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House Passes Bill to Create an Equal Market Playing Field


Washington, Jul 12 -

WASHINGTON – Today, the House passed the National Securities Exchange Regulatory Parity Act of 2016, sponsored by Rep. Royce (R-CA), as amended.

During a recent House Financial Services Committee Markup, Rep. Royce explained "The SEC’s interpretation of the law has created a two-tiered playing field by giving this 'blue sky' exemption only to these three exchanges which existed in 1996. It was not the intention of Congress to create such a carve-out. This bill, the National Securities Exchange Regulatory Parity Act, rights this wrong. It provides clarity around the exemption, which will now apply to all securities listed on a national exchange regulated by the [Securities and Exchange Commission], with Commission-approved listing standards. Why is this exemption important? You could ask anyone from Massachusetts who tried to invest in a little company called Apple during its IPO. State regulators banned the stock for being 'too risky.'”

More information on the bill can be seen below:

H.R. 5421, the “National Securities Exchange Regulatory Parity Act of 2016”

Sponsor: Rep. Royce (R-CA)

Introduced by Mr. Royce on June 9, 2016, the National Securities Exchange Regulatory Parity Act is a simple amendment to the Securities Act of 1933. Specifically, the bill amends Section 18 of the Act, which currently provides blue sky exemption for securities listed and traded on specified national securities exchanges: the New York Stock Exchange, American Stock Exchange and NASDAQ, or whose listing standards are substantially similar to one of the listed exchanges. The current statutory construction provides preferential treatment to the exchanges listed in Section 18(b)(1) of the Act, and limits innovation with respect to listings standards.  Currently, the SEC compares any new, or innovative proposed listing standard against standards of a competitor.  This treatment is an inherently unfair two-step process for the unlisted exchanges and creates a competitive disadvantage amongst exchanges

The bill would eliminate the specific references to those venues, and instead generally provides blue sky exemption for any security listed on a “national securities exchange” registered with the SEC, and whose listing standards have been approved by the SEC.  This change better reflects today’s markets and importantly, this bill eliminates the inherently unfair two-step process.  Additionally, this bill will increase the number of possible listing venues, which in turn will increase the ability for companies to go public, and grow. 

H.R. 5421 passed the Financial Services Committee on June 15, 2016 by a vote of 47-12.

H.R. 5421 passed the House on July 12, 2016 by a voice vote.