[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5877 Reported in House (RH)]

<DOC>





                                                 Union Calendar No. 626
115th CONGRESS
  2d Session
                                H. R. 5877

                          [Report No. 115-807]

     To amend the Securities Exchange Act of 1934 to allow for the 
       registration of venture exchanges, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 18, 2018

  Mr. Emmer introduced the following bill; which was referred to the 
                    Committee on Financial Services

                             July 10, 2018

  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 May 18, 
                                 2018]


_______________________________________________________________________

                                 A BILL


 
     To amend the Securities Exchange Act of 1934 to allow for the 
       registration of venture exchanges, 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 person may register themself 
                (and a national securities exchange may register a 
                listing tier of such exchange) as a national securities 
                exchange solely for the purposes of trading venture 
                securities by filing an application with the Commission 
                pursuant to subsection (a) and the rules and 
                regulations thereunder.
                    ``(B) Publication of notice.--The Commission shall, 
                upon the filing of an application under subparagraph 
                (A), publish notice of such filing and afford 
                interested persons an opportunity to submit written 
                data, views, and arguments concerning such application.
                    ``(C) Approval or denial.--
                            ``(i) In general.--Within 90 days of the 
                        date of publication of a notice under 
                        subparagraph (B) (or within such longer period 
                        as to which the applicant consents), the 
                        Commission shall--
                                    ``(I) by order grant such 
                                registration; or
                                    ``(II) institute a denial 
                                proceeding under clause (ii) to 
                                determine whether registration should 
                                be denied.
                            ``(ii) Denial proceeding.--A proceeding 
                        under clause (i)(II) shall include notice of 
                        the grounds for denial under consideration and 
                        opportunity for hearing and shall be concluded 
                        within 180 days of the date of the publication 
                        of a notice under subparagraph (B). At the 
                        conclusion of such proceeding the Commission, 
                        by order, shall grant or deny such 
                        registration. The Commission may extend the 
                        time for conclusion of such proceeding for up 
                        to 90 days if the Commission finds good cause 
                        for such extension and publishes the 
                        Commission's reasons for so finding or for such 
                        longer period as to which the applicant 
                        consents.
                            ``(iii) Criteria for approval or denial.--
                        The Commission shall grant a registration under 
                        this paragraph if the Commission finds that the 
                        requirements of this title and the rules and 
                        regulations thereunder with respect to the 
                        applicant are satisfied. The Commission shall 
                        deny such registration if it does not make such 
                        finding.
            ``(2) Powers and restrictions.--In addition to the powers 
        and restrictions otherwise applicable to a national securities 
        exchange, 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 not extend unlisted trading privileges to 
                any venture security;
                    ``(C) may only, if the venture exchange is a 
                listing tier of another national securities exchange, 
                allow trading in securities that are registered under 
                section 12(b) on a national securities exchange other 
                than a venture exchange; and
                    ``(D) may, subject to the rule filing process under 
                section 19(b)--
                            ``(i) determine the increment to be used 
                        for quoting and trading venture securities on 
                        the exchange; and
                            ``(ii) choose to carry out periodic 
                        auctions for the sale of a venture security 
                        instead of providing continuous trading of the 
                        venture security.
            ``(3) 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 to the extent such securities are traded on a 
        venture exchange, if the issuer of such security is in 
        compliance with--
                    ``(A) all disclosure obligations of such section 
                3(b) and the regulations issued under such section; and
                    ``(B) ongoing disclosure obligations of the 
                applicable venture exchange that are similar to those 
                provided by an issuer under tier 2 of Regulation A (17 
                C.F.R. 230.251 et seq).
            ``(4) Venture securities traded on venture exchanges may 
        not trade on non-venture exchanges.--A venture security may not 
        be traded on a national securities exchange that is not a 
        venture exchange during any period in which the venture 
        security is being traded on a venture exchange.
            ``(5) Rule of construction.--Nothing in this subsection may 
        be construed as requiring transactions in venture securities to 
        be effected on a national securities exchange.
            ``(6) Commission authority to limit certain trading.--The 
        Commission may limit transactions in venture securities that 
        are not effected on a national securities exchange as 
        appropriate to promote efficiency, competition, capital 
        formation, and to protect investors.
            ``(7) Disclosures to investors.--The Commission shall issue 
