I 

113TH CONGRESS 

1ST SESSION H. R. 1952 

To amend the Securities Exchange Act of 1934 to require the Securities 

and Exchange Commission to allow publicly traded companies with a 

certain sized public float to change their stocks’ tick sizes to increase 

liquidity by incentivizing capital commitment, research coverage, and 

brokerage support, thereby increasing the stocks’ liquidity and investor 

interest, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 13, 2013 

Mr. SCHWEIKERT introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL 

To amend the Securities Exchange Act of 1934 to require 

the Securities and Exchange Commission to allow publicly traded companies with a certain sized public float 

to change their stocks’ tick sizes to increase liquidity 

by incentivizing capital commitment, research coverage, 

and brokerage support, thereby increasing the stocks’ 

liquidity and investor interest, and for other purposes. 

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


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Spread Pricing Liquid3 ity Act of 2013’’. 

4 SEC. 2. TICK SIZE FOR CERTAIN ISSUERS. 

5 (a) IN GENERAL.—Section 11A(c)(6) of the Securi6 ties Exchange Act of 1934 (15 U.S.C. 78k–1(c)(6)) is 

7 amended to read as follows: 

8 ‘‘(6) TICK SIZE FOR CERTAIN ISSUERS.— 

9 ‘‘(A) SELECTION.— 

10 ‘‘(i) IN GENERAL.—The board of di11 rectors of an issuer with a public float of 

12 $500,000,000 or less (based on a rolling 

13 average over the course of the preceding 3- 

14 month period) and an average daily trad15 ing volume of less than 500,000 shares 

16 may select to have the securities of the 

17 issuer quoted and traded using an incre18 ment of either $0.05 or $0.10. 

19 ‘‘(ii) MANNER OF SELECTION.—A se20 lection under this subparagraph shall be 

21 made by informing the Commission and 

22 each exchange on which the securities of 

23 the issuer are quoted or traded. 

24 ‘‘(iii) LIMITATION ON CERTAIN

25 ISSUERS.—With respect to the average 


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1 trading price in the most recent 1-month 

2 period for the securities of an issuer— 

3 ‘‘(I) if such average price is less 

4 than $1, the issuer may not make the 

5 selection under this subparagraph; 

6 and 

7 ‘‘(II) if such average price is $1 

8 or more, but less than $2, the issuer 

9 may only select to have the securities 

10 of the issuer quoted and traded using 

11 an increment of $0.05. 

12 ‘‘(iv) CONSULTATION.—In making a 

13 selection under this subparagraph, the 

14 board of directors shall first consult with 

15 the issuer’s primary listing market. 

16 ‘‘(B) TRADING REQUIREMENTS.—If an 

17 issuer has made the selection under subpara18 graph (A)— 

19 ‘‘(i) all quotes of the securities of such 

20 issuer shall be done using only the incre21 ment selected; 

22 ‘‘(ii) an exchange on which the securi23 ties of such issuer are traded may not 

24 charge a fee for a person engaging in such 

25 a trade, unless such fee is uniform for all 


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1 trades and based solely on the number of 

2 shares traded; and 

3 ‘‘(iii) such selection shall not prevent 

4 the securities of the issuer being traded at 

5 increments other than the increment se6 lected. 

7 ‘‘(C) RIGHT TO OPT OUT OF SELECTION.— 

8 ‘‘(i) IN GENERAL.—An issuer that has 

9 made the selection under subparagraph (A) 

10 may choose to opt out of such selection at 

11 any time after the 6-month period begin12 ning on the date such selection was made. 

13 ‘‘(ii) MANNER OF OPT OUT.—An 

14 issuer that chooses to opt out of the selec15 tion under subparagraph (A) shall do so by 

16 informing the Commission and each ex17 change on which the securities of the 

18 issuer are quoted or traded. 

19 ‘‘(iii) FUTURE SELECTION.—Subject 

20 to subparagraph (D), an issuer that opts 

21 out of the selection under subparagraph 

22 (A) may make the selection under subpara23 graph (A) again at any time after the 1- 

24 year period beginning on the date of the 

25 opt out. 


