Small Cap Liquidity Reform Act of 2013

Floor Speech

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Mr. DUFFY. Thank you, Mr. Chairman, for yielding time.

As both you and the gentleman from Delaware mentioned, it is pretty remarkable that on the Financial Services Committee, a committee which comes together and doesn't always agree on the particulars of every debate that we have, that this bill came out with a vote of 57-0, moving it forward, which I think underscores the fact that there was a lot of work put in on the front end, making sure we were working out the kinks and the concerns.

I am very appreciative of Mr. Carney from Delaware and all the effort and help he put in, and for Mr. Garrett's help in making sure that we could put a package together that we can get a lot of folks to buy into.

We all realize that job creation, especially in a slower moving economy, is incredibly important. Job creation at the higher levels comes from our small businesses, our emerging growth companies. As Mr. Carney earlier referenced, that is why Financial Services came together and passed a bill out of the House, along with the Senate moving it, and the President signing, the JOBS Act, which helped emerging growth companies actually get on the onramp and go public, accessing more and better capital.

What we have seen, though, are a few concerns from those small emerging growth companies that are going public that they are not as easily accessing capital as I thought they may. That is why we have come together to start a pilot program to see if we can enhance the interest and the capital and liquidity of these emerging growth companies.

It really is not very complicated, as Mr. Garrett indicated. This is a 5-year pilot program. So if things don't go as expected, the program will end. If it goes as well as we think it may, we can continue this on permanently.

We are truly looking at small emerging growth companies--those that have revenue of less than $750 million a year. Again, the small, fast-growing companies. It is a small space of the market. It is only 2 percent of trading on and off exchanges.

There has been a lot of debate as we have done this about what is an appropriate model to use when we increase the tick size. Do we do a trade-at, a quote-at, midpoint matches? A lot of people came to us with a lot of different ideas. All of us realized there is a larger debate going on right now that involves our ``dark pools'' and our exchanges.

To be very clear, no one here who worked on this legislation wants to impact that debate in this field. The intent of this bill is not to influence that debate at all. It is really very specifically and narrowly tailored to help small businesses as they look for additional capital to grow and create more jobs.

That is why we have given the SEC the ability to set up different baskets or different segments. One can be a trade-at, one can have price improvement of a different variation, but allowing us to get good quality data that will help us make decisions as we move forward.

One other thing: companies that may not want to participate will have the option to opt out if they don't feel like this kind of a program would work for them.

I just want to say I very much appreciate the gentleman from Delaware and the chairman from New Jersey for all the effort they have put into this bill. I hope that our colleagues, after seeing the great support that we had in the committee, will support this bill today.

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