Spread Pricing Liquidity Act of 2013

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Spread Pricing Liquidity Act of 
2013''.

SEC. 2. TICK SIZE FOR CERTAIN ISSUERS.

    (a) In General.--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:
            ``(6) Tick size for certain issuers.--
                    ``(A) Selection.--
                            ``(i) In general.--The board of directors 
                        of an issuer with a public float of 
                        $500,000,000 or less (based on a rolling 
                        average over the course of the preceding 3-
                        month period) and an average daily trading 
                        volume of less than 500,000 shares may select 
                        to have the securities of the issuer quoted and 
                        traded using an increment of either $0.05 or 
                        $0.10.
                            ``(ii) Manner of selection.--A selection 
                        under this subparagraph shall be made by 
                        informing the Commission and each exchange on 
                        which the securities of the issuer are quoted 
                        or traded.
                            ``(iii) Limitation on certain issuers.--
                        With respect to the average trading price in 
                        the most recent 1-month period for the 
                        securities of an issuer--
                                    ``(I) if such average price is less 
                                than $1, the issuer may not make the 
                                selection under this subparagraph; and
                                    ``(II) if such average price is $1 
                                or more, but less than $2, the issuer 
                                may only select to have the securities 
                                of the issuer quoted and traded using 
                                an increment of $0.05.
                            ``(iv) Consultation.--In making a selection 
                        under this subparagraph, the board of directors 
                        shall first consult with the issuer's primary 
                        listing market.
                    ``(B) Trading requirements.--If an issuer has made 
                the selection under subparagraph (A)--
                            ``(i) all quotes of the securities of such 
                        issuer shall be done using only the increment 
                        selected;
                            ``(ii) an exchange on which the securities 
                        of such issuer are traded may not charge a fee 
                        for a person engaging in such a trade, unless 
                        such fee is uniform for all trades and based 
                        solely on the number of shares traded; and
                            ``(iii) such selection shall not prevent 
                        the securities of the issuer being traded at 
                        increments other than the increment selected.
                    ``(C) Right to opt out of selection.--
                            ``(i) In general.--An issuer that has made 
                        the selection under subparagraph (A) may choose 
                        to opt out of such selection at any time after 
                        the 6-month period beginning on the date such 
                        selection was made.
                            ``(ii) Manner of opt out.--An issuer that 
                        chooses to opt out of the selection under 
                        subparagraph (A) shall do so by informing the 
                        Commission and each exchange on which the 
                        securities of the issuer are quoted or traded.
                            ``(iii) Future selection.--Subject to 
                        subparagraph (D), an issuer that opts out of 
                        the selection under subparagraph (A) may make 
                        the selection under subparagraph (A) again at 
                        any time after the 1-year period beginning on 
                        the date of the opt out.
                    ``(D) Treatment of issuers surpassing cap.--If the 
                public float of an issuer that has made the selection 
                under subparagraph (A) rises above $500,000,000 (based 
                on a rolling average over the course of a 3-month 
                period) or the average daily trading volume of the 
                issuer raises above 500,000 then, after the end of the 
                3-month period beginning on the date of such 
                occurrence--
                            ``(i) the issuer shall no longer be 
                        considered to have made the selection under 
                        subparagraph (A); and
                            ``(ii) the issuer shall be ineligible to 
                        make a selection under subparagraph (A) during 
                        the 2-year period beginning after the end of 
                        such 3-month period, regardless of the issuer's 
                        public float or average daily trading volume.
                    ``(E) Study and report.--
                            ``(i) In general.--Not later than the end 
                        of the 9-month period beginning on the date of 
                        the enactment of this paragraph, and annually 
                        thereafter, the Commission shall carry out a 
                        study of the quoting and trading of securities 
                        in increments of $0.05 and $0.10 permitted by 
                        this paragraph, and the extent to which such a 
                        system is increasing liquidity by incentivizing 
                        capital commitment, research coverage, and 
                        brokerage support.
                            ``(ii) Report to congress.--Upon the 
                        completion of each study described under clause 
                        (i), the Commission shall issue a report to the 
                        Congress containing all of the findings and 
                        determinations made in carrying out such study, 
                        along with any legislative recommendations the 
                        Commission may have.
                    ``(F) Definitions.--For purposes of this paragraph:
                            ``(i) Average daily trading volume.--With 
                        respect to a security, the term `average daily 
                        trading volume' means the average, over the 
                        previous 3-month period, of--
                                    ``(I) the aggregate daily volume 
                                for bids made on the security within 
                                the price band; and
                                    ``(II) the aggregate daily volume 
                                for offers made on the security within 
                                the price band.
                            ``(ii) Price band.--With respect to a 
                        security, the term `price band' means the range 
                        between the price that is 25 cents below the 
                        trading price of the security and the price 
                        that is 25 cents above the trading price of the 
                        security.
                            ``(iii) Public float.--The term `public 
                        float' means the amount of equity of an issuer 
                        that is held by persons who are not affiliated 
                        with the issuer, determined by multiplying the 
                        number of shares of such stock by the price of 
                        one of such shares.''.
    (b) Effective Date.--
            (1) In general.--Section 11A(c)(6) of the Securities 
        Exchange Act of 1934, as amended by subsection (a), shall take 
        effect--
                    (A) with respect to an issuer with a public float 
                of $100,000,000 or less (based on a rolling average 
                over the course of the preceding 3-month period) and an 
                average daily trading volume of less than 100,000, on 
                the date of the enactment of this Act;
                    (B) with respect to an issuer that is not described 
                under subparagraph (A) and that has a public float of 
                $250,000,000 or less (based on a rolling average over 
                the course of the preceding 3-month period) and an 
                average daily trading volume of less than 250,000, 
                after the end of the 3-month period beginning on the 
                date of the enactment of this Act; and
                    (C) with respect to an issuer that is not described 
                under subparagraph (A) or (B) and that has a public 
                float of $500,000,000 or less (based on a rolling 
                average over the course of the preceding 3-month 
                period) and an average daily trading volume of less 
                than 500,000, after the end of the 6-month period 
                beginning on the date of the enactment of this Act.
            (2) Definitions.--For purposes of this subsection, the 
        terms ``average daily trading volume'' and ``public float'' 
        have the meaning given those terms, respectively, under section 
        11A(c)(6)(F) of the Securities Exchange Act of 1934.

Summary: Spread Pricing Liquidity Act of 2013 - Amends the Securities Exchange Act of 1934 concerning the national market system for securities to authorize the board of directors of an issuer with a public float of $500 million or less to select to have the issuer's securities quoted and traded using an increment (tick) of either $0.05 or $0.10. Prohibits selection of the $0.05 tick unless the average trading price in the most recent 1-month period for the securities of an issuer is between $1 and $2. Limits the tick selection to $0.05 for the issuer of any such security. Prescribes trading requirements. Permits a issuer that has made the selection under this Act to choose to opt out at any time after the six-month period beginning on the date the selection was made. States that, if the public float of an issuer that has made such a tick selection rises above $500 million , or its average daily trading volume rises above $500 million, then after the end of the 3-month period beginning on the date of such occurrence the issuer: (1) shall no longer be considered to have made the tick selection. And (2) shall be ineligible to make such a tick selection for 2 years after such 3-month period. Directs the Securities and Exchange Commission (SEC) to study the quoting and trading of securities in increments of $0.05 and $0.10, and the extent to which such system increases liquidity by incentivizing capital commitment, research coverage, and brokerage support.