum offering size of $25 million. Firms currently seeking an initial listing have 30 days to finalize their applications under the old criteria before the new regulations take effect.

Tighter Listing Standards

The proposal to tighten listing standards gives us a clear 30-day period to monitor. We anticipate that many smaller companies, particularly those struggling to meet the new standards, will rush to complete their IPOs before the deadline. This could lead to increased price volatility for newly listed stocks in early October 2025. This change appears to respond to the renewed speculative activity seen over the summer. In August 2025, IPOs with a public float under $20 million experienced an average first-day price change of 35%, a level we haven’t seen consistently since the post-pandemic boom. These new rules likely aim to reduce such instability. The heightened $25 million minimum for Chinese companies is significant, likely a reaction to the extreme price swings we saw from similar listings in 2022 and 2023. Recent data shows that over half of the Chinese IPOs below $50 million from the past 18 months are now trading below their initial prices. We should expect many fewer of these high-risk listings, which may make us more cautious about buying call options on indices that are heavily influenced by small-cap Chinese tech firms. Once these new regulations are in effect, we can anticipate a decrease in the number of low-float stocks. These stocks often lead to short squeezes and high options premiums. As a result, we may see a reduction in implied volatility within the small-cap segment of the Nasdaq. This change could prompt a reevaluation of strategies that depend on earning premiums from these companies.

Opportunities and Strategies

In the short term, we’re looking at chances to buy volatility from the last wave of small IPOs anticipated in September. However, in the following months, selling volatility on small-cap index trackers might become a more appealing strategy. The market landscape in this area is about to shift. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now