IB 

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] 


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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. 


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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Main Street Growth 

5 Act’’. 

6 SEC. 2. VENTURE EXCHANGES. 

7 (a) SECURITIES EXCHANGE ACT OF 1934.—Section 6 

8 of the Securities Exchange Act of 1934 (15 U.S.C. 78f) is 

9 amended by adding at the end the following: 

10 ‘‘(m) VENTURE EXCHANGE.— 

11 ‘‘(1) REGISTRATION.— 

12 ‘‘(A) IN GENERAL.—A national securities 

13 exchange may elect to be treated (or for a listing 

14 tier of such exchange to be treated) as a venture 

15 exchange by notifying the Commission of such 

16 election, either at the time the exchange applies 

17 to be registered as a national securities exchange 

18 or after registering as a national securities ex19 change. 

20 ‘‘(B) DETERMINATION TIME PERIOD.—With 

21 respect to a securities exchange electing to be 

22 treated (or for a listing tier of such exchange to 

23 be treated) as a venture exchange— 

24 ‘‘(i) at the time the exchange applies to 

25 be registered as a national securities exVerDate Sep 11 2014 21:27 Jun 08, 2016 Jkt 059200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6203 E:\BILLS\H4638.RH H4638

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1 change, such application and election shall 

2 be deemed to have been approved by the 

3 Commission unless the Commission denies 

4 such application before the end of the 6- 

5 month period beginning on the date the 

6 Commission received such application; and 

7 ‘‘(ii) after registering as a national se8 curities exchange, such election shall be 

9 deemed to have been approved by the Com10 mission unless the Commission denies such 

11 approval before the end of the 6-month pe12 riod beginning on the date the Commission 

13 received notification of such election. 

14 ‘‘(2) POWERS AND RESTRICTIONS.—A venture 

15 exchange— 

16 ‘‘(A) may only constitute, maintain, or pro17 vide a market place or facilities for bringing to18 gether purchasers and sellers of venture securi19 ties; 

20 ‘‘(B) may determine the increment to be 

21 used for quoting and trading venture securities 

22 on the exchange; 

23 ‘‘(C) shall disseminate last sale and 

24 quotation information on terms that are fair 


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1 and reasonable and not unreasonably discrimi2 natory; 

3 ‘‘(D) may choose to carry out periodic auc4 tions for the sale of a venture security instead of 

5 providing continuous trading of the venture se6 curity; and 

7 ‘‘(E) may not extend unlisted trading privi8 leges to any venture security. 

9 ‘‘(3) EXEMPTIONS FROM CERTAIN NATIONAL SE10 CURITY EXCHANGE REGULATIONS.—A venture ex11 change shall not be required to— 

12 ‘‘(A) comply with any of sections 242.600 

13 through 242.612 of title 17, Code of Federal Reg14 ulations; 

15 ‘‘(B) comply with any of sections 242.300 

16 through 242.303 of title 17, Code of Federal Reg17 ulations; 

18 ‘‘(C) submit any data to a securities infor19 mation processor; or 

20 ‘‘(D) use decimal pricing. 

21 ‘‘(4) TREATMENT OF CERTAIN EXEMPTED SECU22 RITIES.—A security that is exempt from registration 

23 pursuant to section 3(b) of the Securities Act of 1933 

24 shall be exempt from section 12(a) of this title with 

25 respect to the trading of such security on a venture 


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1 exchange, if the issuer of such security is in compli2 ance with all disclosure obligations of such section 

3 3(b) and the regulations issued under such section. 

4 ‘‘(5) DEFINITIONS.—For purposes of this sub5 section: 

6 ‘‘(A) EARLY-STAGE, GROWTH COMPANY.— 

7 ‘‘(i) IN GENERAL.—The term ‘early8 stage, growth company’ means an issuer— 

9 ‘‘(I) that has not made an initial 

10 public offering of any securities of the 

11 issuer; and 

12 ‘‘(II) with a market capitalization 

13 of $1,000,000,000 (as such amount is 

14 indexed for inflation every 5 years by 

15 the Commission to reflect the change in 

16 the Consumer Price Index for All 

17 Urban Consumers published by the Bu18 reau of Labor Statistics, setting the 

19 threshold to the nearest $1,000,000) or 

20 less. 

