[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4638 Reported in House (RH)]

<DOC>





                                                 Union Calendar No. 474
114th CONGRESS
  2d Session
                                H. R. 4638

                          [Report No. 114-609]

To amend the Securities Exchange Act of 1934 to allow for the creation 
 of venture exchanges to promote liquidity of venture securities, and 
                          for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 26, 2016

Mr. Garrett (for himself and Mr. Chabot) introduced the following bill; 
       which was referred to the Committee on Financial Services

                              June 8, 2016

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
    [For text of introduced bill, see copy of bill as introduced on 
                           February 26, 2016]


_______________________________________________________________________

                                 A BILL


 
To amend the Securities Exchange Act of 1934 to allow for the creation 
 of venture exchanges to promote liquidity of venture securities, and 
                          for other purposes.


 


    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Main Street Growth Act''.

SEC. 2. VENTURE EXCHANGES.

    (a) Securities Exchange Act of 1934.--Section 6 of the Securities 
Exchange Act of 1934 (15 U.S.C. 78f) is amended by adding at the end 
the following:
    ``(m) Venture Exchange.--
            ``(1) Registration.--
                    ``(A) In general.--A national securities exchange 
                may elect to be treated (or for a listing tier of such 
                exchange to be treated) as a venture exchange by 
                notifying the Commission of such election, either at 
                the time the exchange applies to be registered as a 
                national securities exchange or after registering as a 
                national securities exchange.
                    ``(B) Determination time period.--With respect to a 
                securities exchange electing to be treated (or for a 
                listing tier of such exchange to be treated) as a 
                venture exchange--
                            ``(i) at the time the exchange applies to 
                        be registered as a national securities 
                        exchange, such application and election shall 
                        be deemed to have been approved by the 
                        Commission unless the Commission denies such 
                        application before the end of the 6-month 
                        period beginning on the date the Commission 
                        received such application; and
                            ``(ii) after registering as a national 
                        securities exchange, such election shall be 
                        deemed to have been approved by the Commission 
                        unless the Commission denies such approval 
                        before the end of the 6-month period beginning 
                        on the date the Commission received 
                        notification of such election.
            ``(2) Powers and restrictions.--A venture exchange--
                    ``(A) may only constitute, maintain, or provide a 
                market place or facilities for bringing together 
                purchasers and sellers of venture securities;
                    ``(B) may determine the increment to be used for 
                quoting and trading venture securities on the exchange;
                    ``(C) shall disseminate last sale and quotation 
                information on terms that are fair and reasonable and 
                not unreasonably discriminatory;
                    ``(D) may choose to carry out periodic auctions for 
                the sale of a venture security instead of providing 
                continuous trading of the venture security; and
                    ``(E) may not extend unlisted trading privileges to 
                any venture security.
            ``(3) Exemptions from certain national security exchange 
        regulations.--A venture exchange shall not be required to--
                    ``(A) comply with any of sections 242.600 through 
                242.612 of title 17, Code of Federal Regulations;
                    ``(B) comply with any of sections 242.300 through 
                242.303 of title 17, Code of Federal Regulations;
                    ``(C) submit any data to a securities information 
                processor; or
                    ``(D) use decimal pricing.
            ``(4) Treatment of certain exempted securities.--A security 
        that is exempt from registration pursuant to section 3(b) of 
        the Securities Act of 1933 shall be exempt from section 12(a) 
        of this title with respect to the trading of such security on a 
        venture exchange, if the issuer of such security is in 
        compliance with all disclosure obligations of such section 3(b) 
        and the regulations issued under such section.
            ``(5) Definitions.--For purposes of this subsection:
                    ``(A) Early-stage, growth company.--
                            ``(i) In general.--The term `early-stage, 
                        growth company' means an issuer--
                                    ``(I) that has not made an initial 
                                public offering of any securities of 
                                the issuer; and
                                    ``(II) with a market capitalization 
                                of $1,000,000,000 (as such amount is 
