Notice2023-07495
Proposed Collection; Comment Request; Extension: Rule 15c2-11
Primary source
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Published
April 11, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 69 (Tuesday, April 11, 2023)</title>
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[Federal Register Volume 88, Number 69 (Tuesday, April 11, 2023)]
[Notices]
[Pages 21731-21732]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-07495]
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SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-196, OMB Control No. 3235-0202]
Proposed Collection; Comment Request; Extension: Rule 15c2-11
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC
20549-2736.
Notice is hereby given that pursuant to the Paperwork Reduction Act
of 1995 (``PRA'') (44 U.S.C. 3501 et seq.) the Securities and Exchange
Commission (``Commission'') is soliciting comments on the existing
collection of information provided for in Rule 15c2-11 (17 CFR
240.15c2-11) (``Rule''), under the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.). The Commission plans to submit this existing
collection of information to the Office of Management and Budget
(``OMB'') for extension and approval.
Rule 15c2-11 governs the publication of quotations for securities
in a quotation medium other than a national securities exchange (i.e.,
over the counter (``OTC'') securities). The Rule is designed to prevent
broker-dealers from publishing or submitting quotations for OTC
securities that may facilitate a fraudulent or manipulative scheme.
Subject to certain exceptions, the Rule prohibits broker-dealers from
publishing any quotation for a security or, directly or indirectly,
submitting any quotation for publication, in a quotation medium unless
they have reviewed specified information concerning the issuer.
Based on the current structure of the market, the Commission staff
believes that the recordkeeping and review requirements under Rule
15c2-11 \1\ apply to 86 broker-dealers, one qualified interdealer
quotation system (``Q-IDQS''), and one registered national securities
association.\2\ Based on information provided by the Financial Industry
Regulatory Authority, Inc. (``FINRA''), the Commission staff
understands that in the 2022 calendar year, 377 Form 211 applications
were filed to initiate the publication or submission of quotations of
OTC securities: \3\ 60 of these Forms 211 concerned OTC securities of
prospectus issuers, Regulation A (``Reg. A'') issuers, and reporting
issuers; 258 concerned OTC securities of ``exempt foreign private
issuers''; and 59 concerned OTC securities of ``catch-all issuers.''
The collection of information that is submitted to FINRA for review and
approval is currently not available to the public from FINRA.
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\1\ In 2021, Commission staff issued a no-action letter, stating
that the staff of the Division of Trading and Markets would not
recommend enforcement action under certain conditions for quotations
of certain fixed-income securities on the over-the-counter markets
to allow for an orderly and good faith transition into compliance
with Rule 15c2-11, as amended in 2020. In 2022, this letter was
withdrawn by the issuance of a new (but consistent) no-action
letter, which provides a temporary staff position that expires on
January 4, 2025. Because it is widely understood that broker-dealers
and other respondents are relying on this no-action position so that
they do not need to comply with the requirements of Rule 15c2-11 for
fixed income securities, the estimates contained herein are made
with regard to equity securities only. Burden estimates that account
for fixed income securities are, therefore, subject to change.
\2\ In calendar year 2022, 86 broker-dealers published
quotations on OTC Markets Group's systems. The Commission staff
believes that this number reasonably estimates the number of broker-
dealers that would engage in activities that would subject them to
Rule 15c2-11. Based on the current structure of the market for
quoted OTC securities, the Commission staff believes that only one
Q-IDQS would engage in activities that would subject it to Rule
15c2-11. There currently is one registered national securities
association. 86 broker-dealers + 1 Q-IDQS + 1 registered national
securities association = 88 respondents.
\3\ A broker-dealer that initiates or resumes a quotation in an
OTC equity security is subject to FINRA Rule 6432, which requires
the broker-dealer to demonstrate compliance with, among other
things, Rule 15c2-11 by filing Form 211. Given the alignment of this
FINRA requirement and Rule 15c2-11, the Commission staff believes
that the number of Forms 211 filed with FINRA in 2022 provides a
reasonable baseline from which to estimate the burdens associated
with the information review requirement under Rule 15c2-11.
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The Commission staff's estimates of the ongoing annual hour burdens
associated with the information collection requirements prescribed in
the Rule are summarized in the chart below.
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Total annual
burden
Information collection industrywide
(hours)
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Recordkeeping associated with the initial publication or 26,231
submission of a quotation in a quotation medium........
Recordkeeping when relying on an exception under 64,339
paragraph (f), that paragraph (b) information is
current and publicly available.........................
Recordkeeping obligations under unsolicited quotation 537,954
exception under paragraph (f)(2).......................
Recordkeeping obligations regarding the frequency of a 95,166
priced bid or offer quotation under paragraph
(f)(3)(i)(A)...........................................
Recordkeeping obligations regarding determining shell 64,339
status under the proviso in paragraph (f)(3)(i)(B).....
Recordkeeping obligations regarding trading suspensions 3
under the provision in paragraph (f)(3)(i)(B)..........
Recordkeeping obligations for the exceptions under 393
paragraph (f)(5)--Asset Test...........................
Recordkeeping obligations for the exceptions under 99,053
paragraph (f)(5)--ADTV Test............................
Recordkeeping obligations of broker-dealers relying on a 28
Q[dash]IDQS complying with information review
requirement pursuant to paragraph (a)(1)(ii)...........
Recordkeeping obligations related to the creation of 20
reasonable written policies and procedures under
paragraph (a)(3).......................................
[[Page 21732]]
Recordkeeping obligations of broker-dealers relying on 93,003
publicly available determinations by Q-IDQSs or
registered national securities associations pursuant to
paragraph (d)(2)(ii)...................................
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Total Hour Burden for all Respondents............... 980,529
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Written comments are invited on: (a) whether the proposed
collection of information is necessary for the proper performance of
the functions of the Commission, including whether the information
shall have practical utility; (b) the accuracy of the Commission's
estimates of the burden of the proposed collection of information; (c)
ways to enhance the quality, utility, and clarity of the information
collected; and (d) ways to minimize the burden of the collection of
information on respondents, including through the use of automated
collection techniques or other forms of information technology.
Consideration will be given to comments and suggestions submitted by
June 12, 2023.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information under the PRA unless it
displays a currently valid OMB control number.
Please direct your written comments to: David Bottom, Director/
Chief Information Officer, Securities and Exchange Commission, c/o John
Pezzullo, 100 F Street NE, Washington, DC 20549, or send an email to:
<a href="/cdn-cgi/l/email-protection#8bdbd9cad4c6eae2e7e9e4f3cbf8eee8a5ece4fd"><span class="__cf_email__" data-cfemail="1a4a485b45577b73767875625a697f79347d756c">[email protected]</span></a>.
Dated: April 5, 2023.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-07495 Filed 4-10-23; 8:45 am]
BILLING CODE 8011-01-P
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