Main Street Growth Act

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. 1. Short title This Act may be cited as the Main Street Growth Act 2. Venture exchanges (a) Securities Exchange Act of 1934 Section 6 of the Securities Exchange Act of 1934 ( 15 U.S.C. 78f (m) Venture exchange (1) Registration (A) In general A national securities exchange may elect to be treated (or for a listing tier of such exchange to be treated) as a venture exchange by notifying the Commission of such election, either at the time the exchange applies to be registered as a national securities exchange or after registering as a national securities exchange. (B) Determination time period With respect to a securities exchange electing to be treated (or for a listing tier of such exchange to be treated) as a venture exchange— (i) at the time the exchange applies to be registered as a national securities exchange, such application and election shall be deemed to have been approved by the Commission unless the Commission denies such application before the end of the 6-month period beginning on the date the Commission received such application; and (ii) after registering as a national securities exchange, such election shall be deemed to have been approved by the Commission unless the Commission denies such approval before the end of the 6-month period beginning on the date the Commission received notification of such election. (2) Powers and restrictions A venture exchange— (A) may only constitute, maintain, or provide a market place or facilities for bringing together purchasers and sellers of venture securities; (B) may determine the increment to be used for quoting and trading venture securities on the exchange; (C) shall disseminate last sale and quotation information on terms that are fair and reasonable and not unreasonably discriminatory; (D) may choose to carry out periodic auctions for the sale of a venture security instead of providing continuous trading of the venture security; and (E) may not extend unlisted trading privileges to any venture security. (3) Exemptions from certain national security exchange regulations A venture exchange shall not be required to— (A) comply with any of sections 242.600 through 242.612 of title 17, Code of Federal Regulations; (B) comply with any of sections 242.300 through 242.303 of title 17, Code of Federal Regulations; (C) submit any data to a securities information processor; or (D) use decimal pricing. (4) Treatment of certain exempted securities A security that is exempt from registration pursuant to section 3(b) of the Securities Act of 1933 shall be exempt from section 12(a) of this title with respect to the trading of such security on a venture exchange, if the issuer of such security is in compliance with all disclosure obligations of such section 3(b) and the regulations issued under such section. (5) Definitions For purposes of this subsection: (A) Early-stage, growth company (i) In general The term early-stage, growth company (I) that has not made an initial public offering of any securities of the issuer; and (II) with a market capitalization of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest $1,000,000) or less. (ii) Treatment when market capitalization exceeds threshold (I) In general In the case of an issuer that is an early-stage, growth company the securities of which are traded on a venture exchange, such issuer shall not cease to be an early-stage, growth company by reason of the market capitalization of such issuer exceeding the threshold specified in clause (i)(II) until the end of the period of 24 consecutive months during which the market capitalization of such issuer exceeds $2,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest $1,000,000). (II) Exemptions If an issuer would cease to be an early-stage, growth company under subclause (I), the venture exchange may, at the request of the issuer, exempt the issuer from the market capitalization requirements of this subparagraph for the 1-year period that begins on the day after the end of the 24-month period described in such subclause. The venture exchange may, at the request of the issuer, extend the exemption for 1 additional year. (B) Venture security The term venture security (i) securities of an early-stage, growth company that are exempt from registration pursuant to section 3(b) of the Securities Act of 1933; and (ii) securities of an emerging growth company. . (b) Securities Act of 1933 Section 18(b)(1) of the Securities Act of 1933 ( 15 U.S.C. 77r(b)(1) (1) in subparagraph (B), by striking or (2) in subparagraph (C), by striking the period and inserting ; or (3) by adding at the end the following: (D) a venture security, as defined under section 6(m)(5) of the Securities Exchange Act of 1934. . (c) Sense of Congress It is the sense of the Congress that the Securities and Exchange Commission should— (1) when necessary or appropriate in the public interest and consistent with the protection of investors, make use of the Commission’s general exemptive authority under section 36 of the Securities Exchange Act of 1934 ( 15 U.S.C. 78mm (2) if the Commission determines appropriate, create an Office of Venture Exchanges within the Commission’s Division of Trading and Markets. (d) Rule of construction Nothing in this section or the amendments made by this section shall be construed to impair or limit the construction of the antifraud provisions of the securities laws (as defined in section 3(a) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78c(a) (e) Effective date for tiers of existing national securities exchanges In the case of a securities exchange that is registered as a national securities exchange under section 6 of the Securities Exchange Act of 1934 ( 15 U.S.C. 78f 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

Summary: Main Street Growth Act (Sec. 2) This bill amends the Securities Exchange Act of 1934 to permit a national securities exchange, for itself or for one of its listing tiers, to elect treatment as a venture exchange by notifying the Securities and Exchange Commission (SEC) of such an election either at the time it applies for registration or after registering as a national securities exchange. Unless the SEC denies the registration application within six months after its receipt, the application and election shall be deemed to have received SEC approval. Similarly, after a national securities exchange registers, its election to be treated as a venture exchange shall be deemed approved unless the SEC denies approval within six months after receiving notice of the election. The bill subjects a venture exchange to certain restrictions, including that it may: (1) only constitute, maintain, or provide a market place or facilities for bringing together purchasers and sellers of venture securities, and (2) not extend unlisted trading privileges to any venture security. Venture securities are securities of: an early-stage, growth company exempt from registration under the Securities Act of 1933; and an emerging growth company. The bill exempts a venture exchange from compliance with: (1) specified National Market System and Alternative Trading System rules, (2) the requirement to submit data to a securities information processor, or (3) mandatory use of decimal pricing. With respect to trading on a venture exchange, the bill also exempts from registration under the Securities Exchange Act of 1934 certain securities exempted from registration under the Securities Act of 1933 if the issuer is in compliance with all disclosure obligations and regulations under the latter Act. The bill defines an issuer with a market capitalization of $1 million or less, and which has not made an initial public offering of any securities, as an "early-stage growth company." An early-stage, growth company whose securities are traded on a venture exchange shall not cease to be an early-stage, growth company by reason of a market capitalization exceeding the $1 million threshold until the end of 24 consecutive months during which that market capitalization exceeds $2 million (indexed for inflation). If an issuer would cease to be an early-stage, growth company for exceeding the market capitalization threshold, a venture exchange may, upon the issuer's request, exempt the issuer from such capitalization requirements for the 24-month period referred to, and extend that exemption for an additional year as well. The Securities Act of 1933 is amended to exempt venture securities from state and local government regulation. The bill expresses the sense of Congress that the SEC should: make use of its general exemptive authority regarding certain elements of this bill; and create an Office of Venture Exchanges, if appropriate, within the SEC Division of Trading and Markets.