Proposed Rule2026-05401
Publication or Submission of Quotations Without Specified Information
Primary source
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Published
March 19, 2026
Issuing agencies
Securities and Exchange Commission
Abstract
The Securities and Exchange Commission ("Commission") is proposing amendments to revise a rule that governs certain information gathering and review requirements that brokers and dealers must satisfy before initiating (or resuming) any quotation for a security in a quotation medium other than a national securities exchange. The proposed amendments would revise the rule to refer to only equity securities.
Full Text
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<title>Federal Register, Volume 91 Issue 53 (Thursday, March 19, 2026)</title>
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[Federal Register Volume 91, Number 53 (Thursday, March 19, 2026)]
[Proposed Rules]
[Pages 13243-13263]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-05401]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 240
[Release No. 34-105004; File No. S7-2026-08]
RIN 3235-AN36
Publication or Submission of Quotations Without Specified
Information
AGENCY: Securities and Exchange Commission.
ACTION: Proposed rule.
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SUMMARY: The Securities and Exchange Commission (``Commission'') is
proposing amendments to revise a rule that governs certain information
gathering and review requirements that brokers and dealers must satisfy
before initiating (or resuming) any quotation for a security in a
quotation medium other than a national securities exchange. The
proposed amendments would revise the rule to refer to only equity
securities.
DATES: Comments should be submitted on or before May 18, 2026.
ADDRESSES: Comments may be submitted by any of the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/comments/s7-2026-08/publication-or-submission-quotations-without-specified-information">https://www.sec.gov/comments/s7-2026-08/publication-or-submission-quotations-without-specified-information</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#f280879e97df919d9f9f979c8681b2819791dc959d84"><span class="__cf_email__" data-cfemail="81f3f4ede4ace2eeecece4eff5f2c1f2e4e2afe6eef7">[email protected]</span></a>. Please include
File Number S7-2026-08 on the subject line.
Paper Comments
<bullet> Send paper comments to Vanessa A. Countryman, Secretary,
Securities and Exchange Commission, 100 F Street NE, Washington, DC
20549-1090.
All submissions should refer to File Number S7-2026-08. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's website (<a href="https://www.sec.gov/rules-regulations/2026/03/s7-2026-08">https://www.sec.gov/rules-regulations/2026/03/s7-2026-08</a>). All comments received will be posted without change. Do
not include personally identifiable information in submissions; you
should submit only information that you wish to make available
publicly. The Commission may redact in part or withhold entirely from
publication submitted material that is obscene or subject to copyright
protection.
Studies, memoranda, or other substantive items may be added by the
Commission or staff to the comment file during this rulemaking. A
notification of the inclusion in the comment file of any such materials
will be made available on the Commission's website. To ensure direct
electronic receipt of such notifications, sign up through the ``Stay
Connected'' option at <a href="http://www.sec.gov">www.sec.gov</a> to receive notifications by email.
A summary of the proposal of not more than 100 words is posted on
the Commission's website (<a href="https://www.sec.gov/rules-regulations/2026/03/s7-2026-08">https://www.sec.gov/rules-regulations/2026/03/s7-2026-08</a>).
FOR FURTHER INFORMATION CONTACT: James Curley, Special Counsel, Laura
Weber, Branch Chief, Josephine Tao, Assistant Director, Office of
Trading Practices, or Carol McGee, Associate Director, Office of
Derivatives Policy and Trading Practices, at (202) 551-5777, Division
of Trading and Markets, Securities and Exchange Commission, 100 F
Street NE, Washington, DC 20549-7010.
SUPPLEMENTARY INFORMATION: The Commission is proposing to amend 17 CFR
240.15c2-11 (``Rule 15c2-11'') under the Securities Exchange Act of
1934 (``Exchange Act'').\1\
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\1\ 15 U.S.C. 78a et seq.
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Table of Contents
I. Introduction
II. Discussion of the Proposed Rule Amendments
A. Amendments to Rule 15c2-11
B. Conforming Amendments
1. Specified and Supplemental Information
2. Exceptions
3. Record Preservation Requirements
C. Technical Amendments
III. General Request for Comment
IV. Economic Analysis
A. Baseline
1. Regulatory Baseline
2. Affected Securities
3. Affected Parties
B. Benefits and Costs
1. Affected Brokers, Dealers, QIDQSs, and RNSAs
2. Affected Issuers
3. Affected Investors
C. Efficiency, Competition, and Capital Formation
D. Reasonable Alternative
1. Except Crypto Securities That Are Equity Securities
E. Request for Comment
V. Paperwork Reduction Act
A. Introduction
B. Rule 15c2-11
C. Collection of Information
D. Respondents
1. Respondents Related to Rule 15c2-11's Information Gathering
and Review Requirements and Corresponding Record Preservation
Requirements
2. Respondents Related to Rule 15c2-11's Exceptions and
Corresponding Record Preservation Requirements
3. Respondents Related to Other Record Preservation Requirements
4. Respondents Related to a QIDQS's or RNSA's Written Policies
and Procedures
E. Use of Information
F. Collections of Information for Equity Quotations
1. Burden Estimates Related to Rule 15c2-11(a)(1)(i), (a)(2),
(d)(1)(i)(A), and (d)(1)(i)(B)--Broker or Dealer or QIDQS
Information Gathering and Review Requirements and Corresponding
Record Preservation Requirements
2. Burden Estimates Related to Rule 15c2-11's Exceptions and
Corresponding Record Preservation Requirements
3. Burden Estimates Related to Other Record Preservation
Requirements
4. Burden Estimates Related to Rule 15c2-11(a)(3)--QIDQS or RNSA
Written Policies and Procedures for Making Publicly Available
Determinations
G. Collection of Information Would Be Mandatory
[[Page 13244]]
H. Confidentiality of Responses to Collection of Information
I. Retention Period for Record Preservation Requirement
J. Request for Comment
VI. Present Values and Annualized Values of Monetized Benefits and
Costs
VII. Regulatory Flexibility Act Certification
VIII. Congressional Review Act
IX. Other Matters
I. Introduction
Rule 15c2-11 requires that brokers and dealers give some measure of
attention to financial and other information about the issuer of a
security before commencing trading in that security.\2\ To that end,
Rule 15c2-11 requires, subject to exceptions,\3\ a broker or dealer,
before initiating (or resuming) any quotation for a security in a
quotation medium,\4\ to gather specified information regarding the
security and its issuer and,\5\ based upon a review of such
information, along with certain supplemental information,\6\ to have a
reasonable basis under the circumstances for believing that such
information is accurate and is from a reliable source.\7\
Alternatively, a broker or dealer may submit a quotation in a quotation
medium that is a qualified interdealer quotation system (``QIDQS'') \8\
that has made a publicly available determination that it has performed
certain information gathering and review requirements,\9\ if certain
conditions are met.\10\ Rule 15c2-11 also includes certain record
preservation requirements.\11\
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\2\ A broader purpose of Rule 15c2-11, however, is to prohibit
brokers and dealers from establishing arbitrary quotations for
infrequently traded over-the-counter (``OTC'') securities in the
absence of certain information. See Initiation or Resumption of
Quotations Without Specified Information, Exchange Act Release No.
21470 (Nov. 8, 1984) [49 FR 45117 (Nov. 15, 1984)] (``1984
Release''), 49 FR 45117-18. See also Initiation or Resumption of
Quotations by a Broker or Dealer Who Lacks Certain Information,
Exchange Act Release No. 9310 (Sept. 13, 1971) [36 FR 18641 (Sept.
18, 1971)] (``1971 Release''), 36 FR 18641 (``[B]rokers and dealers
should be aware that the submission or publication of a quotation at
a price which does not bear a reasonable relationship to the nature
and scope of the issuer's business or its financial status or
experience, may constitute a part of a fraudulent or manipulative
scheme.'').
\3\ See 17 CFR 240.15c2-11(f).
\4\ See 17 CFR 240.15c2-11(e)(8) (defining the term ``quotation
medium'' to mean any ``interdealer quotation system'' or any
publication or electronic communications network or other device
that is used by brokers or dealers to make known to others their
interest in transactions in any security, including offers to buy or
sell at a stated price or otherwise, or invitations of offers to buy
or sell).
\5\ See 17 CFR 240.15c2-11(b) (``Rule 15c2-11(b)'').
\6\ See 17 CFR 240.15c2-11(c) (``Rule 15c2-11(c)'').
\7\ See 17 CFR 240.15c2-11(a) (``Rule 15c2-11(a)'').
\8\ See 17 CFR 240.15c2-11(e)(6).
\9\ See 17 CFR 240.15c2-11(a)(1)(ii).
\10\ See 17 CFR 240.15c2-11(a)(2).
\11\ See 17 CFR 240.15c2-11(d) (``Rule 15c2-11(d)'').
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Rule 15c2-11 applies to quotations for securities.\12\ However,
several exceptions \13\ and exemptions \14\ apply to certain broker or
dealer activities, including: quotations for securities admitted to
trading on a national securities exchange; \15\ quotations that
represent a customer's unsolicited indication of interest
(``unsolicited quotation exception''); \16\ quotations published or
submitted in an interdealer quotation system for a security that has
been the subject of a bid or offer quotation in such a system at a
specified price, with no more than four business days in succession
without such a quotation (``piggyback exception''); \17\ quotations for
municipal securities; \18\ quotations for securities that meet certain
average daily trading volume (``ADTV'') value and total asset and
shareholder equity criteria (``ADTV and asset test exception''); \19\
quotations for a security by a broker or dealer that is named as an
underwriter in a registration statement or offering statement for that
class of security (``underwritten offering exception''); \20\ and
quotations that rely on a publicly available determination by a QIDQS
or registered national securities association (``RNSA'') that the
requirements of certain of these exceptions are met.\21\ Rule 15c2-11
does not apply to certain exempted securities,\22\ including, among
others, certain government securities, such as securities which are
direct obligations of, or obligations guaranteed as to principal or
interest by, the United States.\23\ Additionally, in 2023, the
Commission provided an exemption from Rule 15c2-11 for fixed-income
securities that are sold in compliance with the safe harbor in 17 CFR
230.144A (``Rule 144A'') under the Securities Act of 1933 (``Securities
Act'').\24\
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\12\ See 17 CFR 240.15c2-11(a).
\13\ See 17 CFR 240.15c2-11(f) (``Rule 15c2-11(f)'').
\14\ See infra notes 22-24.
\15\ See 17 CFR 240.15c2-11(f)(1).
\16\ See 17 CFR 240.15c2-11(f)(2).
\17\ See 17 CFR 240.15c2-11(f)(3).
\18\ See 17 CFR 240.15c2-11(f)(4). See also infra note 23.
\19\ See 17 CFR 240.15c2-11(f)(5).
\20\ See 17 CFR 240.15c2-11(f)(6).
\21\ See 17 CFR 240.15c2-11(f)(7).
\22\ See 15 U.S.C. 78o(c)(2)(A) (removing certain exempted
securities from the scope of Rule 15c2-11).
\23\ See 15 U.S.C. 78c(a)(12). Municipal securities are not
deemed to be ``exempted securities'' for the purposes of section 15
(or section 17A) of the Exchange Act. See 15 U.S.C.
78c(a)(12)(B)(ii); Public Law 94-29 sec. 3(3), 89 Stat. 97, 97-98
(1975). However, in 1976, the Commission adopted an exception from
Rule 15c2-11 for municipal securities. See Regulation of Municipal
Securities Professionals and Transactions in Municipal Securities,
Exchange Act Release No. 12468 (May 20, 1976) [41 FR 22820 (June 7,
1976)]. Although municipal securities have been excepted from Rule
15c2-11 since 1976, a robust municipal securities disclosure regime
has developed since the Commission's adoption of Exchange Act Rule
15c2-12 in 1989. See 17 CFR 240.15c2-12.
\24\ See Order Granting Broker-Dealers Exemptive Relief,
Pursuant to Section 36(a) and Rule 15c2-11(g) under the Securities
Exchange Act of 1934, from Rule 15c2-11 for Fixed-Income Securities
Sold in Compliance with the Safe Harbor of Rule 144A under the
Securities Act of 1933, Exchange Act Release No. 98819 (Oct. 30,
2023) [88 FR 75343 (Nov. 2, 2023)] (``144A Exemptive Release'').
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Adopted in 1971, Rule 15c2-11 was designed to prevent certain
manipulative and fraudulent trading schemes that had arisen in
connection with the distribution and trading of unregistered securities
issued by shell corporations or other companies having outstanding but
infrequently traded securities.\25\ In 2020, to provide greater
transparency of information and to allow investors to effectively
analyze the market for quoted OTC securities, the rule 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.\26\
Following the adoption of the 2020 amendments to Rule 15c2-11,\27\
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.\28\ In
[[Page 13245]]
September 2021, the Commission approved amendments to FINRA's rule
implementing the 2020 amendments to Rule 15c2-11.\29\ FINRA has always
structured its rule to apply to only equity securities that are not
traded on a national securities exchange.\30\ 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.\31\
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\25\ See 1971 Release, 36 FR 18641 (``fraudulent and
manipulative potential . . . exists when a broker or dealer submits
quotations concerning any infrequently traded security in the
absence of certain information''); Initiation or Resumption of
Quotations Without Specified Information, Exchange Act Release No.
19673 (Apr. 14, 1983) [48 FR 17111 (Apr. 21, 1983)] (``1983
Release''), 48 FR 17112.
\26\ See Exchange Act Release No. 89891 (Sept. 16, 2020) [85 FR
68124 (Oct. 27, 2020)] (``2020 Release''), 85 FR 68140.
\27\ See supra note 26.
\28\ See generally Letter from Christopher B. Killian, Managing
Director, Securities Industry and Financial Markets Assoc.
(``SIFMA'') and Lindsey Weber Keljo, Managing Director, Securities
Industry and Financial Markets Assoc.--Asset Management Group
(``SIFMA AMG'') (Mar. 2, 2026) (``SIFMA Letter''); Letter from Paul
Cellupica, General Counsel, Investment Company Institute (``ICI'')
and Lindsey Weber Keljo, Managing Director, SIFMA AMG (Nov. 21,
2024) (``ICI Letter''), available at <a href="https://www.ici.org/system/files/2024-11/24-cl-joint-rule-15c2-11-extension.pdf">https://www.ici.org/system/files/2024-11/24-cl-joint-rule-15c2-11-extension.pdf</a>; Letter from
Kristi Leo, President, Structured Finance Assoc. (``SFA'') (Dec. 9,
2021) (``SFA Letter''), available at <a href="https://structuredfinance.org/wp-content/uploads/2021/12/SFA_15c2-11_vf_website-1.pdf">https://structuredfinance.org/wp-content/uploads/2021/12/SFA_15c2-11_vf_website-1.pdf</a>; Group
Letter from Lindsey Weber Keljo, Managing Director, SIFMA AMG, et
al. (Sept. 23, 2021) (``SIFMA AMG Group Letter''), available at
<a href="https://www.sifma.org/wp-content/uploads/2021/09/Investor-15c2-11-letter-final-2021-09-23.pdf">https://www.sifma.org/wp-content/uploads/2021/09/Investor-15c2-11-letter-final-2021-09-23.pdf</a>; Letter from Christopher B. Killian,
Managing Director, SIFMA and Michael Decker, Senior Vice President,
Bond Dealers of America (``BDA'') (Aug. 26, 2021) (``BDA Letter''),
available at <a href="https://www.sifma.org/wp-content/uploads/2021/09/SIFMA-BDA-Exemptive-Request-FI-2021-08-26.pdf">https://www.sifma.org/wp-content/uploads/2021/09/SIFMA-BDA-Exemptive-Request-FI-2021-08-26.pdf</a> (in part discussing that
``the fixed income markets are different from the equity markets due
to the variety of types of securities, the large number of fixed
income securities, the lack of exchange trading, and the infrequency
of trading of particular fixed income securities, among other
things.'').
\29\ See Self-Regulatory Organizations; Financial Industry
Regulatory Authority, Inc.; Order Granting Approval of a Proposed
Rule Change Relating to Members' Filing Requirements Under FINRA
Rule 6432 (Compliance With the Information Requirements of SEA Rule
15c2-11), Exchange Act Release No. 92932 (Sept. 10, 2021) [86 FR
51700 (Sept. 16, 2021)] (``Rule 6432 Order'').
\30\ See Rule 6432 Order, 49 FR 51701 n.10. See also Letter from
Daniel Zinn, General Counsel, and Cass Sanford, Associate General
Counsel, OTC Markets Group Inc., (July 6, 2021) (supporting the
application of the proposed rule changes to the OTC equities
market), available at <a href="https://www.sec.gov/comments/sr-finra-2021-014/srfinra2021014-9038478-246207.pdf">https://www.sec.gov/comments/sr-finra-2021-014/srfinra2021014-9038478-246207.pdf</a>.
\31\ See 144A Exemptive Release. In addition, in 2024, the
Division of Trading and Markets issued a no-action letter that
addresses certain other fixed-income securities. See Letter from
Josephine J. Tao, Assistant Director, Division of Trading and
Markets, SEC, to Racquel Russell, Senior Vice President and Director
of Capital Markets Policy, Office of the General Counsel, Financial
Industry Regulatory Authority, Inc. (``FINRA'') (Nov. 22, 2024)
(``2024 No-Action Letter''), available at <a href="https://www.sec.gov/files/investment/no-action/fixed-income-rule-15c2-11-no-action-letter-finra-112224.pdf">https://www.sec.gov/files/investment/no-action/fixed-income-rule-15c2-11-no-action-letter-finra-112224.pdf</a>. Staff no-action letters and other staff documents
(including those cited herein) represent the views of Commission
staff and are not a rule, regulation, or statement of the
Commission. The Commission has neither approved nor disapproved the
content of these documents and, like all staff statements, they have
no legal force or effect, do not alter or amend applicable law, and
create no new or additional obligations for any person.
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As discussed below in Part II, consistent with the Commission's
provision of exemptive relief and the staff's issuance of a no-action
letter for certain fixed-income securities,\32\ as well as with other
Commission proposals identifying certain non-equity securities as not
requiring Rule 15c2-11's protections,\33\ the Commission is proposing
amendments to Rule 15c2-11 to replace the terms ``security'' and
``securities'' with the terms ``equity security'' or ``equity
securities.'' Under the proposal, ``equity security'' (or ``equity
securities'') would be as defined in 17 CFR 240.3a11-1'' (``Rule 3a11-
1'').
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\32\ See 144A Exemptive Release; 2024 No-Action Letter.
\33\ See Publication or Submission of Quotations Without
Specified Information, Exchange Act Release No. 39670 (Feb. 17,
1998) [63 FR 9661 (Feb. 25, 1998)] (``1998 Release''), 63 FR 9669
(stating that ``[d]ebt securities frequently are held by
institutional investors, and it does not appear that they have been
the subject of the abuses that [Rule 15c2-11] is intended to
address''); Publication or Submission of Quotations Without
Specified Information, Exchange Act Release No. 41110 (Feb. 25,
1999) [64 FR 11124 (Mar. 8, 1999)] (``1999 Release''), 64 FR 11128-
30 (stating that ``applying [Rule 15c2-11] to . . . certain fixed-
income debt securities is not directly related to microcap fraud
concerns'' and ``proposing to exclude [from Rule 15c2-11] debt
securities, non-participatory preferred stock, and investment grade
asset-backed securities''); 2019 Release, 84 FR 58230, 58239.
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II. Discussion of the Proposed Rule Amendments
A. Amendments to Rule 15c2-11
The proposed amendments would replace the terms ``security'' and
``securities'' in Rule 15c2-11 with the terms ``equity security'' or
``equity securities,'' as defined in Rule 3a11-1,\34\ but would not
otherwise change the substantive information gathering and review
requirements under existing Rule 15c2-11(a) that brokers and dealers
must satisfy before initiating (or resuming) any quotation for equity
securities in a quotation medium.
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\34\ Rule 3a11-1 defines ``equity security'' as ``any stock or
similar security, certificate of interest or participation in any
profit sharing agreement, preorganization certificate or
subscription, transferable share, voting trust certificate or
certificate of deposit for an equity security, limited partnership
interest, interest in a joint venture, or certificate of interest in
a business trust; any security future on any such security; or any
security convertible, with or without consideration into such a
security, or carrying any warrant or right to subscribe to or
purchase such a security; or any such warrant or right; or any put,
call, straddle, or other option or privilege of buying such a
security from or selling such a security to another without being
bound to do so.'' See 17 CFR 240.3a11-1.
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Exchange Act Rule 3a11-1 includes a broad range of equity interests
\35\ and provides more specificity than 15 U.S.C. 78c(a)(11) (``section
3(a)(11)''), which also defines the term ``equity security.'' \36\
Leveraging the definition in Rule 3a11-1 should provide more clarity
with respect to which securities are subject to the rule than
referencing the statutory definition. In addition, Rule 3a11-1 provides
a definition that should be familiar to issuers who are tracking their
obligations under Exchange Act section 12(g). Accordingly, the
Commission is proposing to amend paragraph (a)(1) of Rule 15c2-11 by
replacing the word ``security'' with ``an equity security as defined in
Sec. 240.3a11-1 of this chapter.'' \37\
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\35\ See Equity Securities; Exemptions from Registration,
Exchange Act Release No. 7581 (Apr. 23, 1965) [30 FR 6114 (Apr. 30,
1965)] 30 FR 6114-15.
\36\ Exchange Act section 3(a)(11) defines the term ``equity
security'' to mean ``any stock or similar security; or any security
future on any such security; or any security convertible, with or
without consideration, into such a security, or carrying any warrant
or right to subscribe to or purchase such a security; or any such
warrant or right; or any other security which the Commission shall
deem to be of similar nature and consider necessary or appropriate,
by such rules and regulations as it may prescribe in the public
interest or for the protection of investors, to treat as an equity
security.''
\37\ See infra Part IX including proposed amended Rule 15c2-
11(a)(1).
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As discussed below, Rule 3a11-1 defines the term ``equity
security'' as used in Exchange Act section 12(g),\38\ which is one of
the triggers of the information requirements specified in Rule 15c2-
11(b).\39\ Accordingly, under the proposal, Rule 15c2-11 would continue
to apply to brokers and dealers initiating (or resuming) quotations in
a quotation medium for any equity security as defined in Rule 3a11-
1.\40\ The Commission is also proposing conforming amendments to other
provisions of the rule, such as the specified and supplemental
information in Rule 15c2-11(b) and Rule 15c2-11(c), respectively, that
must be reviewed, as well as to the rule's record preservation
requirements and exceptions in Rule 15c2-11(d) and Rule 15c2-11(f),
respectively, to specify that only equity securities would be subject
to these provisions. The Commission is also proposing non-substantive,
grammatical corrections to three provisions of the rule.
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\38\ See supra note 35.
\39\ See 17 CFR 240.15c2-11(b)(3), (b)(4).
\40\ 17 CFR 240.3a11-1. The other provisions of Rule 15c2-11
would continue to apply, including the exceptions in paragraph (f).
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Regarding the proposed amendments' application to crypto
assets,\41\ to the extent a crypto asset is an equity security, as
defined in Rule 3a11-1, Rule 15c2-11 would apply to brokers and dealers
initiating (or resuming) quotations for those crypto assets in a
quotation medium.
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\41\ A ``crypto asset'' is any digital representation of value
that is recorded on a cryptographically secured distributed ledger.
The foregoing definition of ``crypto asset'' is identical to the
definition of ``Digital Asset'' in section 2(6) of the Guiding and
Establishing National Innovation for U.S. Stablecoins Act, Public
Law 119-27, 139 Stat. 419 (2025).
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By proposing to revise Rule 15c2-11 to refer to only equity
securities, the Commission does not intend to, and the proposed rule
would not, excuse brokers and dealers from their duty to comply with
applicable registration \42\
[[Page 13246]]
and antifraud provisions of the Federal securities laws and Commission
rules, including their duty to make reasonable inquiry with respect to
non-equity securities.\43\
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\42\ For example, Rule 15c2-11 has no bearing on whether brokers
or dealers may rely on the section 4(a)(3) or 4(a)(4) exemptions
from registration under the Securities Act.
\43\ See, e.g., 1971 Release, 36 FR 18641. See also 1999
Release, 64 FR 11147.
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The Commission proposes a compliance date for the proposed
amendments that is the same as the effective date, and an effective
date that is 60 days after publication of the proposed amendments in
the Federal Register. This approach would limit the amount of time
before the applicability of Rule 15c2-11's proposed revision to refer
to only equity securities, as defined in Rule 3a11-1.
In proposing to revise Rule 15c2-11 to refer to only equity
securities, the Commission recognizes that the regulatory concerns that
prompted the Commission's adoption of and subsequent amendments to Rule
15c2-11 were manipulative schemes observed in the OTC equity markets,
particularly for the shares of issuers with little or no business
activity or assets.\44\ The Commission stated when adopting Rule 15c2-
11 in 1971 that ``these concerns exist when a broker or dealer submits
quotations concerning any infrequently traded security in the absence
of certain information.'' \45\ Therefore, the rule was designed to
prevent brokers and dealers from initiating market making activities
that were critical to the success of certain manipulative and
fraudulent trading schemes with a focus on the OTC equity markets.\46\
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\44\ See Spin Offs and Shell Corporations, Exchange Act Release
No. 8638 (July 2, 1969) [34 FR 11581 (July 15, 1969)]. See also 1983
Release, 48 FR 17111-12; Initiation or Resumption of Quotations
Without Specified Information, Exchange Act Release No. 27247 (Sept.
14, 1989) [54 FR 39194 (Sept. 25, 1989)] (``1989 Release''), 54 FR
39195; Initiation or Resumption of Quotations Without Specified
Information, Exchange Act Release No. 29094 (Apr. 17, 1991) [56 FR
19148 (Apr. 25, 1991)] (``1991 Release''), 56 FR 19159; 1999
Release, 64 FR 11148, 11150; Publication or Submission of Quotations
Without Specified Information, Exchange Act Release No. 87115 (Sept.
25, 2019) [84 FR 58206 (Oct. 30, 2019)] (``2019 Release''), 84 FR
58219.
\45\ 1971 Release, 36 FR 18641.
\46\ See 1971 Release, 36 FR 18641; 1983 Release, 48 FR 17112.
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The Commission also previously explored whether to explicitly
except non-equity securities, particularly fixed-income securities,
from the rule. For instance, in requesting comment in the 1999 Release
as to whether to except fixed-income securities from the rule, the
Commission stated that the type of issuer information required by Rule
15c2-11 is much less relevant to the pricing and trading of fixed-
income securities.\47\ In that proposal, the Commission also stated
that fraud and manipulation in microcap securities has not been evident
in the fixed-income market, and that non-convertible debt securities
and investment grade asset-backed securities generally trade at prices
and in denominations that make them less likely targets for
manipulation.\48\ Many commenters to the 1998 Release concurred, and
asked that amendments be crafted to cover only those equity securities
most likely to be prone to abusive activities.\49\
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\47\ See 1999 Release, 64 FR 11130.
\48\ See 1999 Release, 64 FR 11130.
\49\ See 1999 Release, 64 FR 11128. The Commission did not act
on the proposal.
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In 2020, the Commission amended Rule 15c2-11 to require that
certain information about a security be current and publicly available
for a broker or dealer to initiate (or resume) a quotation for it.\50\
In doing so, the Commission stated that it was seeking to further
protect retail investors from fraud and manipulation in the OTC
market.\51\ While these amendments were intended to enhance protections
for retail investors in equity securities,\52\ such as by requiring
that the information be both current and publicly available, they
created potential operational and liquidity difficulties with regard to
non-equity securities, for which the applicable information was less
likely to be current and publicly available.\53\
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\50\ See 2020 Release.
\51\ See 2020 Release, 85 FR 68128.
\52\ See 2020 Release, 85 FR 68125.
\53\ See, e.g., SIFMA AMG Group Letter, at 7 (addressing fixed-
income securities); SFA Letter, at 4-5 (addressing asset-backed
securities).
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In 2023, the Commission issued exemptive relief for fixed-income
securities sold in reliance on Rule 144A \54\ because issuers of such
securities must provide information to investors (including potential
investors) upon request, and such investors--who must be qualified
institutional buyers--would be able to use the provided information to
make better informed investment decisions and assess potential risks in
investing in the securities.\55\ Market participants stated that,
without relief, the amended rule would undermine its intended purpose
because issuers of such securities would reduce information flow and
possibly go dark because making such information available to the
general public, rather than to only persons who are qualified to invest
in such securities would, among other things, reveal confidential
information.\56\
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\54\ 17 CFR 230.144A. See also No. 33-6862 (Apr. 23, 1990), 55
FR 17933, 17939 n.55 (Apr. 30, 1990) (``Rule 144A Adopting
Release'') (noting the applicability of Rule 15c2-11 to Rule 144A
offerings).
\55\ See 144A Exemptive Release.
\56\ See, e.g., Letter from Andrew Pincus, Petition for
Rulemaking and Application for Exemption from Rule 15c2-11 (Nov. 22,
2022), available at <a href="https://www.sec.gov/files/rules/petitions/2022/petamend-rule-15c211-4795.pdf">https://www.sec.gov/files/rules/petitions/2022/petamend-rule-15c211-4795.pdf</a>.
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In 2024, the staff issued a no-action letter that addressed
numerous categories of fixed-income securities.\57\ The staff issued
this letter in response to various concerns by market participants
including that, unlike the equity markets, there is no infrastructure
where the rule's required current information for fixed-income
securities is consolidated and publicly available.\58\ Information on
OTC equity securities has been available and consolidated on various
sources, such as OTC Markets and Bloomberg, for some time. Information
on non-equity securities is not similarly consolidated and thus often
not publicly available or easily accessible,\59\ creating burdens on
brokers and dealers to ensure that current Rule 15c2-11 information
remains publicly available before initiating or resuming quotations--a
requirement that did not exist prior to 2020.\60\ Similar to the
reasons behind the Commission's exemption for fixed-income securities
sold under Rule 144A, investors in the securities covered by the no-
action letter are often sophisticated or qualified investors.\61\
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\57\ See 2024 No-Action Letter. Although the Commission's
exemptive relief and the staff's no-action letter address the vast
majority of fixed-income securities, they do not encompass all non-
equity securities. The 2024 No-Action Letter superseded staff no-
action letters that were issued starting in 2021.
\58\ See SIFMA AMG Group Letter, at 6 (stating that for fixed-
income securities ``there is currently no infrastructure for
compliance with the Rule''); SFA Letter, at 2 (stating that ``Rule
15c2-11 information is not materially relevant to ABS and therefore
such information is not available''); BDA Letter, at 4 (stating that
``accurate volume data is not available [for fixed-income
securities]'').
\59\ See, e.g., SIFMA Letter, at 6 (stating that ``there is a
party (a qualified interdealer quotation system, or QIDQS) in the
OTC equity markets that makes determinations of public availability
of information upon which dealers may rely for Rule 15c2-11
compliance. Since 2021, no vendors, SROs, bond exchanges or ATSs
have stepped forward to take this role in the fixed-income
[markets]''); supra note 58.
\60\ See, e.g., The Detriment of Rule 15c2-11's Application to
Fixed Income Markets, Joe Corcoran, SIFMA (Sept. 12, 2022),
available at <a href="https://www.sifma.org/news/blog/the-detriment-of-rule-15c2-11s-application-to-fixed-income-markets-the-consequences-of-unilateral-rulemaking-without-public-comment">https://www.sifma.org/news/blog/the-detriment-of-rule-15c2-11s-application-to-fixed-income-markets-the-consequences-of-unilateral-rulemaking-without-public-comment</a>.
\61\ See ICI Letter, at 3 (``in the fixed income market . . .
traders are overwhelmingly institutional investors''); SFA Letter,
at 3 (``Unlike the equity markets which include substantial retail
investment, the fixed income markets are largely institutional.'').
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Further, many exceptions from Rule 15c2-11 available to equity
securities
[[Page 13247]]
traded on OTC markets are not typically available to non-equity
securities.\62\ As the Commission has previously stated, such
exceptions help reduce unnecessary burdens on brokers and dealers and
enhance the efficiency of the OTC market.\63\ For instance, Rule 15c2-
11 includes an exception for securities listed on national securities
exchanges if certain conditions are met, but few fixed-income
securities are listed on a national securities exchange.\64\ In
addition, the exceptions that rely on the worldwide ADTV value,\65\ or
those premised on the frequency of quotations,\66\ would not typically
be available to non-equity securities because accurate volume data is
often not available and such securities can be infrequently traded or
quoted. The result is a more burdensome rule for non-equity securities.
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\62\ See SIFMA AMG Group Letter, at 7 (requesting that the
Commission ``revise the Rule in a manner that is consistent with the
structure of the [fixed-income] markets, with workable provisions
and exceptions'').
\63\ See 2020 Release, 85 FR 68140.
\64\ See 17 CFR 240.15c2-11(f)(1). 15 U.S.C. 78l(g) (``section
12(g)'') of the Exchange Act applies to equity securities, making it
more likely that current and publicly available information is
readily available to brokers and dealers for review. See infra note
69.
\65\ See 17 CFR 240.15c2-11(f)(5).
\66\ See 17 CFR 240.15c2-11(f)(3).
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Finally, the types of information required by the rule can be
burdensome to locate or may be nonexistent for non-equity securities.
As noted above, Rule 3a11-1 defines the term ``equity security'' as
used in Exchange Act section 12(g),\67\ which only applies to equity
securities,\68\ and registration pursuant to section 12(g) is one of
the triggers for many of the information requirements specified in Rule
15c2-11(b).\69\ Therefore, paragraph (b) information is more likely to
be readily available to brokers and dealers with respect to equity
securities than it is for non-equity securities, given the affirmative
registration requirements imposed on certain issuers of equity
securities, but not non-equity securities, by section 12(g). Section
12(g)(1) of the Exchange Act and 17 CFR 240.12g-1 (``Rule 12g-1'')
promulgated thereunder generally require an issuer to register a class
of equity securities if the issuer of the securities, at the end of its
fiscal year, has more than $10,000,000 in total assets and a class of
equity securities held of record by either 2,000 persons or 500 persons
who are not accredited investors.\70\ Every issuer of a class of equity
securities registered pursuant to section 12(g) is required to file
with the Commission periodic and current reports pursuant to section
13(a) of the Exchange Act, which would help to satisfy the paragraph
(b)(3) information requirements.\71\ In addition, market participants
have expressed concerns that, with respect to issuers of fixed-income
or other non-equity securities that have not incurred a reporting
obligation under the Exchange Act and have not filed a registration or
offering statement with respect to the non-equity securities, the
``catch-all'' information specified in Rule 15c2-11(b)(5) often is not
current or publicly available.\72\
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\67\ See supra note 35.
\68\ See 15 U.S.C. 78l(g)(1)(A).
\69\ See 17 CFR 240.15c2-11(b)(3), (b)(4). Although issuers of
non-equity securities would incur reporting obligations under 15
U.S.C. 78m(a) (``section 13(a)'') or 15 U.S.C. 78o(d) (``section
15(d)'') of the Exchange Act to the extent they choose to list a
class of non-equity securities on a national securities exchange or
conduct a registered offering of non-equity securities, section
12(g) does not apply to non-equity securities and there is no
comparable provision that mandates registration of a class of non-
exchange traded non-equity securities under the Exchange Act.
\70\ See 15 U.S.C. 78l(g)(1); 17 CFR 240.12g-1.
