BIO Applauds Reps. Sean Duffy and John Carney for Introducing Small Cap Liquidity Reform Act

The Bill will spur capital formation for small public companies</p>

Washington, DC (November 13, 2013) - The Biotechnology Industry Organization (BIO) today applauds Reps. Sean Duffy (R-WI) and John Carney (D-DE) for introducing the Small Cap Liquidity Reform Act.  This bill builds on the success of the Jumpstart Our Business Startups (JOBS) Act by increasing liquidity for emerging growth companies, including biotech innovators, that trade on the public market. 

Under current U.S. Securities and Exchange Commission (SEC) rules, all securities on the public market are priced in $0.01 increments. This minimum trading increment is known as the “tick size.” The switch to the standard tick size of a penny was enacted in 2000 in order to boost trading in large company stocks, but many smaller issuers have experienced the opposite effect. 

The Small Cap Liquidity Reform Act institutes a pilot program that will allow small issuers to choose larger trading increments (either $0.05 or $0.10) in order to spur trading activity in their stock. Allowing an increased tick size will grant flexibility to growing companies and increase the liquidity and capital availability necessary for emerging biotech companies to be successful on the public market.

Jim Greenwood, BIO’s President and CEO, made the following statement:   

“BIO thanks Rep. Duffy and Rep. Carney for introducing this important legislation. Growing biotech companies often turn to the public market to access the large sums of capital necessary to fund expensive clinical trials. However, a stagnant market bereft of liquidity does nothing to spur capital formation or fund research. 

“The current one-size-fits-all tick size does not reflect the realities of the market and subjects smaller issuers to the same trading framework as large, multinational companies with exponentially higher trading volumes and market caps.

“Once on the public market, small innovative businesses face a daily struggle to maintain liquidity. The Small Cap Liquidity Reform Act will allow companies to choose the tick size that best fits their trading needs and stimulate capital formation for breakthrough research.

“BIO supports the Small Cap Liquidity Reform Act because it takes into account the unique nature of the trading environment that small companies face as well as the high capital burden of biotech R&D. Allowing for tick size flexibility will increase the effectiveness of the public market as a capital formation tool and speed the development of cures and treatments for the most devastating and debilitating diseases.” 

The JOBS Act has been successful in stimulating IPO activity for biotech small businesses. Since its passage, more than 45 biotech companies have gone public using the IPO On-Ramp. Once on the public market, these companies depend on strong liquidity to help raise the capital necessary to fund the decade-long, billion-dollar development timeline intrinsic to groundbreaking R&D.

For more information on emerging biotech companies, please visit


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