        regulations to ensure that persons selling or purchasing 
        venture securities on a venture exchange are provided 
        disclosures sufficient to understand--
                    ``(A) the characteristics unique to venture 
                securities; and
                    ``(B) in the case of a venture exchange that is a 
                listing tier of another national securities exchange, 
                that the venture exchange is distinct from the other 
                national securities exchange.
            ``(8) 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 any 
                                registered initial public offering of 
                                any securities of the issuer; and
                                    ``(II) with a public float of less 
                                than or equal to the value of public 
                                float required to qualify as a large 
                                accelerated filer under section 
                                240.12b-2 of title 17, Code of Federal 
                                Regulations.
                            ``(ii) Treatment when public float exceeds 
                        threshold.--An issuer shall not cease to be an 
                        early-stage, growth company by reason of the 
                        public float of such issuer exceeding the 
                        threshold specified in clause (i)(II) until the 
                        later of the following:
                                    ``(I) The end of the period of 24 
                                consecutive months during which the 
                                public float of the 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) The end of the 1-year period 
                                following the end of the 24-month 
                                period described under subclause (I), 
                                if the issuer requests such 1-year 
                                extension from a venture exchange and 
                                the venture exchange elects to provide 
                                such extension.
                    ``(B) Public float.--With respect to an issuer, the 
                term `public float' means the aggregate worldwide 
                market value of the voting and non-voting common equity 
                of the issuer held by non-affiliates.
                    ``(C) Venture security.--
                            ``(i) In general.--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;
                                    ``(II) securities of an emerging 
                                growth company; or
                                    ``(III) securities registered under 
                                section 12(b) and listed on a venture 
                                exchange (or, prior to listing on a 
                                venture exchange, listed on a national 
                                securities exchange) where--
                                            ``(aa) the issuer of such 
                                        securities has a public float 
                                        less than or equal to the value 
                                        of public float required to 
                                        qualify as a large accelerated 
                                        filer under section 240.12b-2 
                                        of title 17, Code of Federal 
                                        Regulations; or
                                            ``(bb) the average daily 
                                        trade volume is 75,000 shares 
                                        or less during a continuous 60-
                                        day period.
                            ``(ii) Treatment when public float exceeds 
                        threshold.--Securities shall not cease to be 
                        venture securities by reason of the public 
                        float of the issuer of such securities 
                        exceeding the threshold specified in clause 
                        (i)(III)(aa) until the later of the following:
                                    ``(I) The end of the period of 24 
                                consecutive months beginning on the 
                                date--
                                            ``(aa) the public float of 
                                        such issuer exceeds 
                                        $2,000,000,000; and
                                            ``(bb) the average daily 
                                        trade volume of such securities 
                                        is 100,000 shares or more 
                                        during a continuous 60-day 
                                        period.
                                    ``(II) The end of the 1-year period 
                                following the end of the 24-month 
                                period described under subclause (I), 
                                if the issuer of such securities 
                                requests such 1-year extension from a 
                                venture exchange and the venture 
                                exchange elects to provide such 
                                extension.''.
    (b) Securities Act of 1933.--Section 18 of the Securities Act of 
1933 (15 U.S.C. 77r) is amended--
            (1) by redesignating subsection (d) as subsection (e); and
            (2) by inserting after subsection (c) the following:
    ``(d) Treatment of Securities Listed on a Venture Exchange.--
Notwithstanding subsection (b), a security is not a covered security 
pursuant to subsection (b)(1)(A) if the security is only listed, or 
authorized for listing, on a venture exchange (as defined under section 
6(m) 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. 626

115th CONGRESS

  2d Session

                               H. R. 5877

                          [Report No. 115-807]

_______________________________________________________________________

                                 A BILL

     To amend the Securities Exchange Act of 1934 to allow for the 
       registration of venture exchanges, and for other purposes.

_______________________________________________________________________

                             July 10, 2018

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