IIB 

115TH CONGRESS 

2D SESSION H. R. 5877 

IN THE SENATE OF THE UNITED STATES 

JULY 11, 2018 

Received; read twice and referred to the Committee on Banking, Housing, and 

Urban Affairs 

AN ACT 

To amend the Securities Exchange Act of 1934 to allow 

for the registration of venture exchanges, 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 ‘‘Main Street Growth 

3 Act’’. 

4 SEC. 2. VENTURE EXCHANGES. 

5 (a) SECURITIES EXCHANGE ACT OF 1934.—Section 

6 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f) 

7 is amended by adding at the end the following: 

8 ‘‘(m) VENTURE EXCHANGE.— 

9 ‘‘(1) REGISTRATION.— 

10 ‘‘(A) IN GENERAL.—A person may register 

11 themself (and a national securities exchange 

12 may register a listing tier of such exchange) as 

13 a national securities exchange solely for the 

14 purposes of trading venture securities by filing 

15 an application with the Commission pursuant to 

16 subsection (a) and the rules and regulations 

17 thereunder. 

18 ‘‘(B) PUBLICATION OF NOTICE.—The 

19 Commission shall, upon the filing of an applica20 tion under subparagraph (A), publish notice of 

21 such filing and afford interested persons an op22 portunity to submit written data, views, and ar23 guments concerning such application. 

24 ‘‘(C) APPROVAL OR DENIAL.— 

25 ‘‘(i) IN GENERAL.—Within 90 days of 

26 the date of publication of a notice under 


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1 subparagraph (B) (or within such longer 

2 period as to which the applicant consents), 

3 the Commission shall— 

4 ‘‘(I) by order grant such registra5 tion; or 

6 ‘‘(II) institute a denial pro7 ceeding under clause (ii) to determine 

8 whether registration should be denied. 

9 ‘‘(ii) DENIAL PROCEEDING.—A pro10 ceeding under clause (i)(II) shall include 

11 notice of the grounds for denial under con12 sideration and opportunity for hearing and 

13 shall be concluded within 180 days of the 

14 date of the publication of a notice under 

15 subparagraph (B). At the conclusion of 

16 such proceeding the Commission, by order, 

17 shall grant or deny such registration. The 

18 Commission may extend the time for con19 clusion of such proceeding for up to 90 

20 days if the Commission finds good cause 

21 for such extension and publishes the Com22 mission’s reasons for so finding or for such 

23 longer period as to which the applicant 

24 consents. 


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1 ‘‘(iii) CRITERIA FOR APPROVAL OR

2 DENIAL.—The Commission shall grant a 

3 registration under this paragraph if the 

4 Commission finds that the requirements of 

5 this title and the rules and regulations 

6 thereunder with respect to the applicant 

7 are satisfied. The Commission shall deny 

8 such registration if it does not make such 

9 finding. 

10 ‘‘(2) POWERS AND RESTRICTIONS.—In addition 

11 to the powers and restrictions otherwise applicable 

12 to a national securities exchange, a venture ex13 change— 

14 ‘‘(A) may only constitute, maintain, or pro15 vide a market place or facilities for bringing to16 gether purchasers and sellers of venture securi17 ties; 

18 ‘‘(B) may not extend unlisted trading 

19 privileges to any venture security; 

20 ‘‘(C) may only, if the venture exchange is 

21 a listing tier of another national securities ex22 change, allow trading in securities that are reg23 istered under section 12(b) on a national securi24 ties exchange other than a venture exchange; 

25 and 


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1 ‘‘(D) may, subject to the rule filing process 

2 under section 19(b)— 

3 ‘‘(i) determine the increment to be 

4 used for quoting and trading venture secu5 rities on the exchange; and 

6 ‘‘(ii) choose to carry out periodic auc7 tions for the sale of a venture security in8 stead of providing continuous trading of 

9 the venture security. 

