The TICKER Act would amend the Securities Exchange Act of 1934 to impose new disclosure requirements on U.S. financial markets regarding consolidated variable interest entities (CVIEs). Specifically, it would require national securities exchanges to identify CVIE issuers in their trading symbols, using clearly visible indicators, and would obligate brokers and dealers to warn investors that investments in CVIEs may lack certain legal recourse. The bill defines “covered entity” as a consolidated variable interest entity and sets a 180-day timeline after enactment for these identification and warning requirements to take effect. It also adds a sense-of-the-Congress statement underscoring concerns about CVIEs, particularly those based in foreign jurisdictions (notably China), and the need for transparent risk disclosure for US investors. In short, if enacted, the bill would make it easier for investors to spot CVIE-listed securities and remind them of potential limitations on legal protections, with exchanges and brokers/dealers carrying new labeling and warning duties.
Key Points
- 1Identification requirement on exchanges: National securities exchanges must label the securities of every CVIE (referred to as a “covered entity”) in the issuer’s trading symbol on the exchange.
- 2Definition of covered entity: A consolidated variable interest entity (CVIE) as used in the bill’s provisions; “variable interest entity” is defined by generally accepted accounting principles (GAAP).
- 3Effective timeline: The exchange labeling requirement becomes effective 180 days after enactment and applies to CVIE securities listed on or after that date.
- 4Broker/dealer warnings: By no later than 180 days after enactment, the SEC must require brokers and dealers to provide warnings to investors that investments in CVIEs may lack legal recourse.
- 5Sense of Congress: The bill states that CVIEs, especially those based in foreign jurisdictions such as China, pose specific risks to U.S. investors and that these risks should be disclosed in a standardized, easily recognizable way (e.g., visible ticker or symbol cues).