[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 3723 Introduced in Senate (IS)]

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115th CONGRESS
  2d Session
                                S. 3723

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


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            December 6, 2018

  Mr. Kennedy introduced the following bill; which was read twice and 
    referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 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) Definitions.--In 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 not 
                                more than 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 any successor 
                                regulation.
                            ``(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 the issuer exceeding the 
                        threshold specified in clause (i)(II) until the 
                        later of--
                                    ``(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); and
                                    ``(II) the end of the 1-year period 
                                following the end of the 24-month 
                                period described in subclause (I), if 
                                the issuer requests the 1-year 
                                extension from a venture exchange and 
                                the venture exchange elects to provide 
                                that 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) a security of an early-stage, 
                                growth company that is exempt from 
                                registration pursuant to section 3(b) 
                                of the Securities Act of 1933 (15 
                                U.S.C. 77c(b));
                                    ``(II) a security of an emerging 
                                growth company; or
                                    ``(III) a security 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 the 
                                        security has a public float 
                                        that is not more than 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 any successor 
                                        regulation; or
                                            ``(bb) the average daily 
                                        trade volume is not more than 
                                        75,000 shares during a 
                                        continuous 60-day period.
                            ``(ii) Treatment when public float exceeds 
                        threshold.--A security shall not cease to be a 
                        venture security by reason of the public float 
                        of the issuer of the security exceeding the 
                        threshold specified in clause (i)(III)(aa) 
                        until the later of--
                                    ``(I) the end of the period of 24 
                                consecutive months beginning on the 
                                date on which--
                                            ``(aa) the public float of 
                                        the issuer exceeds 
                                        $2,000,000,000; and
                                            ``(bb) the average daily 
                                        trade volume of the security is 
                                        not less than 100,000 shares 
                                        during a continuous 60-day 
                                        period; and
                                    ``(II) the end of the 1-year period 
                                following the end of the 24-month 
                                period described under subclause (I), 
                                if the issuer of the security requests 
                                the 1-year extension from a venture 
                                exchange and the venture exchange 
                                elects to provide that extension.
            ``(2) Registration.--
                    ``(A) In general.--A person may register (and a 
                national securities exchange may register a listing 
                tier of the exchange) as a national securities exchange 
                solely for the purpose 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 the filing and afford interested 
                persons an opportunity to submit written data, views, 
                and arguments concerning the application.
                    ``(C) Approval or denial.--
                            ``(i) In general.--Not later than 90 days 
                        after the date on which a notice is published 
                        under subparagraph (B), or within such longer 
                        period as to which the applicant consents, the 
                        Commission shall--
                                    ``(I) by order grant the 
                                registration; or
                                    ``(II) institute a denial 
                                proceeding under clause (ii) to 
                                determine whether registration should 
                                be denied.
                            ``(ii) Denial proceeding.--
                                    ``(I) In general.--A proceeding 
                                under clause (i)(II) shall--
                                            ``(aa) include notice of 
                                        the grounds for denial under 
                                        consideration and opportunity 
                                        for hearing; and
                                            ``(bb) be concluded not 
                                        later than 180 days after the 
                                        date on which the notice is 
                                        published under subparagraph 
                                        (B).
                                    ``(II) Order.--At the conclusion of 
                                a proceeding under clause (i)(II), the 
                                Commission shall by order grant or deny 
                                the registration.
                                    ``(III) Extension.--The Commission 
                                may extend the time for conclusion of a 
                                proceeding under clause (i)(II) for a 
                                period of not more than 90 days if the 
                                Commission--
                                            ``(aa) finds good cause for 
                                        the extension; and
                                            ``(bb) publishes the 
                                        reasons for the finding 
                                        described in item (aa) or for 
                                        such longer period as to which 
                                        the applicant consents.
                            ``(iii) Criteria for approval or denial.--
                        The Commission shall--
                                    ``(I) grant a registration under 
                                this paragraph if the Commission finds 
                                that the requirements of this Act and 
                                the rules and regulations thereunder 
                                with respect to the applicant are 
                                satisfied; and
                                    ``(II) deny a registration under 
                                this paragraph if the Commission does 
                                not make the finding described in 
                                subclause (I).
            ``(3) 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.
            ``(4) Treatment of certain exempted securities.--A security 
        that is exempt from registration pursuant to section 3(b) of 
        the Securities Act of 1933 (15 U.S.C. 77c(b)) shall be exempt 
        from section 12(a) of this Act to the extent the security is 
        traded on a venture exchange, if the issuer of the 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, as described in 
                sections 230.251 through 230.263 of title 17, Code of 
                Federal Regulations, or any successor regulation.
            ``(5) 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.
            ``(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) Rule of construction.--Nothing in this subsection may 
        be construed as requiring transactions in venture securities to 
        be effected on a national securities exchange.''.
    (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 in 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 general exemptive authority of the Commission under section 
        36 of the Securities Exchange Act of 1934 (15 U.S.C. 78mm) with 
        respect to the provisions added by the amendments made by this 
        section; and
            (2) if the Commission determines appropriate, create an 
        Office of Venture Exchanges within the Division of Trading and 
        Markets of the Commission.
    (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 that 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.
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