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Equity Capital Formation Task Force Comments on SEC Order to Develop a Tick Size Pilot Plan

June 25, 2014

Supports the SEC’s Effort to Evaluate the Impact of Small-Cap Trading Rules on Capital Formation

Continues to Advocate for Market Structure Reform to Encourage Job Creation and Growth

WASHINGTON--(BUSINESS WIRE)-- 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 order issued by the U.S. Securities and Exchange Commission (“SEC”) directing exchanges and the Financial Industry Regulatory Authority (FINRA) to develop a plan to implement a pilot program that, among other things, would widen the quoting and trading increments for certain small-cap stocks.

The order follows a report issued by the ECF Task Force in November, 2013, titled “From the On-Ramp to the Freeway: Refueling Job Creation and Growth by Reconnecting Investors with Small-Cap Companies,” which highlighted the challenges small-cap companies face when trying to raise capital. The report included a series of recommendations to enhance market structure as a means to increase the potential for job creation and growth in the U.S., including a pilot trading program where select small-cap companies trade under new Small-Cap Trading Rules. A copy of the complete report can be accessed at:

Regarding the SEC Order, Jeffrey M. Solomon, Co-Chair of the ECF Task Force and Chief Executive Officer of Cowen and Company said, “We commend the SEC for taking quick action to examine the flaws associated with the one-size-fits-all capital markets ecosystem that has stifled capital formation for small-cap companies. We believe a data-driven pilot program, if implemented effectively, would appropriately evaluate the need for permanent change to the Small-Cap Trading Rules. We continue to maintain that constructive market structure reform, beginning with this pilot program, will enable the growth of small-cap companies, which is critical to the economy.”

Scott Kupor, Co-Chair of the ECF Task Force and Managing Partner, Andreessen Horowitz added, “We are encouraged by the SEC’s order, and believe it is a strong step in the right direction. Increasing liquidity for small-cap companies is important for them to thrive as independent, public companies and to create jobs in the U.S. We look forward to working with the SEC and the exchanges on the implementation of the pilot program going forward.”

The ECF Task Force intends to address certain aspects of the proposed plan, such as duration, to ensure the program provides a true empirical test of the Small-Cap Trading Rule’s effect on the small-cap market. The group will review the specific plan developed by the exchanges and FINRA, and plans to actively participate in the SEC’s comment period.

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.


Sard Verbinnen & Co


Dan Gagnier, 212-687-8080

Carissa Felger, 312-895-4700

Source: The Equity Capital Formation (ECF) Task Force

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Source: Business Wire

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