The SEC today proposed amendments to Exchange Act Rule 15c2-11, which establishes information gathering and review requirements for broker-dealers that publish quotations for, or maintain continuous quoted markets in, securities traded over-the-counter. The proposed changes would explicitly limit the rule's scope to equity securities only.
The rule was originally designed to prevent manipulative and fraudulent trading schemes in OTC equity markets since its adoption. The proposed amendments would formalize what the agency says was always understood about the rule's intended scope, removing any ambiguity about which types of securities are covered.
Under the proposal, Rule 15c2-11 would be amended to refer specifically to equity securities, clarifying broker-dealers' regulatory obligations when publishing quotations in OTC markets. The changes aim to provide greater regulatory certainty for market participants operating in different asset classes.
The rulemaking reflects the SEC's broader effort to ensure regulations are appropriately calibrated for different types of securities and markets. Rule 15c2-11 has been a key tool in the commission's oversight of OTC trading activities, particularly in preventing fraud and manipulation in less liquid equity markets.
"Regulations should be appropriately tailored to fit the asset class to which they apply," said SEC Chairman Paul S. Atkins. "This proposal would clarify regulatory obligations when publishing quotations and affirm what was always understood: Rule 15c2-11 applies to equity securities."
The proposing release has been published on SEC.gov and will appear in the Federal Register, triggering a 60-day comment period. Market participants and other interested parties will have the opportunity to provide feedback on the proposed clarifications.
The amendments, if finalized, would provide clearer guidance for broker-dealers operating in OTC markets while maintaining the rule's core fraud prevention objectives for equity securities trading.