US capital markets may be headed toward bipartisan reform.
Jeb Hensarling, the Republican from the State of Texas, and Maxine Waters, the Democrat from the State of California, jointly announced bipartisan capital markets reform called JOBS and Investor Confidence Act of 2018.
“House Financial Services Committee Chairman Jeb Hensarling (R-TX) and Ranking Member Maxine Waters (D-CA) announced today that they have reached an agreement on a package of strong, bipartisan capital-formation legislation to help America’s small businesses and entrepreneurs and to protect investors. The package, known as the ‘JOBS and Investor Confidence Act of 2018,’ is comprised of 32 individual pieces of legislation that have passed the Committee or House this Congress with broad bipartisan support.
“Over the last several months, our Committee has been working hard to put forth a number of capital-formation bills that are designed to breathe new life into markets that are suffocating under aging regulations,” said Hensarling. “Thanks to the efforts of the Ranking Member and Members of the Committee on both sides of the aisle, we have a strong bipartisan package that will play an important role in sustaining long-term economic growth and global competitiveness.”
“A stronger economy, more jobs for America’s families, and strong investor protections are top priorities for Committee Democrats,” Waters said. “I want to thank the Chairman and the staff of the Committee on both sides of the aisle for the work that they have been doing, working together to live up to what we always say—that we all support small businesses, their access to capital and protecting investors. This is true bipartisanship we are witnessing today.”
Among the bills which make up this package of reforms, here are the most significant for traders.
H.R. 3903, Encouraging Public Offerings Act of 2017 – Sponsored by Rep. Ted Budd, a Republican from the State of North Carolina and cosponsored by Representative Gregory Meeks, a Democrat from the State of New York, the “Encouraging Public Offerings Act of 2017” amends the Securities Act of 1933 to expand to all public companies certain provisions of Title I of the Jumpstart Our Business Startups (JOBS) Act, which previously applied only to an EGC. Specifically, the legislation allows issuers to submit to the SEC for confidential review, before publicly filing, draft registration statements for Initial Public Offerings (IPOs) and for follow-on offerings within one year of an IPO. Additionally, this bill allows all companies to “test-the-waters” before filing an IPO, which means they may meet with qualified institutional buyers and other institutional accredited investors to gauge those investors’ interest in the offer.
H.R. 5749, Options Markets Stability Act – Sponsored by Rep. Randy Hultgren, a Republican from the State of Illinois, and cosponsored by Rep. Bill Foster, a Democrat from the same state, the legislation requires the prudential regulators to implement a risk-adjusted approach to value centrally-cleared exchange-listed derivatives as it relates to capital rules to better and more accurately reflect exposure and to promote market-making activity.
H.R. 5877, Main Street Growth Act – Sponsored by Rep. Tom Emmer, a Republican from the State of Minnesota, the “Main Street Growth Act” amends the Securities Exchange Act of 1934 to allow for the registration of venture exchanges with the SEC to provide a venue that is tailored to the needs of small and emerging companies and offers qualifying companies one venue in which their securities can trade.
H.R. 6324, Middle Market IPO Underwriting Cost Act – Sponsored by Representative Jim Himes, a Democrat from the State of Connecticut, the “Middle Market IPO Underwriting Cost Act” requires the SEC, in consultation with the Financial Industry Regulatory Authority, to study the direct and indirect costs associated with small and medium-sized companies to undertake initial public offering.
The announcement was cheered on by Paul Ryan, the Speaker of the House, and a Republican from the State of Wisconsin.
He noted the Capital Markets Reform package would, “cut down on regulations that are holding back small businesses and start-ups. It’s the third piece in a line of critical bipartisan bills aimed at creating jobs, unlocking innovation, and driving growth. This will help us sustain the positive growth that we are already seeing. And this all gets us back to creating an environment where entrepreneurs can succeed and workers can get ahead.”