H.R. 6127 (112th): Liquidity Enhancement for Small Public Companies Act

112th Congress, 2011–2013. Text as of Jul 13, 2012 (Introduced).

Status & Summary | PDF | Source: GPO

I

112th CONGRESS

2d Session

H. R. 6127

IN THE HOUSE OF REPRESENTATIVES

July 13, 2012

(for himself and Mr. Garrett) introduced the following bill; which was referred to the Committee on Financial Services

A BILL

To amend the Securities Exchange Act of 1934 to enable national securities exchanges to provide financial incentives to market-makers that adhere to objective standards that increase the liquidity and depth of the public capital markets and promote enhanced trading and price-discovery for smaller public companies.

1.

Short title

This Act may be cited as the Liquidity Enhancement for Small Public Companies Act.

2.

Market quality incentive programs

(a)

Rules of exchanges

Section 11 of the Securities Exchange Act of 1934 (15 U.S.C. 78k) is amended by adding at the end the following:

(e)

Market quality incentive programs

(1)

In general

Notwithstanding any provision of this title or any other provision of law, the Commission shall not propose, adopt, maintain, or enforce any rule, regulation, policy, or procedure that directly or indirectly bars a national securities exchange from adopting and administering a program pursuant to exchange rules under which the exchange, an entity that lists securities on a national securities exchange, an entity determined appropriate by the Commission, or any other entity determined appropriate by a national securities exchange, provides financial incentives to market makers that adhere to standards of market quality established by the rules of the exchange.

(2)

Procedure

The procedure by which a national securities exchange provides financial incentives to market makers pursuant to paragraph (1) shall be set forth in the rules of the exchange and the exchange shall provide financial incentives only to those market makers that maintain specified market quality standards that include aggressive quoting requirements.

(3)

Limitation

Any financial incentive provided to market makers described in paragraphs (1) and (2) shall be paid only by a national securities exchange and may not be paid directly to a market maker by an entity that lists securities on the exchange.

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(b)

Rules of associations

Section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o–3) is amended by adding at the end the following:

(n)

Market quality incentive programs

A national securities association registered under this section may not adopt, maintain, or propose any rule, regulation, policy, or procedure that directly or indirectly bars a national securities exchange from having a program under which the securities of an issuer determined appropriate by the Commission for listing on a national securities exchange provides financial incentives to market makers that adhere to standards of market quality established by the exchange.

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