NEW YORK — With many major companies trading in penny-stock territory, the New York Stock Exchange is considering relaxing a rule that requires shares to trade above a dollar.
"That's something that we're considering, given the market environment," said NYSE Euronext spokesman Raymond Pellechia.
Currently, an NYSE-listed company's shares cannot remain below $1 longer than 30 consecutive days. If that happens, the company gets about six months to prove to the NYSE that it can boost its stock price.
The exchange has yet to submit a formal proposal to the Securities and Exchange Commission to temporarily ease the requirement, Pellechia said. Although it's a long-standing NYSE rule, he said, the SEC would have to approve the rule change.
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The Nasdaq stock market already announced in October a three-month suspension of its minimum bid price and market value, and extended the suspension in December.
And the NYSE has already lowered the minimum market capitalization for listed stocks. On Jan. 23, the exchange temporarily decreased the threshold to $15 million from $25 million. The minimum market cap was raised to $25 million from $15 million in 2004.
Generally, the market cap threshold ends up disqualifying more companies than the more flexible stock price rule. Last year, the NYSE delisted 54 companies — 29 for a market cap that was too low, and five for what the exchange describes as an "abnormally low share price."
Roughly 65 companies are currently listed on the NYSE Web site as "non-compliant with NYSE quantitative continued listing standards." That's more than 3 percent of the approximately 1,950 companies listed on the exchange, and a longer list than usual, according to the NYSE.
Those non-compliant companies include Visteon Corp., Vonage Holdings Corp., Pier 1 Imports Inc., Rite Aid Corp. and Lee Enterprises — all of which have stocks trading below $1 a share.
And if the stock market stays weak, other companies could end up joining that list.
The bailed-out insurer American International Group Inc. dipped below the $1-a-share level earlier this month, while companies such as General Motors Corp., Ford Motors Corp., Office Depot Inc., Hovnanian Enterprises Inc., Citigroup Inc. and E.W. Scripps Co. are trading around $2 a share. GM shares have tumbled to their lowest level in more than 70 years, pulled down by a drop in the broader markets.