IB 

Union Calendar No. 626 

115TH CONGRESS 

2D SESSION H. R. 5877 

[Report No. 115–807] 

To amend the Securities Exchange Act of 1934 to allow for the registration 

of venture exchanges, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 18, 2018 

Mr. EMMER introduced the following bill; which was referred to the Committee 

on Financial Services 

JULY 10, 2018 

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 May 18, 2018] 


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A BILL 

To amend the Securities Exchange Act of 1934 to allow 

for the registration of venture exchanges, 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 person may register 

13 themself (and a national securities exchange may 

14 register a listing tier of such exchange) as a na15 tional securities exchange solely for the purposes 

16 of trading venture securities by filing an appli17 cation with the Commission pursuant to sub18 section (a) and the rules and regulations there19 under. 

20 ‘‘(B) PUBLICATION OF NOTICE.—The Com21 mission shall, upon the filing of an application 

22 under subparagraph (A), publish notice of such 

23 filing and afford interested persons an oppor24 tunity to submit written data, views, and argu25 ments concerning such application. 


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1 ‘‘(C) APPROVAL OR DENIAL.— 

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

3 the date of publication of a notice under 

4 subparagraph (B) (or within such longer 

5 period as to which the applicant consents), 

6 the Commission shall— 

7 ‘‘(I) by order grant such registra8 tion; or 

9 ‘‘(II) institute a denial proceeding 

10 under clause (ii) to determine whether 

11 registration should be denied. 

12 ‘‘(ii) DENIAL PROCEEDING.—A pro13 ceeding under clause (i)(II) shall include 

14 notice of the grounds for denial under con15 sideration and opportunity for hearing and 

16 shall be concluded within 180 days of the 

17 date of the publication of a notice under 

18 subparagraph (B). At the conclusion of such 

19 proceeding the Commission, by order, shall 

20 grant or deny such registration. The Com21 mission may extend the time for conclusion 

22 of such proceeding for up to 90 days if the 

23 Commission finds good cause for such exten24 sion and publishes the Commission’s reaVerDate Sep 11 2014 00:29 Jul 11, 2018 Jkt 079200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6203 E:\BILLS\H5877.RH H5877

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1 sons for so finding or for such longer period 

2 as to which the applicant consents. 

3 ‘‘(iii) CRITERIA FOR APPROVAL OR DE4 NIAL.—The Commission shall grant a reg5 istration under this paragraph if the Com6 mission finds that the requirements of this 

7 title and the rules and regulations there8 under with respect to the applicant are sat9 isfied. The Commission shall deny such reg10 istration if it does not make such finding. 

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

12 to the powers and restrictions otherwise applicable to 

13 a national securities exchange, a venture exchange— 

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 privi19 leges to any venture security; 

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

21 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; 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 used 

4 for quoting and trading venture securities 

5 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 the 

9 venture security. 

10 ‘‘(3) TREATMENT OF CERTAIN EXEMPTED SECU11 RITIES.—A security that is exempt from registration 

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

13 shall be exempt from section 12(a) of this title to the 

14 extent such securities are traded on a venture ex15 change, if the issuer of such security is in compliance 

16 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 Regu23 lation A (17 C.F.R. 230.251 et seq). 

24 ‘‘(4) VENTURE SECURITIES TRADED ON VENTURE

25 EXCHANGES MAY NOT TRADE ON NON-VENTURE EXVerDate Sep 11 2014 00:29 Jul 11, 2018 Jkt 079200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6203 E:\BILLS\H5877.RH H5877

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1 CHANGES.—A venture security may not be traded on 

2 a national securities exchange that is not a venture 

3 exchange during any period in which the venture se4 curity is being traded on a venture exchange. 

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

6 subsection may be construed as requiring transactions 

7 in venture securities to be effected on a national secu8 rities exchange. 

9 ‘‘(6) COMMISSION AUTHORITY TO LIMIT CERTAIN

10 TRADING.—The Commission may limit transactions 

11 in venture securities that are not effected on a na12 tional securities exchange as appropriate to promote 

13 efficiency, competition, capital formation, and to pro14 tect investors. 

15 ‘‘(7) DISCLOSURES TO INVESTORS.—The Com16 mission shall issue regulations to ensure that persons 

17 selling or purchasing venture securities on a venture 

18 exchange are provided disclosures sufficient to under19 stand— 

20 ‘‘(A) the characteristics unique to venture 

21 securities; and 

22 ‘‘(B) in the case of a venture exchange that 

23 is a listing tier of another national securities ex24 change, that the venture exchange is distinct 

25 from the other national securities exchange. 


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1 ‘‘(8) DEFINITIONS.—For purposes of this sub2 section: 

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

4 ‘‘(i) IN GENERAL.—The term ‘early5 stage, growth company’ means an issuer— 

6 ‘‘(I) that has not made any reg7 istered initial public offering of any se8 curities of the issuer; and 

9 ‘‘(II) with a public float of less 

10 than or equal to the value of public 

11 float required to qualify as a large ac12 celerated filer under section 240.12b–2 

13 of title 17, Code of Federal Regula14 tions. 

