SEC Seeks Proposals to Enhance Trading for Thinly-Traded Securities
The U.S. Securities and Exchange Commission (SEC) is asking market participants to develop innovative proposals for changes in equity market structure that are designed to improve trading in thinly-traded securities.
Nasdaq commends the SEC for its attention to improving the trading quality of small- and medium-enterprise companies. We have advocated for efforts to strengthen markets for smaller companies as part of our blueprint to revitalize the U.S. capital markets, expanded through our TotalMarkets initiative focused on market structure supporting the trading of public companies.
In the October 17th statement, the SEC said it is soliciting proposals to suspend or terminate unlisted trading privileges (UTP) for such securities, exempt them from certain provisions of Regulation NMS and other SEC rules, as well as to accomplish other types of innovative reforms. “As we have heard from issuers, exchanges, and other market participants, a one-size-fits-all approach to market structure does not work for many of our public issuers, particularly small- and medium-sized companies,” SEC Chairman Jay Clayton said last Thursday.
The regulatory agency acknowledged that low trading volumes might drive higher transaction costs to investors and make it difficult to unwind positions.
“We want to know if more can be done to improve secondary market quality for thinly-traded securities, and we look forward to seeing proposals geared to enhance trading and liquidity for this segment of the market while maintaining or improving market integrity," Clayton said.
Nasdaq plans to respond to the SEC’s request and we encourage companies to contact us and/or the SEC in regards to these important developments. Nasdaq believes the SEC has taken another important step toward modernizing markets and looks forward to extending our partnership.
Nasdaq continues to keep pushing for reforms to help improve the market experience for listed companies and market quality for their securities. We continue to support issuer choice in concentration liquidity of smaller companies on one exchange and to other solutions tailed to thinly-traded securities.Nelson Griggs, President, Nasdaq Stock Exchange
Read the SEC statement here.
Learn about Nasdaq’s Revitalize initiative.
Learn about Nasdaq’s TotalMarkets initiative.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
