Equity Capital Formation Task Force Applauds SEC Approval of Two-Year Pilot Program for Trading in Small-Cap Companies

WASHINGTON--()--The Equity Capital Formation (ECF) Task Force, a group comprised of individuals from across the country’s startup and small-capitalization company ecosystems, today commented on the U.S. Securities and Exchange Commission (“SEC”) approval of the two-year pilot program that would widen the minimum quoting and trading increments–or tick sizes–for stocks of some smaller companies.

“From the On-Ramp to the Freeway: Refueling Job Creation and Growth by Reconnecting Investors with Small-Cap Companies.”

As disclosed by the SEC, the tick size pilot will begin by May 6, 2016. It will include stocks of companies with $3 billion or less in market capitalization, an average daily trading volume of one million shares or less, and a volume weighted average price of at least $2.00 for every trading day.

Jeffrey M. Solomon, Co-Chair of the ECF Task Force and President of Cowen Group, commented, “In launching this pilot, the SEC is taking important steps to explore solutions for enhancing trading liquidity for smaller companies. We are supportive of the comprehensive pilot trading program outlined and the insights that it will provide all market participants in terms of market structure and its impact on capital formation. Following the JOBS Act mandate, the SEC, Treasury Department, FINRA and Member of Congress, in addition to many market participants, have provided the necessary debate and perspective to make this program a reality.”

Scott Kupor, Co-Chair of the ECF Task Force and Managing Partner of Andreessen Horowitz, added, “We continue to believe that the pilot program approved by the SEC will enable all investors to empirically gauge the quality of different equity market structures in smaller-cap companies. Improved trading liquidity in the test groups will ultimately lead to improved capital formation dynamics for small capitalization companies enabling them to create more private sector jobs in the United States. We fully support the SEC-approved pilot program and look forward to the start of the program by May 6, 2016.”

A copy of the SEC’s announcement regarding the pilot program and further details can be found at: http://www.sec.gov/news/pressrelease/2015-82.html.

In November 2013, the ECF Task Force issued a report titled “From the On-Ramp to the Freeway: Refueling Job Creation and Growth by Reconnecting Investors with Small-Cap Companies.” This report highlights the challenges faced by small companies when trying to raise capital and includes recommendations for improved access to capital, including completion of the JOBS Act’s mandates regarding Regulation A and suggestions to enhance its usage. The complete report is available at: http://www.equitycapitalformationtaskforce.com.

About the ECF Task Force

Comprising professionals from across America’s startup and small-capitalization company ecosystems, the Equity Capital Formation (ECF) Task Force formed in June 2013 to 1) examine the challenges that America’s startups and small-cap companies face in raising equity in the current public market environment, and 2) develop recommendations for policy-makers that will help such companies gain greater access to the capital they need to grow their businesses and generate private sector job growth. The task force’s efforts have been informed by discussions flowing from The Securities and Exchange Commission’s Decimalization Roundtable (February 2013), which examined the impacts of decimalized pricing of securities on IPOs, trading, and liquidity for small and middle capitalization companies; and from the Capital Access Innovation Summit convened by the Treasury Department and the Small Business Administration in June 2013, which focused on the impact of the JOBS Act of 2012 on capital formation for emerging growth companies and what additional measures might benefit this process.


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