Restoring the Secondary Trading Market Act
Introduced 2026-01-16
H.R. 7127 (119th)
Restoring the Secondary Trading Market Act
Restoring the Secondary Trading Market Act
Introduced 2026-01-16
H.R. 7127 (119th)Stage: In Committee
Show progress & status
72/100 · Highly Contentious40/100 · PassageLeans Right
Status: Referred to the House Committee on Financial Services.
H.R. 7127 (119th)Status: Referred to the House Committee on Financial Services.Stage: In CommitteeGeneral PolicyTaxpayer impact: Minimal72/100 · Highly Contentious40/100 · PassageLeans Right
Discussions: 1Intro
Committee
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Senate
President
Enrolled
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Summary & Impact
The bill amends Section 18(a) of the Securities Act of 1933 to bar States from prohibiting, limiting, or imposing conditions on off-exchange secondary trading in securities of an issuer that makes specified current information publicly available. The exemption applies where an issuer publishes the periodic and current reports referenced in 17 C.F.R. section 230.257(b) or the documents listed in 17 C.F.R. section 240.15c2-11(b). The bill thereby creates a federal preemption over state regulation of certain off-exchange secondary trading when specified disclosure conditions are met.
Perspective snapshot
Left20%
Center50%
Right85%
Where people disagree: Progressive emphasizes investor protection and state blue‑sky authority More
Risk snapshot
ScopeLOW
ComplexityLOW
SalienceMEDIUM
Fiscal/RegLOW
✓ Potential Benefits
- Reduces compliance costs for broker‑dealers trading exempted securities across state lines.HIGH
- Increases liquidity for eligible off‑exchange securities by removing state restrictions on secondary trading.MEDIUM
- Creates a uniform national standard potentially lowering market entry barriers for small issuers.MEDIUM
- Encourages secondary market activity that could improve price discovery for eligible issuers.MEDIUM
- Reduces duplicative state filings and related administrative fees for certain transactions.MEDIUM
⚠ Potential Concerns
- Preempts state Blue Sky laws, reducing local authorities' ability to block risky offerings.HIGH
- Retail investors may have diminished local legal remedies and oversight options.HIGH
- May increase investor exposure to fraud in lightly traded off‑exchange securities.MEDIUM
- Shifts enforcement responsibility toward federal regulators without providing additional resources.MEDIUM
- Reduces state revenue from securities fees and may complicate state budgets.MEDIUM
What this means for you
- Narrow, administrable change with industry appeal but significant federalism and investor-protection concerns reduce chances absent cross-branch compromises.
- Relatively narrow technical change could attract industry support, but state preemption and investor-protection objections create opposition.
- Senate hurdles higher for preemption and deregulation bills; needs bipartisan support to overcome procedural barriers.
Caveats & assumptions (7)
- Commission will define 'off‑exchange secondary trading' through future rulemaking.
- Issuers choose to make the specified current information publicly available.
- SEC enforcement resources remain at current levels absent appropriation changes.
- States previously used Blue Sky laws to regulate the affected off‑exchange trades.
- Trading volume and market liquidity responses are uncertain and issuer‑specific.
- No change to federal periodic reporting obligations beyond preemption.
- Estimates of economic effects depend on market participant behavioral changes.
Analyzed Jan 19, 2026•Based on: Introduced in House