Technical corrections only. The later version (v2) corrects a cross-reference in Section 2, changing "15 U.S.C. 77r(b)(4)" to "15 U.S.C. 77r(a)" for Section 18(a) of the Securities Act of 1933. No substantive policy changes were made between the introduced and reported versions of the bill.
Restoring the Secondary Trading Market Act
- Sponsor
- Rep. Meuser, Daniel [R-PA-9]
- Committees
- Financial Services Committee (primary)
- Last action
- Mar 25, 2026
Bottom line
This bill aims to streamline regulatory oversight for certain off-exchange secondary securities trading by establishing federal preemption over state laws, provided issuers meet specific public information disclosure requirements.
What it actually does
This bill amends the Securities Act of 1933 to create a federal preemption for state regulation of off-exchange secondary trading. Specifically, states would be prohibited from regulating such trading if the securities are issued by an entity that makes certain current information publicly available, as defined by existing federal regulations (17 CFR 230.257(b) or 17 CFR 15c2-11(b)). The bill also grants the Securities and Exchange Commission (SEC) the authority to define "off-exchange secondary trading."
Proponents argue
Proponents argue that this bill will reduce duplicative regulatory burdens and compliance costs for issuers and market participants involved in off-exchange secondary trading, fostering a more efficient and liquid national market. They contend that requiring public disclosure of current information ensures adequate investor protection while eliminating unnecessary state-level regulations, thereby encouraging capital formation and providing clearer rules for interstate transactions.
Opponents contend
Opponents might argue that this preemption diminishes states' abilities to protect their residents from fraudulent or abusive practices in securities trading, potentially creating regulatory gaps. They may contend that state regulations often address unique local market conditions or investor protection needs that federal rules might overlook, and that a blanket preemption could weaken overall investor safeguards, particularly for smaller investors or less transparent markets.
The bill is very short and can be read and understood quickly, allowing ample time for evaluation of its core provisions and implications.
Section 2, amending Section 18(a) of the Securities Act of 1933
Exemption from State Regulation for Off-Exchange Secondary Trading
This provision adds a new paragraph (4) to Section 18(a) of the Securities Act of 1933, which deals with federal preemption of state securities laws. It states that states cannot directly or indirectly prohibit, limit, or impose conditions on off-exchange secondary trading of securities if the issuer makes certain current information publicly available. The required information aligns with existing federal regulations for periodic reports (17 CFR 230.257(b)) or specified documents (17 CFR 15c2-11(b)). The SEC is also granted authority to define "off-exchange secondary trading."
Supporters argue
Supporters argue that this provision creates a more uniform and efficient national market by eliminating a patchwork of state regulations, which can be costly and confusing for issuers. They contend that the federal disclosure requirements ensure sufficient transparency for investors, making state-level rules redundant and burdensome.
Critics contend
Critics may argue that this provision erodes the ability of states to protect their residents from specific risks or fraudulent activities in securities markets, especially those unique to local conditions. They might contend that state regulators often provide a crucial layer of investor protection that federal oversight alone may not fully address.
Tradeoffs
This provision navigates the tension between fostering a streamlined, less burdensome national market for securities trading and preserving the traditional role of states in investor protection. It trades off state-specific regulatory flexibility for federal uniformity.
The bill defines the "current information publicly available" required for an issuer to qualify for state preemption by referencing specific sections of the Code of Federal Regulations: 17 CFR 230.257(b) (periodic and current reports for Regulation A offerings) and 17 CFR 15c2-11(b) (documents and information for quotations in an interdealer quotation system).
Section 2(3)(A) and (B)
Why it matters:This is standard legislative practice to avoid reprinting lengthy regulatory text and to ensure consistency with existing federal disclosure frameworks. It leverages established rules rather than creating new ones, which is generally efficient, but it does require external research for a complete understanding.
Case for: Referencing existing regulations ensures consistency with established federal disclosure standards and avoids creating new, potentially conflicting, disclosure regimes. It leverages existing regulatory infrastructure and expertise within the SEC.
Case against: It makes the bill less self-contained and harder for a layperson or even an informed reader to fully comprehend without consulting external, often technical, regulatory documents. This could obscure the actual burden or transparency requirements for issuers and the level of information available to investors.
Estimated impact: The impact is that the scope and detail of the required public information are directly tied to existing SEC rules, which dictate the level of transparency an issuer must maintain to qualify for state preemption. This ensures a baseline of disclosure but relies on the adequacy of those existing rules for this new context.