SEC Invites Outsiders to Submit Proposals for Secondary Market

sec invites proposals

Seeking to improve the secondary market structure for “thinly traded securities”, the SEC has outsourced the creative process to anyone involved in this market who may have some good ideas. The SEC’s press release “invites exchanges and other market participants to submit innovative proposals designed to improve the secondary market structure for exchange listed equity securities that trade in lower volumes, commonly referred to as “thinly traded securities.”

The SEC adds in their press release:

“Low trading volumes may drive higher transaction costs for investors, may present challenges for investors seeking to establish or unwind meaningful positions, and may negatively impact an issuer’s cost of capital. The Commission is interested in proposals to address these issues by improving the secondary market structure for thinly traded securities. The Commission’s statement lays out various considerations that may be helpful for a proposal to address, including whether and under what circumstances it would be appropriate to suspend unlisted trading privileges on multiple exchanges and whether exemptive relief from Regulation NMS and other rules under the Securities Exchange Act of 1934 would improve trading and liquidity.

SEC Chairman Jay Clayton said, “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. 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.”

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Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
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