15 ‘‘(ii) TREATMENT WHEN PUBLIC FLOAT

16 EXCEEDS THRESHOLD.—An issuer shall not 

17 cease to be an early-stage, growth company 

18 by reason of the public float of such issuer 

19 exceeding the threshold specified in clause 

20 (i)(II) until the later of the following: 

21 ‘‘(I) The end of the period of 24 

22 consecutive months during which the 

23 public float of the issuer exceeds 

24 $2,000,000,000 (as such amount is in25 dexed for inflation every 5 years by the 


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1 Commission to reflect the change in the 

2 Consumer Price Index for All Urban 

3 Consumers published by the Bureau of 

4 Labor Statistics, setting the threshold 

5 to the nearest $1,000,000). 

6 ‘‘(II) The end of the 1-year period 

7 following the end of the 24-month pe8 riod described under subclause (I), if 

9 the issuer requests such 1-year exten10 sion from a venture exchange and the 

11 venture exchange elects to provide such 

12 extension. 

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

14 issuer, the term ‘public float’ means the aggre15 gate worldwide market value of the voting and 

16 non-voting common equity of the issuer held by 

17 non-affiliates. 

18 ‘‘(C) VENTURE SECURITY.— 

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

20 security’ means— 

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

22 growth company that are exempt from 

23 registration pursuant to section 3(b) of 

24 the Securities Act of 1933; 


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1 ‘‘(II) securities of an emerging 

2 growth company; or 

3 ‘‘(III) securities registered under 

4 section 12(b) and listed on a venture 

5 exchange (or, prior to listing on a ven6 ture exchange, listed on a national se7 curities exchange) where— 

8 ‘‘(aa) the issuer of such secu9 rities has a public float less than 

10 or equal to the value of public 

11 float required to qualify as a large 

12 accelerated filer under section 

13 240.12b–2 of title 17, Code of Fed14 eral Regulations; or 

15 ‘‘(bb) the average daily trade 

16 volume is 75,000 shares or less 

17 during a continuous 60-day pe18 riod. 

19 ‘‘(ii) TREATMENT WHEN PUBLIC FLOAT

20 EXCEEDS THRESHOLD.—Securities shall not 

21 cease to be venture securities by reason of 

22 the public float of the issuer of such securi23 ties exceeding the threshold specified in 

24 clause (i)(III)(aa) until the later of the fol25 lowing: 


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1 ‘‘(I) The end of the period of 24 

2 consecutive months beginning on the 

3 date— 

4 ‘‘(aa) the public float of such 

5 issuer exceeds $2,000,000,000; and 

6 ‘‘(bb) the average daily trade 

7 volume of such securities is 

8 100,000 shares or more during a 

9 continuous 60-day period. 

10 ‘‘(II) The end of the 1-year period 

11 following the end of the 24-month pe12 riod described under subclause (I), if 

13 the issuer of such securities requests 

14 such 1-year extension from a venture 

15 exchange and the venture exchange 

16 elects to provide such extension.’’. 

17 (b) SECURITIES ACT OF 1933.—Section 18 of the Secu18 rities Act of 1933 (15 U.S.C. 77r) is amended— 

19 (1) by redesignating subsection (d) as subsection 

20 (e); and 

21 (2) by inserting after subsection (c) the fol22 lowing: 

23 ‘‘(d) TREATMENT OF SECURITIES LISTED ON A VEN24 TURE EXCHANGE.—Notwithstanding subsection (b), a secu25 rity is not a covered security pursuant to subsection 


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1 (b)(1)(A) if the security is only listed, or authorized for list2 ing, on a venture exchange (as defined under section 6(m) 

3 of the Securities Exchange Act of 1934).’’. 

4 (c) SENSE OF CONGRESS.—It is the sense of the Con5 gress that the Securities and Exchange Commission 

6 should— 

7 (1) when necessary or appropriate in the public 

8 interest and consistent with the protection of inves9 tors, make use of the Commission’s general exemptive 

10 authority under section 36 of the Securities Exchange 

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

12 provisions added by this section; and 

13 (2) if the Commission determines appropriate, 

14 create an Office of Venture Exchanges within the 

15 Commission’s Division of Trading and Markets. 

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

17 or the amendments made by this section shall be construed 

18 to impair or limit the construction of the antifraud provi19 sions of the securities laws (as defined in section 3(a) of 

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

21 or the authority of the Securities and Exchange Commis22 sion under those provisions. 

23 (e) EFFECTIVE DATE FOR TIERS OF EXISTING NA24 TIONAL SECURITIES EXCHANGES.—In the case of a securi25 ties exchange that is registered as a national securities exVerDate Sep 11 2014 00:29 Jul 11, 2018 Jkt 079200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6203 E:\BILLS\H5877.RH H5877

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1 change under section 6 of the Securities Exchange Act of 

2 1934 (15 U.S.C. 78f) on the date of the enactment of this 

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

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

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

6 after such date of enactment. 


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Union Calendar No. 626 

115TH CONGRESS 

2D SESSION H. R. 5877 

[Report No. 115–807] 

A BILL 

To amend the Securities Exchange Act of 1934 to 

and for other purposes. allow for the registration of venture exchanges, 

JULY 10, 2018 

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


lotter on DSKBCFDHB2PROD with BILLS