10 ‘‘(3) TREATMENT OF CERTAIN EXEMPTED SE11 CURITIES.—A security that is exempt from registra12 tion pursuant to section 3(b) of the Securities Act 

13 of 1933 shall be exempt from section 12(a) of this 

14 title to the extent such securities are traded on a 

15 venture exchange, if the issuer of such security is in 

16 compliance with— 

17 ‘‘(A) all disclosure obligations of such sec18 tion 3(b) and the regulations issued under such 

19 section; and 

20 ‘‘(B) ongoing disclosure obligations of the 

21 applicable venture exchange that are similar to 

22 those provided by an issuer under tier 2 of Reg23 ulation A (17 CFR 230.251 et seq.). 

24 ‘‘(4) VENTURE SECURITIES TRADED ON VEN25 TURE EXCHANGES MAY NOT TRADE ON NON-VENVerDate Sep 11 2014 22:57 Jul 11, 2018 Jkt 079200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H5877.RFS H5877

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1 TURE EXCHANGES.—A venture security may not be 

2 traded on a national securities exchange that is not 

3 a venture exchange during any period in which the 

4 venture security is being traded on a venture ex5 change. 

6 ‘‘(5) RULE OF CONSTRUCTION.—Nothing in 

7 this subsection may be construed as requiring trans8 actions in venture securities to be effected on a na9 tional securities exchange. 

10 ‘‘(6) COMMISSION AUTHORITY TO LIMIT CER11 TAIN TRADING.—The Commission may limit trans12 actions in venture securities that are not effected on 

13 a national securities exchange as appropriate to pro14 mote efficiency, competition, capital formation, and 

15 to protect investors. 

16 ‘‘(7) DISCLOSURES TO INVESTORS.—The Com17 mission shall issue regulations to ensure that per18 sons selling or purchasing venture securities on a 

19 venture exchange are provided disclosures sufficient 

20 to understand— 

21 ‘‘(A) the characteristics unique to venture 

22 securities; and 

23 ‘‘(B) in the case of a venture exchange 

24 that is a listing tier of another national securi25 ties exchange, that the venture exchange is disVerDate Sep 11 2014 22:57 Jul 11, 2018 Jkt 079200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H5877.RFS H5877

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1 tinct from the other national securities ex2 change. 

3 ‘‘(8) DEFINITIONS.—For purposes of this sub4 section: 

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

6 ‘‘(i) IN GENERAL.—The term ‘early7 stage, growth company’ means an issuer— 

8 ‘‘(I) that has not made any reg9 istered initial public offering of any 

10 securities of the issuer; and 

11 ‘‘(II) with a public float of less 

12 than or equal to the value of public 

13 float required to qualify as a large ac14 celerated filer under section 240.12b– 

15 2 of title 17, Code of Federal Regula16 tions. 

17 ‘‘(ii) TREATMENT WHEN PUBLIC

18 FLOAT EXCEEDS THRESHOLD.—An issuer 

19 shall not cease to be an early-stage, growth 

20 company by reason of the public float of 

21 such issuer exceeding the threshold speci22 fied in clause (i)(II) until the later of the 

23 following: 

24 ‘‘(I) The end of the period of 24 

25 consecutive months during which the 


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1 public float of the issuer exceeds 

2 $2,000,000,000 (as such amount is 

3 indexed for inflation every 5 years by 

4 the Commission to reflect the change 

5 in the Consumer Price Index for All 

6 Urban Consumers published by the 

7 Bureau of Labor Statistics, setting 

8 the threshold to the nearest 

9 $1,000,000). 

10 ‘‘(II) The end of the 1-year pe11 riod following the end of the 24- 

12 month period described under sub13 clause (I), if the issuer requests such 

14 1-year extension from a venture ex15 change and the venture exchange 

16 elects to provide such extension. 

17 ‘‘(B) PUBLIC FLOAT.—With respect to an 

18 issuer, the term ‘public float’ means the aggre19 gate worldwide market value of the voting and 

20 non-voting common equity of the issuer held by 

21 non-affiliates. 