21 ‘‘(ii) TREATMENT WHEN MARKET CAP22 ITALIZATION EXCEEDS THRESHOLD.— 

23 ‘‘(I) IN GENERAL.—In the case of 

24 an issuer that is an early-stage, growth 

25 company the securities of which are 


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1 traded on a venture exchange, such 

2 issuer shall not cease to be an early3 stage, growth company by reason of the 

4 market capitalization of such issuer ex5 ceeding the threshold specified in clause 

6 (i)(II) until the end of the period of 24 

7 consecutive months during which the 

8 market capitalization of such issuer ex9 ceeds $2,000,000,000 (as such amount 

10 is indexed for inflation every 5 years 

11 by the Commission to reflect the change 

12 in the Consumer Price Index for All 

13 Urban Consumers published by the Bu14 reau of Labor Statistics, setting the 

15 threshold to the nearest $1,000,000). 

16 ‘‘(II) EXEMPTIONS.—If an issuer 

17 would cease to be an early-stage, 

18 growth company under subclause (I), 

19 the venture exchange may, at the re20 quest of the issuer, exempt the issuer 

21 from the market capitalization require22 ments of this subparagraph for the 1- 

23 year period that begins on the day 

24 after the end of the 24-month period 

25 described in such subclause. The venVerDate Sep 11 2014 21:27 Jun 08, 2016 Jkt 059200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6203 E:\BILLS\H4638.RH H4638

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1 ture exchange may, at the request of 

2 the issuer, extend the exemption for 1 

3 additional year. 

4 ‘‘(B) VENTURE SECURITY.—The term ‘ven5 ture security’ means— 

6 ‘‘(i) securities of an early-stage, growth 

7 company that are exempt from registration 

8 pursuant to section 3(b) of the Securities 

9 Act of 1933; and 

10 ‘‘(ii) securities of an emerging growth 

11 company.’’. 

12 (b) SECURITIES ACT OF 1933.—Section 18(b)(1) of the 

13 Securities Act of 1933 (15 U.S.C. 77r(b)(1)) is amended— 

14 (1) in subparagraph (B), by striking ‘‘or’’ at the 

15 end; 

16 (2) in subparagraph (C), by striking the period 

17 and inserting ‘‘; or’’; and 

18 (3) by adding at the end the following: 

19 ‘‘(D) a venture security, as defined under 

20 section 6(m)(5) of the Securities Exchange Act of 

21 1934.’’. 

22 (c) SENSE OF CONGRESS.—It is the sense of the Con23 gress that the Securities and Exchange Commission 

24 should— 


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1 (1) when necessary or appropriate in the public 

2 interest and consistent with the protection of inves3 tors, make use of the Commission’s general exemptive 

4 authority under section 36 of the Securities Exchange 

5 Act of 1934 (15 U.S.C. 78mm) with respect to the 

6 provisions added by this section; and 

7 (2) if the Commission determines appropriate, 

8 create an Office of Venture Exchanges within the 

9 Commission’s Division of Trading and Markets. 

10 (d) RULE OF CONSTRUCTION.—Nothing in this section 

11 or the amendments made by this section shall be construed 

12 to impair or limit the construction of the antifraud provi13 sions of the securities laws (as defined in section 3(a) of 

14 the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))) 

15 or the authority of the Securities and Exchange Commis16 sion under those provisions. 

17 (e) EFFECTIVE DATE FOR TIERS OF EXISTING NA18 TIONAL SECURITIES EXCHANGES.—In the case of a securi19 ties exchange that is registered as a national securities ex20 change under section 6 of the Securities Exchange Act of 

21 1934 (15 U.S.C. 78f) on the date of the enactment of this 

22 Act, any election for a listing tier of such exchange to be 

23 treated as a venture exchange under subsection (m) of such 

24 section shall not take effect before the date that is 180 days 

25 after such date of enactment. 


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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 

other purposes. promote liquidity of venture securities, and for allow for the creation of venture exchanges to 

JUNE 8, 2016 

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


sradovich on DSK3TPTVN1PROD with BILLS