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Well, OK. We've just learned that last Friday the SEC
approved the Nasdaq's request to establish a new lower level stock exchange, to
be dubbed the BX Venture Market. The Nasdaq's original proposal was back in
I am not an expert on the operation of stock markets, but
as I understand it, Nasdaq is re-commissioning the Boston Stock Exchange, which
they acquired and turned into only a trading venue. Now on the BX Venture
Market, companies would get listed much as they do on the higher exchanges,
with a company-driven application process rather than the market maker-driven
process on the OTC markets.
It appears this will be that long sought after "in
between" exchange with lower quantitative and qualitative requirements than the
Nasdaq and NYSE AMEX, but more than the over-the-counter markets. There would
be a collaboration between Nasdaq and its expertise in overseeing market
activity and FINRA's experience overseeing the over-the-counter markets.
Requirements to list on the BXV, among others, would
include 1) full reporting company current in filings, 2) independent audit
committee, 3) independent directors making compensation decisions, 4)
prohibition on "nullifying, restricting or disparately reducing" voting rights,
5) holding an annual shareholders' meeting.
Unfortunately, shell companies would not be
allowed to list. Also unfortunately, stock sold by BX listed companies will not
be exempt from state securities review as higher exchanges' stock is. Similar
to Nasdaq, a change in control of a BX company will require a new initial
In addition, listed companies would need to have 200,000
publicly held shares, at least 200 public shareholders and a minimum market
value of listed securities of $2 million to start and $1 million to maintain.
Minimum initial listing price will be $1.00 in most cases and a continuing
price of $0.25 will be necessary to keep the listing (this is more than NYSE
Amex, which has no minimum price to maintain a listing).
The goal: help companies getting delisted from major
exchanges from leaving the "exchange" world, and helping growing companies not
quite ready for prime time to get more attention and more transparency.
Yet they are taking pains to make clear this is not a
Nasdaq exchange. You can be immediately delisted if you refer to yourself as
listed on Nasdaq or as a Nasdaq listed company. Yet Nasdaq will own it and
their listing people will handle processing listings and delistings.
Anyway, interesting stuff! Will tell you more as I pore
through this 80-page SEC release
For additional insights on reverse mergers,
SPACs, other alternatives to traditional initial public offerings, the small
and microcap markets and the economy, visit the Reverse Merger and
SPAC Blog by David N. Feldman, Esq., Partner of Richardson &