The proposed changes would modify Rule 15c2-11 to refer specifically to equity securities, clarifying the scope of information gathering and review requirements that broker-dealers must satisfy when publishing quotations for securities or maintaining continuous quoted markets in the over-the-counter market.
Since its adoption, Rule 15c2-11’s focus has been on preventing certain manipulative and fraudulent trading schemes in the OTC equity markets. The proposed amendments would amend Rule 15c2-11 to refer to only equity securities.
The proposed changes would formalize what the SEC characterizes as an existing understanding about the rule's scope, according to the agency's statement. The amendments are designed to eliminate uncertainty about which types of securities fall under the rule's requirements.
The clarification could provide greater regulatory certainty for broker-dealers operating in OTC markets, particularly those dealing with debt securities or other non-equity instruments that may have been subject to interpretive uncertainty under the current rule language.
The changes would not alter the underlying anti-fraud and market integrity objectives of the regulation. The proposal reflects the SEC's broader effort to ensure regulations are appropriately calibrated for different asset classes in the OTC market.
"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 is published on SEC.gov and will be published in the Federal Register. The comment period will remain open for 60 days after the date of publication of the proposing release in the Federal Register.
The commission will review public feedback before determining whether to adopt the amendments as proposed or with modifications.