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1 ‘‘(D) TREATMENT OF ISSUERS SUR2 PASSING CAP.—If the public float of an issuer 

3 that has made the selection under subpara4 graph (A) rises above $500,000,000 (based on 

5 a rolling average over the course of a 3-month 

6 period) or the average daily trading volume of 

7 the issuer raises above 500,000 then, after the 

8 end of the 3-month period beginning on the 

9 date of such occurrence— 

10 ‘‘(i) the issuer shall no longer be con11 sidered to have made the selection under 

12 subparagraph (A); and 

13 ‘‘(ii) the issuer shall be ineligible to 

14 make a selection under subparagraph (A) 

15 during the 2-year period beginning after 

16 the end of such 3-month period, regardless 

17 of the issuer’s public float or average daily 

18 trading volume. 

19 ‘‘(E) STUDY AND REPORT.— 

20 ‘‘(i) IN GENERAL.—Not later than the 

21 end of the 9-month period beginning on 

22 the date of the enactment of this para23 graph, and annually thereafter, the Com24 mission shall carry out a study of the 

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1 ments of $0.05 and $0.10 permitted by 

2 this paragraph, and the extent to which 

3 such a system is increasing liquidity by 

4 incentivizing capital commitment, research 

5 coverage, and brokerage support. 

6 ‘‘(ii) REPORT TO CONGRESS.—Upon 

7 the completion of each study described 

8 under clause (i), the Commission shall 

9 issue a report to the Congress containing 

10 all of the findings and determinations 

11 made in carrying out such study, along 

12 with any legislative recommendations the 

13 Commission may have. 

14 ‘‘(F) DEFINITIONS.—For purposes of this 

15 paragraph: 

16 ‘‘(i) AVERAGE DAILY TRADING VOL17 UME.—With respect to a security, the term 

18 ‘average daily trading volume’ means the 

19 average, over the previous 3-month period, 

20 of— 

21 ‘‘(I) the aggregate daily volume 

22 for bids made on the security within 

23 the price band; and 


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1 ‘‘(II) the aggregate daily volume 

2 for offers made on the security within 

3 the price band. 

4 ‘‘(ii) PRICE BAND.—With respect to a 

5 security, the term ‘price band’ means the 

6 range between the price that is 25 cents 

7 below the trading price of the security and 

8 the price that is 25 cents above the trading 

9 price of the security. 

10 ‘‘(iii) PUBLIC FLOAT.—The term 

11 ‘public float’ means the amount of equity 

12 of an issuer that is held by persons who 

13 are not affiliated with the issuer, deter14 mined by multiplying the number of shares 

15 of such stock by the price of one of such 

16 shares.’’. 

17 (b) EFFECTIVE DATE.— 

18 (1) IN GENERAL.—Section 11A(c)(6) of the Se19 curities Exchange Act of 1934, as amended by sub20 section (a), shall take effect— 

21 (A) with respect to an issuer with a public 

22 float of $100,000,000 or less (based on a roll23 ing average over the course of the preceding 3- 

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1 ume of less than 100,000, on the date of the 

2 enactment of this Act; 

3 (B) with respect to an issuer that is not 

4 described under subparagraph (A) and that has 

5 a public float of $250,000,000 or less (based on 

6 a rolling average over the course of the pre7 ceding 3-month period) and an average daily 

8 trading volume of less than 250,000, after the 

9 end of the 3-month period beginning on the 

10 date of the enactment of this Act; and 

11 (C) with respect to an issuer that is not 

12 described under subparagraph (A) or (B) and 

13 that has a public float of $500,000,000 or less 

14 (based on a rolling average over the course of 

15 the preceding 3-month period) and an average 

16 daily trading volume of less than 500,000, after 

17 the end of the 6-month period beginning on the 

18 date of the enactment of this Act. 

19 (2) DEFINITIONS.—For purposes of this sub20 section, the terms ‘‘average daily trading volume’’ 

21 and ‘‘public float’’ have the meaning given those 

22 terms, respectively, under section 11A(c)(6)(F) of 

23 the Securities Exchange Act of 1934. 

Æ 


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