enactment, the SEC was required to present to Congress its findings and recommendations following a review of Regulation S-K that is intended to analyse current registration requirements and determine whether these requirements can be updated, modified or simplified in order to reduce costs and other burdens on emerging growth companies.49
The SEC has not yet completed the
mandated study regarding Regulation S-K. On July 20 2012, the SEC delivered to Congress the report required by section 106 of the JOBS Act.50
The
study notes the observations of the IPO Task Force regarding the changing market structure and economics arising from the shift to decimal stock quotes, which point toward a negative impact on the economic sustainability of sell-side research and the greater emphasis placed on liquid, very large capitalisation stocks at the expense of smaller capitalisation stocks. The SEC’s study takes a three-pronged approach to examining the issues: (i) reviewing empirical studies regarding tick size and decimalisation; (ii) participation in, and review of materials prepare in connection with, discussions concerning the impact of market structure on small and middle capitalisation companies and on IPOs as part of the SEC Advisory Committee on Small and Emerging Companies; and (iii) a survey of tick-size conventions in foreign markets. The SEC concluded that decimalisation may have been
one of a number of factors that have influenced the IPO market, and that the existing literature did not isolate the effect of decimalisation from the many other factors. The SEC also noted that markets have evolved significantly since decimalisation was implemented over a decade ago, and that other countries have used multiple tick sizes rather than the one-size-fits-all approach implemented in the United States. Based on the observations reported in the study, the SEC recommends that the Commission should not proceed with specific rulemaking to increase tick sizes, but should rather consider additional steps that may be needed to determine whether rulemaking should be undertaken, which might include soliciting the views of investors, companies, market professionals, academics and others on the broad topic of decimalisation and the impact on IPOs and the markets. In particular, the study notes the possibility of a roundtable where these issues can be addressed. The SEC announced that its staff will host a roundtable in early 2013 to discuss the impact of decimal- based stock trading on small and mid-sized companies, market professionals, investors, and US securities markets.
JOBS Act Quick Start 21
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