22 ‘‘(C) VENTURE SECURITY.— 

23 ‘‘(i) IN GENERAL.—The term ‘venture 

24 security’ means— 


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1 ‘‘(I) securities of an early-stage, 

2 growth company that are exempt from 

3 registration pursuant to section 3(b) 

4 of the Securities Act of 1933; 

5 ‘‘(II) securities of an emerging 

6 growth company; or 

7 ‘‘(III) securities registered under 

8 section 12(b) and listed on a venture 

9 exchange (or, prior to listing on a ven10 ture exchange, listed on a national se11 curities exchange) where— 

12 ‘‘(aa) the issuer of such se13 curities has a public float less 

14 than or equal to the value of pub15 lic float required to qualify as a 

16 large accelerated filer under sec17 tion 240.12b–2 of title 17, Code 

18 of Federal Regulations; or 

19 ‘‘(bb) the average daily 

20 trade volume is 75,000 shares or 

21 less during a continuous 60-day 

22 period. 

23 ‘‘(ii) TREATMENT WHEN PUBLIC

24 FLOAT EXCEEDS THRESHOLD.—Securities 

25 shall not cease to be venture securities by 


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1 reason of the public float of the issuer of 

2 such securities exceeding the threshold 

3 specified in clause (i)(III)(aa) until the 

4 later of the following: 

5 ‘‘(I) The end of the period of 24 

6 consecutive months beginning on the 

7 date— 

8 ‘‘(aa) the public float of 

9 such issuer exceeds 

10 $2,000,000,000; and 

11 ‘‘(bb) the average daily 

12 trade volume of such securities is 

13 100,000 shares or more during a 

14 continuous 60-day period. 

15 ‘‘(II) The end of the 1-year pe16 riod following the end of the 24- 

17 month period described under sub18 clause (I), if the issuer of such securi19 ties requests such 1-year extension 

20 from a venture exchange and the ven21 ture exchange elects to provide such 

22 extension.’’. 

23 (b) SECURITIES ACT OF 1933.—Section 18 of the Se24 curities Act of 1933 (15 U.S.C. 77r) is amended— 


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1 (1) by redesignating subsection (d) as sub2 section (e); and 

3 (2) by inserting after subsection (c) the fol4 lowing: 

5 ‘‘(d) TREATMENT OF SECURITIES LISTED ON A VEN6 TURE EXCHANGE.—Notwithstanding subsection (b), a se7 curity is not a covered security pursuant to subsection 

8 (b)(1)(A) if the security is only listed, or authorized for 

9 listing, on a venture exchange (as defined under section 

10 6(m) of the Securities Exchange Act of 1934).’’. 

11 (c) SENSE OF CONGRESS.—It is the sense of the Con12 gress that the Securities and Exchange Commission 

13 should— 

14 (1) when necessary or appropriate in the public 

15 interest and consistent with the protection of inves16 tors, make use of the Commission’s general exemp17 tive authority under section 36 of the Securities Ex18 change Act of 1934 (15 U.S.C. 78mm) with respect 

19 to the provisions added by this section; and 

20 (2) if the Commission determines appropriate, 

21 create an Office of Venture Exchanges within the 

22 Commission’s Division of Trading and Markets. 

23 (d) RULE OF CONSTRUCTION.—Nothing in this sec24 tion or the amendments made by this section shall be con25 strued to impair or limit the construction of the antifraud 


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1 provisions of the securities laws (as defined in section 3(a) 

2 of the Securities Exchange Act of 1934 (15 U.S.C. 

3 78c(a))) or the authority of the Securities and Exchange 

4 Commission under those provisions. 

5 (e) EFFECTIVE DATE FOR TIERS OF EXISTING NA6 TIONAL SECURITIES EXCHANGES.—In the case of a secu7 rities exchange that is registered as a national securities 

8 exchange under section 6 of the Securities Exchange Act 

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

10 this Act, any election for a listing tier of such exchange 

11 to be treated as a venture exchange under subsection (m) 

12 of such section shall not take effect before the date that 

13 is 180 days after such date of enactment. 

Passed the House of Representatives July 10, 2018. 

Attest: KAREN L. HAAS, 

Clerk. 


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