Restoring the Secondary Trading Market Act
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The bill would bar states from prohibiting, limiting, or conditioning off-exchange secondary trading of securities issued by companies that already make certain current financial information public.
It would federalize a narrow slice of securities regulation, shifting authority over that specific type of trading away from state securities regulators to a single federal standard.
What this bill would do
What it would do
The bill would amend Section 18(a) of the Securities Act of 1933 to add a new category of federally covered securities exempt from state regulation. It would prevent states from directly or indirectly prohibiting, limiting, or imposing conditions on off-exchange secondary trading in securities of an issuer that makes current information publicly available, as defined by specific SEC disclosure rules (Regulation A reporting and Rule 15c2-11 documentation).
The exemption applies only where the issuer already meets one of the two named federal disclosure standards; it does not remove state authority over securities from issuers that do not make such information public, and it does not change any other part of federal securities law or the SEC's registration or exchange-trading rules.
Key provisions
- 1Would amend Section 18(a) of the Securities Act of 1933 to add off-exchange secondary trading as a new category exempt from state regulation
- 2Would define the exemption to cover issuers that make current information publicly available under SEC Regulation A periodic/current reporting rules
- 3Would also cover issuers that meet the disclosure requirements of SEC Rule 15c2-11
Who would be affected
Issuers of securities that publicly disclose information under Regulation A or Rule 15c2-11, broker-dealers and investors who trade those securities off-exchange, and state securities regulators who currently oversee such secondary trading within their states.
Why it matters
Companies and investors trading these securities off-exchange would face a single federal standard instead of varying state rules, potentially easing compliance and expanding secondary market liquidity. State regulators would lose the ability to impose additional conditions or restrictions on this trading, reducing their oversight in this area.
What would change
Changes to existing law
Amends Securities Act of 1933 (15 U.S.C. § 77r(a)) (Sec. 2)
Adds a new paragraph exempting off-exchange secondary trading of securities from state regulation when the issuer discloses information under specified SEC rules
Agencies directed to act
Legislative status & sources
Latest action
Placed on the Union Calendar, Calendar No. 493.
Official CRS summary
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This bill prohibits states from banning, limiting, or imposing conditions upon off-exchange secondary trading of securities. This prohibition applies if the issuer of those securities provides public information on the issuer's financial status in accordance with federal regulations.
Legislative subjects
Business records; Corporate finance and management; Finance and Financial Sector; Financial services and investments; Securities; State and local government operations
Committee report
H. Rept. 119-573