Nasdaq recently announced SEC approval of its BX Venture Market. According to Nasdaq, this new exchange will provide smaller issuers, including over-the-counter traded issuers and issuers failing to meet the listing standards of other national exchanges, with a transparent and well-regulated listing alternative.

To qualify for listing on the BX Venture Market, issuers must meet numerous listing standards, which are set forth in the SEC’s release (PDF). These standards will be lower than that of Nasdaq, the NYSE and other national exchanges, attracting smaller, less liquid companies. Among other requirements, including quantitative listing requirements, these listing standards will require:

  • three independent directors;
  • an independent audit committee;
  • independent director oversight of executive compensation;
  • review of related party transactions by independent directors;
  • shareholder approval of equity compensation;
  • annual shareholder meetings; and
  • a code of conduct for all directors, officers and employees.

The BX Venture Market anticipates receiving listing applications in the third quarter of 2011, and currently plans to launch in the fourth quarter of 2011.

OUR TAKE: The BX Venture Market may provide emerging businesses and other smaller issuers with an attractive alternative to the OTC Bulletin Board and Pink Sheets, or the more stringent standards of other national exchanges. Whether the BX Venture Market will spawn a new age of IPOs for smaller and venture-backed issuers remains to be seen. But the emergence of the BX Venture Market, combined with the SEC’s efforts to review impediments to capital formation, is a step forward for smaller issuers