and reasonable and not unreasonably discrimi-
natory; 
‘‘(D) may choose to carry out periodic auc-
tions for the sale of a venture security instead of 
providing continuous trading of the venture se-
curity; and 
‘‘(E) may not extend unlisted trading privi-
leges to any venture security. 
‘‘(3) EXEMPTIONS FROM CERTAIN NATIONAL SE-
CURITY
EXCHANGE
REGULATIONS.—A venture ex-
change shall not be required to— 
‘‘(A) comply with any of sections 242.600 
through 242.612 of title 17, Code of Federal Reg-
ulations; 
‘‘(B) comply with any of sections 242.300 
through 242.303 of title 17, Code of Federal Reg-
ulations; 
‘‘(C) submit any data to a securities infor-
mation processor; or 
‘‘(D) use decimal pricing. 
‘‘(4) TREATMENT OF CERTAIN EXEMPTED SECU-
RITIES.—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 
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exchange, if the issuer of such security is in compli-
ance with all disclosure obligations of such section 
3(b) and the regulations issued under such section. 
‘‘(5) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) EARLY-STAGE, GROWTH COMPANY.— 
‘‘(i) IN
GENERAL.—The term ‘early- 
stage, growth company’ means an issuer— 
‘‘(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 Bu-
reau of Labor Statistics, setting the 
threshold to the nearest $1,000,000) or 
less. 
‘‘(ii) TREATMENT WHEN MARKET CAP-
ITALIZATION EXCEEDS THRESHOLD.— 
‘‘(I) IN GENERAL.—In the case of 
an issuer that is an early-stage, growth 
company the securities of which are 
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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 ex-
ceeding 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 ex-
ceeds $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 Bu-
reau 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 re-
quest of the issuer, exempt the issuer 
from the market capitalization require-
ments 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 ven-
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ture exchange may, at the request of 
the issuer, extend the exemption for 1 
additional year. 
‘‘(B) VENTURE SECURITY.—The term ‘ven-
ture security’ means— 
‘‘(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)) is amended— 
(1) in subparagraph (B), by striking ‘‘or’’ at the 
end; 
(2) in subparagraph (C), by striking the period 
and inserting ‘‘; or’’; and 
(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 Con-
gress that the Securities and Exchange Commission 
should— 
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(1) when necessary or appropriate in the public 
interest and consistent with the protection of inves-
tors, make use of the Commission’s general exemptive 
authority under section 36 of the Securities Exchange 
Act of 1934 (15 U.S.C. 78mm) with respect to the 
provisions added by this section; and 
(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 provi-
sions of the securities laws (as defined in section 3(a) of 
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))) 
or the authority of the Securities and Exchange Commis-
sion under those provisions. 
(e) EFFECTIVE DATE FOR TIERS OF EXISTING NA-
TIONAL SECURITIES EXCHANGES.—In the case of a securi-
ties exchange that is registered as a national securities ex-
change under section 6 of the Securities Exchange Act of 
1934 (15 U.S.C. 78f) on the date of the enactment of this 
Act, any election for a listing tier of such exchange to be 
treated as a venture exchange under subsection (m) of such 
section shall not take effect before the date that is 180 days 
after such date of enactment. 
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Union Calendar No. 474 
114TH CONGRESS 
2D SESSION 
H. R. 4638 
[Report No. 114–609] 
A BILL 
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. 
JUNE 8, 2016 
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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