Sec. 501. Liquidity pilot program for securities of certain emerging growth companies

1,264 words·~6 min read·/bill/113/hr/5405/rfs/section-501

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

Section 11A(c)(6) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78k–1(c)(6) ) is amended to read as follows: Beginning on the date that is 90 days after the date of the enactment of the Small Cap Liquidity Reform Act of 2014 , the securities of a covered emerging growth company shall be quoted using— a minimum increment of $0.05; or if, not later than 60 days after such date of enactment, the company so elects in the manner described in subparagraph (D)— a minimum increment of $0.10; or the increment at which such securities would be quoted without regard to the minimum increments established under this paragraph.

In the case of a covered emerging growth company the securities of which are quoted at a minimum increment of $0.05 or $0.10 under this paragraph, the Commission shall determine the increment at which the securities of such company are traded. At any time beginning on the date that is 90 days after the date of the enactment of the Small Cap Liquidity Reform Act of 2014 , a covered emerging growth company the securities of which are quoted at a minimum increment of $0.05 or $0.10 under this paragraph may elect in the manner described in subparagraph (D)— for the securities of such company to be quoted at the increment at which such securities would be quoted without regard to the minimum increments established under this paragraph; or to change the minimum increment at which the securities of such company are quoted from $0.05 to $0.10 or from $0.10 to $0.05.

An election under this subparagraph shall take effect on the date that is 30 days after such election is made. A covered emerging growth company may not make more than one election under clause (i)(II). An election is made in the manner described in this subparagraph by informing the Commission of such election. Upon being informed of an election under clause (i), the Commission shall notify each exchange or other trading venue where the securities of the covered emerging growth company are quoted or traded.

If an issuer the securities of which are quoted at a minimum increment of $0.05 or $0.10 under this paragraph ceases to be a covered emerging growth company, the securities of such issuer shall be quoted at the increment at which such securities would be quoted without regard to the minimum increments established under this paragraph. The Commission may by regulation, as the Commission considers appropriate, specify any circumstances under which an issuer shall continue to be considered a covered emerging growth company for purposes of this paragraph after the issuer ceases to meet the requirements of subparagraph (L)(i).

If the trading price of the securities of a covered emerging growth company is below $1 at the close of the last trading day before the date that is 90 days after the date of the enactment of the Small Cap Liquidity Reform Act of 2014 , the securities of such company shall be quoted using the increment at which such securities would be quoted without regard to the minimum increments established under this paragraph. If a covered emerging growth company makes an initial public offering after the day described in subclause

(I)and the first share of the securities of such company is offered to the public at a price below $1, the securities of such company shall be quoted using the increment at which such securities would be quoted without regard to the minimum increments established under this paragraph. If the average trading price of the securities of a covered emerging growth company falls below $1 for any 90-day period beginning on or after the day before the date of the enactment of the Small Cap Liquidity Reform Act of 2014 , the securities of such company shall, after the end of such period, be quoted using the increment at which such securities would be quoted without regard to the minimum increments established under this paragraph. If the Commission determines that a covered emerging growth company has violated any provision of the securities laws prohibiting fraudulent, manipulative, or deceptive acts or practices, the securities of such company shall, after the date of the determination, be quoted using the increment at which such securities would be quoted without regard to the minimum increments established under this paragraph. The securities of an issuer may not be quoted at a minimum increment of $0.05 or $0.10 under this paragraph at any time after— such issuer makes an election under subparagraph (A)(ii)(II); such issuer makes an election under subparagraph (C)(i)(I), except during the period before such election takes effect; or the securities of such issuer are required by this paragraph to be quoted using the increment at which such securities would be quoted without regard to the minimum increments established under this paragraph. The Commission shall require a covered emerging growth company the securities of which are quoted at a minimum increment of $0.05 or $0.10 under this paragraph to make such reports and disclosures as the Commission considers necessary or appropriate in the public interest or for the protection of investors. An issuer (or any officer, director, manager, or other agent of such issuer) shall not be liable to any person (other than such issuer) under any law or regulation of the United States, any constitution, law, or regulation of any State or political subdivision thereof, or any contract or other legally enforceable agreement (including any arbitration agreement) for any losses caused solely by the quoting of the securities of such issuer at a minimum increment of $0.05 or $0.10, by the trading of such securities at the increment determined by the Commission under subparagraph (B), or by both such quoting and trading, as provided in this paragraph. Not later than 6 months after the date of the enactment of the Small Cap Liquidity Reform Act of 2014 , and every 6 months thereafter, the Commission, in coordination with each exchange on which the securities of covered emerging growth companies are quoted or traded, shall submit to Congress a report on the quoting and trading of securities in increments permitted by this paragraph and the extent to which such quoting and trading are increasing liquidity and active trading by incentivizing capital commitment, research coverage, and brokerage support, together with any legislative recommendations the Commission may have. In this paragraph: The term covered emerging growth company means an emerging growth company, as defined in the first paragraph

(80)of section 3(a), except that— such paragraph shall be applied by substituting $750,000,000 for $1,000,000,000 each place it appears; and subparagraphs (B), (C), and

(D)of such paragraph do not apply. The term security means an equity security. Notwithstanding any other provision of this paragraph, the Commission may— make such adjustments to the pilot program specified in this paragraph as the Commission considers necessary or appropriate to ensure that such program can provide statistically meaningful or reliable results, including adjustments to eliminate selection bias among participants, expand the number of participants eligible to participate in such program, and change the duration of such program for one or more participants; and conduct any other study or pilot program, in conjunction with or separate from the pilot program specified in this paragraph (as such program may be adjusted pursuant to clause (i)), to evaluate quoting or trading in various minimum increments. . Effective on the date that is 5 years after the date of the enactment of this Act, section 11A(c)(6) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78k–1(c)(6) ) is repealed.

Connections1 off-index

1 reference not yet in our index

15 USC 78k–1(c)(6)

Citation graph

cites case law

Sec. 501

Liquidity pilot program for securities of certain emerging growth companies

Cite15 USC 78k–1(c)(6)

Cites 1Cited by 0 across 0 sources