                                indexed for inflation every 5 years by 
                                the Commission to reflect the change in 
                                the Consumer Price Index for All Urban 
                                Consumers published by the Bureau of 
                                Labor Statistics, setting the threshold 
                                to the nearest $1,000,000) or less.
                            ``(ii) Treatment when market capitalization 
                        exceeds threshold.--
                                    ``(I) In general.--In the case of 
                                an issuer that is an early-stage, 
                                growth company the securities of which 
                                are traded on a venture exchange, such 
                                issuer shall not cease to be an early-
                                stage, growth company by reason of the 
                                market capitalization of such issuer 
                                exceeding the threshold specified in 
                                clause (i)(II) until the end of the 
                                period of 24 consecutive months during 
                                which the market capitalization of such 
                                issuer exceeds $2,000,000,000 (as such 
                                amount is indexed for inflation every 5 
                                years by the Commission to reflect the 
                                change in the Consumer Price Index for 
                                All Urban Consumers published by the 
                                Bureau of Labor Statistics, setting the 
                                threshold to the nearest $1,000,000).
                                    ``(II) Exemptions.--If an issuer 
                                would cease to be an early-stage, 
                                growth company under subclause (I), the 
                                venture exchange may, at the request of 
                                the issuer, exempt the issuer from the 
                                market capitalization requirements of 
                                this subparagraph for the 1-year period 
                                that begins on the day after the end of 
                                the 24-month period described in such 
                                subclause. The venture exchange may, at 
                                the request of the issuer, extend the 
                                exemption for 1 additional year.
                    ``(B) Venture security.--The term `venture 
                security' means--
                            ``(i) securities of an early-stage, growth 
                        company that are exempt from registration 
                        pursuant to section 3(b) of the Securities Act 
                        of 1933; and
                            ``(ii) securities of an emerging growth 
                        company.''.
    (b) Securities Act of 1933.--Section 18(b)(1) of the Securities Act 
of 1933 (15 U.S.C. 77r(b)(1)) is amended--
            (1) in subparagraph (B), by striking ``or'' at the end;
            (2) in subparagraph (C), by striking the period and 
        inserting ``; or''; and
            (3) by adding at the end the following:
                    ``(D) a venture security, as defined under section 
                6(m)(5) of the Securities Exchange Act of 1934.''.
    (c) Sense of Congress.--It is the sense of the Congress that the 
Securities and Exchange Commission should--
            (1) when necessary or appropriate in the public interest 
        and consistent with the protection of investors, make use of 
        the Commission's general exemptive authority under section 36 
        of the Securities Exchange Act of 1934 (15 U.S.C. 78mm) with 
        respect to the provisions added by this section; and
            (2) if the Commission determines appropriate, create an 
        Office of Venture Exchanges within the Commission's Division of 
        Trading and Markets.
    (d) Rule of Construction.--Nothing in this section or the 
amendments made by this section shall be construed to impair or limit 
the construction of the antifraud provisions of the securities laws (as 
defined in section 3(a) of the Securities Exchange Act of 1934 (15 
U.S.C. 78c(a))) or the authority of the Securities and Exchange 
Commission under those provisions.
    (e) Effective Date for Tiers of Existing National Securities 
Exchanges.--In the case of a securities exchange that is registered as 
a national securities exchange under section 6 of the Securities 
Exchange Act of 1934 (15 U.S.C. 78f) on the date of the enactment of 
this Act, any election for a listing tier of such exchange to be 
treated as a venture exchange under subsection (m) of such section 
shall not take effect before the date that is 180 days after such date 
of enactment.
                                                 Union Calendar No. 474

114th CONGRESS

  2d Session

                               H. R. 4638

                          [Report No. 114-609]

_______________________________________________________________________

                                 A BILL

To amend the Securities Exchange Act of 1934 to allow for the creation 
 of venture exchanges to promote liquidity of venture securities, and 
                          for other purposes.

_______________________________________________________________________

                              June 8, 2016

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed