IB 
Union Calendar No. 252 
113TH CONGRESS 
2D SESSION 
H. R. 3448 
[Report No. 113–342] 
To amend the Securities Exchange Act of 1934 to provide for an optional 
pilot program allowing certain emerging growth companies to increase 
the tick sizes of their stocks. 
IN THE HOUSE OF REPRESENTATIVES 
NOVEMBER 12, 2013 
Mr. DUFFY (for himself and Mr. CARNEY) introduced the following bill; which 
was referred to the Committee on Financial Services 
FEBRUARY 5, 2014 
Additional sponsor: Mr. FINCHER 
FEBRUARY 5, 2014 
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 November 12, 2013] 
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A BILL 
To amend the Securities Exchange Act of 1934 to provide 
for an optional pilot program allowing certain emerging 
growth companies to increase the tick sizes of their 
stocks. 
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Small Cap Liquidity 
Reform Act of 2013’’. 
SEC. 2. LIQUIDITY PILOT PROGRAM FOR SECURITIES OF 
CERTAIN EMERGING GROWTH COMPANIES. 
(a) IN GENERAL.—Section 11A(c)(6) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78k–1(c)(6)) is amended 
to read as follows: 
‘‘(6) LIQUIDITY PILOT PROGRAM FOR SECURITIES OF 
CERTAIN EMERGING GROWTH COMPANIES.— 
‘‘(A) QUOTING INCREMENT.—Beginning on the 
date that is 90 days after the date of the enactment 
of the Small Cap Liquidity Reform Act of 2013, the 
securities of a covered emerging growth company shall 
be quoted using— 
‘‘(i) a minimum increment of $0.05; or 
‘‘(ii) if, not later than 60 days after such 
date of enactment, the company so elects in the 
manner described in subparagraph (D)— 
‘‘(I) a minimum increment of $0.10; or 
‘‘(II) the increment at which such secu-
rities would be quoted without regard to the 
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minimum increments established under this 
paragraph. 
‘‘(B) TRADING
INCREMENT.—In the case of a 
covered emerging growth company the securities of 
which are quoted at a minimum increment of $0.05 
or $0.10 under this paragraph, the Commission shall 
determine the increment at which the securities of 
such company are traded. 
‘‘(C) FUTURE RIGHT TO OPT OUT OR CHANGE 
MINIMUM INCREMENT.— 
‘‘(i) IN GENERAL.—At any time beginning 
on the date that is 90 days after the date of the 
enactment of the Small Cap Liquidity Reform 
Act of 2013, a covered emerging growth company 
the securities of which are quoted at a minimum 
increment of $0.05 or $0.10 under this para-
graph may elect in the manner described in sub-
paragraph (D)— 
‘‘(I) for the securities of such company 
to be quoted at the increment at which such 
securities would be quoted without regard to 
the minimum increments established under 
this paragraph; or 
‘‘(II) to change the minimum incre-
ment at which the securities of such com-
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pany are quoted from $0.05 to $0.10 or 
from $0.10 to $0.05. 
‘‘(ii) WHEN
ELECTION
EFFECTIVE.—An 
election under this subparagraph shall take effect 
on the date that is 30 days after such election is 
made. 
‘‘(iii) SINGLE ELECTION TO CHANGE MIN-
IMUM INCREMENT.—A covered emerging growth 
company may not make more than one election 
under clause (i)(II). 
‘‘(D) MANNER OF ELECTION.— 
‘‘(i) IN GENERAL.—An election is made in 
the manner described in this subparagraph by 
informing the Commission of such election. 
‘‘(ii) NOTIFICATION
OF
EXCHANGES
AND 
OTHER TRADING VENUES.—Upon being informed 
of an election under clause (i), the Commission 
shall notify each exchange or other trading venue 
where the securities of the covered emerging 
growth company are quoted or traded. 
‘‘(E) ISSUERS CEASING TO BE COVERED EMERG-
ING GROWTH COMPANIES.— 
‘‘(i) IN GENERAL.—If an issuer the securi-
ties of which are quoted at a minimum incre-
ment of $0.05 or $0.10 under this paragraph 
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ceases to be a covered emerging growth company, 
the securities of such issuer shall be quoted at the 
increment at which such securities would be 
quoted without regard to the minimum incre-
ments established under this paragraph. 
‘‘(ii) EXCEPTIONS.—The Commission may 
by regulation, as the Commission considers ap-
propriate, specify any circumstances under 
which an issuer shall continue to be considered 
a covered emerging growth company for purposes 
of this paragraph after the issuer ceases to meet 
the requirements of subparagraph (L)(i). 
‘‘(F) SECURITIES TRADING BELOW $1.— 
‘‘(i) INITIAL PRICE.— 
‘‘(I) AT EFFECTIVE DATE.—If the trad-
ing price of the securities of a covered 
emerging growth company is below $1 at 
the close of the last trading day before the 
date that is 90 days after the date of the en-
actment of the Small Cap Liquidity Reform 
Act of 2013, the securities of such company 
shall be quoted using the increment at 
which such securities would be quoted with-
out regard to the minimum increments es-
tablished under this paragraph. 
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‘‘(II) AT IPO.—If a covered emerging 
growth company makes an initial public of-
fering after the day described in subclause 
(I) and the first share of the securities of 
such company is offered to the public at a 
price below $1, the securities of such com-
pany shall be quoted using the increment at 
which such securities would be quoted with-
out regard to the minimum increments es-
tablished under this paragraph. 
‘‘(ii) AVERAGE TRADING PRICE.—If the av-
erage trading price of the securities of a covered 
emerging growth company falls below $1 for any 
90-day period beginning on or after the day be-
fore the date of the enactment of the Small Cap 
Liquidity Reform Act of 2013, the securities of 
such company shall, after the end of such period, 
be quoted using the increment at which such se-
curities would be quoted without regard to the 
minimum increments established under this 
paragraph. 
‘‘(G) FRAUD OR MANIPULATION.—If the Commis-
sion determines that a covered emerging growth com-
pany has violated any provision of the securities laws 
prohibiting fraudulent, manipulative, or deceptive 
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acts or practices, the securities of such company shall, 
after the date of the determination, be quoted using 
the increment at which such securities would be 
quoted without regard to the minimum increments es-
tablished under this paragraph. 
‘‘(H) INELIGIBILITY
FOR
INCREASED
MINIMUM 
INCREMENT PERMANENT.—The securities of an issuer 
may not be quoted at a minimum increment of $0.05 
or $0.10 under this paragraph at any time after— 
‘‘(i) such issuer makes an election under 
subparagraph (A)(ii)(II); 
‘‘(ii) such issuer makes an election under 
subparagraph (C)(i)(I), except during the period 
before such election takes effect; or 
‘‘(iii) the securities of such issuer are re-
quired by this paragraph to be quoted using the 
increment at which such securities would be 
quoted without regard to the minimum incre-
ments established under this paragraph. 
‘‘(I) ADDITIONAL REPORTS AND DISCLOSURES.— 
The Commission shall require a covered emerging 
growth company the securities of which are quoted at 
a minimum increment of $0.05 or $0.10 under this 
paragraph to make such reports and disclosures as the 
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Commission considers necessary or appropriate in the 
public interest or for the protection of investors. 
‘‘(J) LIMITATION OF LIABILITY.—An issuer (or 
any officer, director, manager, or other agent of such 
issuer) shall not be liable to any person (other than 
such issuer) under any law or regulation of the 
United States, any constitution, law, or regulation of 
any State or political subdivision thereof, or any con-
tract or other legally enforceable agreement (including 
any arbitration agreement) for any losses caused sole-
ly by the quoting of the securities of such issuer at a 
minimum increment of $0.05 or $0.10, by the trading 
of such securities at the increment determined by the 
Commission under subparagraph (B), or by both such 
quoting and trading, as provided in this paragraph. 
‘‘(K) REPORT TO CONGRESS.—Not later than 6 
months after the date of the enactment of the Small 
Cap Liquidity Reform Act of 2013, and every 6 
months thereafter, the Commission, in coordination 
with each exchange on which the securities of covered 
emerging growth companies are quoted or traded, 
shall submit to Congress a report on the quoting and 
trading of securities in increments permitted by this 
paragraph and the extent to which such quoting and 
trading are increasing liquidity and active trading 
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by incentivizing capital commitment, research cov-
erage, and brokerage support, together with any legis-
lative recommendations the Commission may have. 
‘‘(L) DEFINITIONS.—In this paragraph: 
‘‘(i) COVERED
EMERGING
GROWTH
COM-
PANY.—The term ‘covered emerging growth com-
pany’ means an emerging growth company, as 
defined in the first paragraph (80) of section 
3(a), except that— 
‘‘(I) such paragraph shall be applied 
by 
substituting 
‘$750,000,000’ 
for 
‘$1,000,000,000’ each place it appears; and 
‘‘(II) subparagraphs (B), (C), and (D) 
of such paragraph do not apply. 
‘‘(ii) SECURITY.—The term ‘security’ means 
an equity security. 
‘‘(M) 
SAVINGS
PROVISION.—Notwithstanding 
any other provision of this paragraph, the Commis-
sion may— 
‘‘(i) make such adjustments to the pilot pro-
gram specified in this paragraph as the Commis-
sion considers necessary or appropriate to ensure 
that such program can provide statistically 
meaningful or reliable results, including adjust-
ments to eliminate selection bias among partici-
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Union Calendar No. 252 
113TH CONGRESS 
2D SESSION 
H. R. 3448 
[Report No. 113–342] 
A BILL 
To amend the Securities Exchange Act of 1934 to 
provide for an optional pilot program allowing 
certain emerging growth companies to increase 
the tick sizes of their stocks. 
FEBRUARY 5, 2014 
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union, 
and ordered to be printed 
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