Commissioner Hester Peirce recently engaged in a significant discussion with the Small Business Capital Formation Advisory Committee. On February 24, 2026, she highlighted the concept of ‘secondaries’ in small business capital formation.
She described the secondary market as a trading hub for investors aiming to buy or sell their owned securities, such as stocks, bonds, options, and futures. This market, where most securities trading occurs, operates distinctly from the primary market where securities originate.
According to the Commissioner, the secondary market plays a crucial role in offering liquidity to investors. It eases the buying and selling of securities, serving as an exit platform for investors. Furthermore, it aids in price discovery, enabling investors to comprehend the true value of a security. This knowledge is essential for small businesses in attracting the right investors.
Secondary Markets: A Boon for Small Businesses
Commissioner Peirce underscored the importance of secondary markets for small businesses. These markets offer a platform for small businesses to access capital and expand. They also provide an exit strategy for investors, thus stimulating more participation in the primary market.
She also stressed the need for regulatory changes to bolster the growth of secondary markets. Current regulations, she noted, constrict the size and scope of these markets, thereby hampering the capital-raising ability of small businesses. Consequently, this could deter investors from participating in the primary market.
Furthermore, Commissioner Peirce highlighted the role of technological advancements in secondary markets’ growth. The emergence of blockchain technology and digital securities is reshaping the secondary market. This transformation could potentially pave the way for small businesses to access capital and invite investors to partake in their growth.
In summary, the Commissioner emphasized the critical role of secondary markets in the capital formation process for small businesses. By creating a supportive regulatory environment and harnessing technological advancements, these markets could significantly aid in the growth and development of small businesses.
