People walk past Nasdaq's MarketSite even space in New York's Times Square in 2012. The exchange has recently sought to tighten rules for companies wishing to tap U.S. public markets.

Nasdaq on Friday proposed a new rule that would allow the exchange to block IPOs even when companies meet all listing standards if it detects red flags that could make a company’s stock vulnerable to manipulation.

The move underscores a push to tighten gatekeeping as firms from opaque jurisdictions look to tap public markets in the U.S., where a deeper pool of capital often gives companies better valuations than they can get elsewhere.

It follows a period of heightened scrutiny of market volatility and would give the exchange more room to act when it sees warning signs. If adopted, the rule could raise t

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