Rule 15c2‑11 generally prohibits brokers from publishing quotations for OTC securities unless specified, current information about the issuer is publicly available. Yesterday, the SEC announced  proposed amendments that would limit the Rule’s application to equity securities only.  Here’s the 76-page Proposing Release and here’s the one-page Fact Sheet. This excerpt from the Fact Sheet explains what this proposal is about:

In 2020, Rule 15c2-11 was amended to require that specified information be current and publicly available for brokers and dealers to publish a quotation for, or maintain a continuous quoted market in, a security in a quotation medium. Following the adoption of the 2020 amendments to Rule 15c2-11, numerous industry participants stated that they never understood Rule 15c2-11 to apply to non-equity securities and expressed concerns with the potential burdens of applying the amended rule to fixed-income securities.

After industry participants shared their concerns regarding Rule 15c2-11’s application, the Commission provided exemptive relief and the staff issued a no-action letter addressing the vast majority of fixed-income securities. Accordingly, the Commission is proposing amendments to Rule 15c2-11 to replace the term “security” with “equity security,” as defined in Exchange Act Rule 3a11-1.

Comments on the proposal are due 60 days after publication in the federal register.

In other rulemaking news (and at the risk of “burying the lede”), the WSJ is reporting that the SEC may issue its long-anticipated proposal to eliminate mandatory quarterly reporting as soon as next month.  Stay tuned.

– John Jenkins