In a recent speech delivered at a Futures Industry Association conference (see full text here:, Commissioner Gallagher raised the possibility of a venture exchange.  Commissioner Gallagher addressed broader market structure issues in his remarks; however, he devoted a substantial portion of the speech to the benefits that might be associated with a venture exchange for equity securities of smaller companies.  Gallagher noted that a historic one-size fits all regulatory approach may have made the public markets inhospitable for small and emerging companies.  Commissioner Gallagher noted that the SEC’s Advisory Committee on Small and Emerging Companies has recommended that the SEC facilitate a marketplace for the securities of small and emerging companies, or a “venture exchange.”  Gallagher noted that the SEC is working with the securities exchanges to facilitate a pilot program that would permit smaller companies to choose to use a wider tick size; however, he observed that a venture exchange might provide a better answer for smaller companies.  He pointed to examples in Canada and the UK (presumably the AIM).  In the U.S., this idea has not progressed though.  The BX Venture Market, which has real qualitative listing standards, was approved by the SEC, but not as a “national securities exchange.”  This means that securities listed on the BX Venture Market would not be deemed “covered securities” (exempt from state blue sky requirements).  Without preemption, a listing on such a venture market would not be meaningful for a smaller emerging company.

Gallagher also touched on a topic that Chair White has addressed several times recently—disclosure requirements.  Gallagher noted that it is important for regulators to be “willing to consider setting aside the one-size-fits-all approach in favor of more tailored requirements for different-sized companies.”  Might the pendulum be swinging back to phased disclosures?  Certainly the SEC’s proposed crowdfunding rules demonstrated a willingness to tailor disclosure requirements, but are we ready to return to the days of the SB forms?  And, in the absence of express requirements that would compel issuers to limit their disclosures (for example, requiring small issuers to identify only the ten most significant risks affecting their business results), will market participants heed the call to focus on only the most pertinent disclosures?