The North American Securities Administrators Association (NASAA), the lobbying group that represents state securities regulators, has issued a statement opposing the Restoring the Secondary Trading Market Act.
This legislation, which is in markup today (January 22, 2026), aims to preempt state regulation of off-exchange secondary trading, provided the issuing company maintains certain public financial disclosures.
If approved, the legislation could improve liquidity for securities issued under Reg A and Reg CF.
An issuer using the Reg A exemption may choose to list its shares on a regulated exchange after completing a funding round. An issuer could also see trading on a non-exchange, but the security would be subject to state Blue Sky rules, thus creating a substantial impediment to liquidity for investors.
Primary offerings issued under Reg A are exempt from state Blue Sky rules, but an oversight in the legislation that updated Reg A to make it workable failed to include preemption for secondary transactions.
NASAA believes this legislation is “unnecessary” as some states (not all) allow for EDGAR filings as a designated information source. The group also believes the legislation does not address other items impacting liquidity:
“…the bill would not address the primary factors that continue to limit liquidity in the Regulation A market. Issues such as share transfer inefficiencies and issuer rights of first refusal persist independent of state regulation. Further preemption of state authority, without addressing these underlying issues, is unlikely to meaningfully improve secondary market activity.”
The gist of the statement by NASAA is the group’s fear of a reduction in oversight at the state level. It is interesting to note that when Reg A was updated under the JOBS Act of 2012, NASAA battled the preemption of state Blue Sky oversight for primary offerings.