Monday, July 16, 2012

House Chairmen Introduce Legislation to Increase Liquidity for Small Public Companies

Legislation that would increase liquidity for small public companies has been introduced by Rep. Scott Garrett (R-NJ), Chair of the Capital Markets Subcommittee, and Rep. Patrick McHenry (R-NC), Chair of the Capital Markets Subcommittee. The Liquidity Enhancement for Small Companies Act, HR 6127, would amend Section 11 of the Exchange Act to enable national securities exchanges to provide financial incentives to market makers that adhere to objective standards that increase liquidity and depth of the capital markets and promote enhanced trading and price discovery for smaller public companies. The measure would allow the exchanges to provide financial incentives only to those market makers maintaining specified market quality standards that include aggressive quoting requirements. Further, financial incentives provided to market makers must 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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