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Policy & Regulation

U.S. House Approves Financial Services Legislation Supported By Nasdaq's Revitalize Initiative

Sharing several positive developments in our efforts to revitalize the U.S. capital markets and improve the public company experience.

I am pleased to share several positive developments in our efforts to revitalize the U.S. capital markets and improve the public company experience. On July 10, the U.S. House of Representatives passed the following financial services legislation, with bipartisan support:

  • H.R. 5877 – “Main Street Growth Act” – sponsored by Rep. Tom Emmer (R-MN), allows for venture exchanges to trade smaller, less liquid securities in an environment better designed for their trading characteristics. During the debate, Rep. Bill Huizenga (R-MI), who chairs the Capital Markets, Securities and Investment Subcommittee, referenced Nasdaq's May 23rd testimony delivered by Edward Knight, EVP and Global Chief Legal and Policy Officer. “Nasdaq recommends permitting issuers to choose to trade in an environment with consolidated liquidity as would be allowed under the venture exchange legislation,” Rep. Huizenga further stated. “By creating a market for smaller issuers that is voluntary for issuers to join and largely exempt from the UTP Obligations, subject to key exemptions, we can concentrate liquidity to reduce volatility and improve the trading experience.”
  • H.R. 5970 – “Modernizing Disclosures for Investors Act” – sponsored by Rep. Ann Wagner (R-MO), directs the SEC to conduct a study aimed at simplifying the disclosure regime by looking at the possibility of making the Form 10-Q optional, while retaining key investor disclosures in, for instance, the earnings release. It requires the SEC to report back to Congress within 180 days on this critical issue for public companies.
  • H.R. 6139 – “Improving Investment Research for Small and Emerging Issuers Act”– sponsored by Rep. Huizenga, directs the SEC to conduct a study on issues affecting the provision of and reliance upon investment research into small issuers. Lack of research impedes liquidity and hurts capital formation.

We are pleased the House has approved these bills. Additionally, we applaud other developments in recent weeks in support of our Revitalize blueprint proposals:

  • The SEC announced in late June it will adopt amendments to the smaller reporting company (SRC) definition, designed to expand the number of smaller public companies that qualify for scaled disclosures. This enables a company with less than $250 million of public float to provide scaled disclosures, as compared to the $75 million threshold under the prior definition. The final rules also expand the definition to include companies with less than $100 million in annual revenues, if they also have either no public float or a public float less than $700 million.
  • H.R. 4050, “Corporate Governance Reform and Transparency Act” – Regulating proxy advisors and eliminating their conflict of interests was the subject of a hearing in the Senate Banking Committee on June 28. Nasdaq teamed up with a broad coalition on a letter to Committee leadership supporting the bill. The coalition included the U.S. Chamber of Commerce, American Council for Capital Formation, American Fuel & Petrochemical Manufacturers, American Insurance Association, American Securities Association, Biotechnology Innovation Organization, The Center on Executive Compensation, Equity Dealers of America, Independent Community Bankers of America, Main Street Investors Coalition, Nareit, National Association of Manufacturers, National Black Chamber of Commerce, National Investor Relations Institute, Retail Industry Leaders Association, TechNet and WorldatWork.

Congress is focused on these issues and we hope to see a bipartisan package with some of these items move out of Congress and to the President’s desk this year. We remain committed to working with the SEC, Congress and other constituents to move forward other legislative priorities that will help make the public markets more attractive.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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