\71\ See 17 CFR 240.15c2-11(b)(3).
\72\ See, e.g., ICI Letter, at 3; SFA Letter, at 4.
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For the reasons discussed above, the Commission is proposing
amendments to revise the rule to refer to only equity securities.
Request for Comments
The Commission generally requests comment from the public on this
aspect of the proposal. More specific requests for comment are set
forth below. As much as possible, commenters are requested to provide
empirical data in support of any arguments or analyses and to offer
explanations for their views.
Q1. The Commission is proposing to use the equity security
definition in Rule 3a11-1. Does this definition provide adequate
specificity to market participants as to Rule 15c2-11's scope? If not,
what other amendment(s) to Rule 15c2-11 would be required to provide
such specificity?
Q2. Is there another or alternative equity security definition that
is more appropriate (than the definition in Rule 3a11-1) to be
referenced in Rule 15c2-11? Please explain.
Q3. Should a definition of equity security be added to paragraph
(e) of Rule 15c2-11?
Q4. If the Commission adds a definition of equity security to Rule
15c2-11, should the definition incorporate all of Rule 3a11-1's
elements or only a subset of the different types of equity securities
listed under Rule 3a11-1? For example, should the definition exclude
security futures, which are required to be traded on a national
securities exchange pursuant to 15 U.S.C. 78f(h)(1) (section 6(h)(1))
of the Exchange Act, or puts, calls, options or privileges? \73\ Please
explain.
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\73\ See, e.g., Letter from Karl Trinko (Mar. 3, 2026),
available at <a href="https://www.sec.gov/files/rules/petitions/2026/petn4-888.pdf">https://www.sec.gov/files/rules/petitions/2026/petn4-888.pdf</a> (discussing the securities of certain royalty trusts).
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B. Conforming Amendments
The Commission is proposing conforming amendments throughout Rule
15c2-11 in light of its proposal to revise Rule 15c2-11 to refer to
only equity securities, as defined in Rule 3a11-1.
1. Specified and Supplemental Information
Under the proposed amendments, documents and information concerning
only equity securities would need to be gathered and reviewed in
satisfying Rule 15c2-11's information gathering and review
requirements, except with regard to the existing requirement in
paragraph (c)(2) concerning any trading suspension order, issued by the
Commission within a certain timeframe, regarding ``any securities'' of
the security's issuer or its predecessor.\74\ The documents and
information that are required to be gathered and reviewed are
specified, (1) with regard to issuers and their securities, in
paragraph (b) of Rule 15c2-11 (``paragraph (b) information'') and, (2)
with regard to certain supplemental information, in paragraph (c) of
Rule 15c2-11 (``supplemental information'').\75\
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\74\ Reviewing the information in trading suspension orders,
regardless of the type or class of securities to which the
suspension applies, is important because it can apprise brokers and
dealers of questions the Commission has raised regarding the issuer
or its securities that should be considered when they determine to
publish quotations. See 1991 Release, 56 FR 19154. Limiting the
required review of trading suspension orders to only equity
securities could prevent brokers and dealers from being alerted to
the possibility that information in their possession concerning the
issuer may no longer be accurate. See 1991 Release, 56 FR 19153. See
also 1989 Release, 54 FR 39196 (stating that ``it is essential that
a broker-dealer considering submitting quotations for a security be
alert to unusual circumstances that may be present, such as the
issuance of a trading suspension'').
\75\ See 17 CFR 240.15c2-11(a)(1)(i)(C), (a)(2)(iii).
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Paragraph (b) information generally references certain types of
Commission filings (e.g., prospectus, offering circular, annual report
or statement, or periodic or current report) \76\ or other documents
and information,\77\ depending on the regulatory status of the issuer
of the security that is the subject of a broker's, dealer's, or QIDQS's
review. Certain paragraph (b) information currently includes the term
[[Page 13248]]
``security.'' The proposal, therefore, includes conforming amendments
to paragraph (b) to specify that documents and information regarding
only equity securities must be gathered and reviewed. The Commission is
proposing to replace the term ``security'' with the defined term
``equity security'' in the following paragraphs of Rule 15c2-11:
paragraph (b)(3)(v), with respect to an annual statement referred to in
section 12(g)(2)(G)(i) of the Exchange Act; paragraph (b)(4), with
respect to a copy of the information that must be published for a
foreign private issuer to meet the exemption from having to register a
class of securities under section 12(g) of the Exchange Act; and
paragraphs (b)(5)(i)(D), (b)(5)(i)(E), (b)(5)(i)(F), (b)(5)(i)(P), and
(b)(5)(ii), with respect to information regarding an issuer that
generally is not subject to statute- or rule-based disclosure and
reporting requirements under the Federal securities laws.\78\
Additionally, the Commission is proposing to add the word ``equity'' in
front of the word ``security'' in the introductory paragraph of Rule
15c2-11(c). These conforming amendments are being proposed only for the
purpose of specifying Rule 15c2-11's scope and do not change the
requirements or prohibitions of any other Exchange Act sections or
rules referenced in Rule 15c2-11.
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\76\ See 17 CFR 240.15c2-11(b)(1) through (3).
\77\ See 17 CFR 240.15c2-11(b)(4), (b)(5).
\78\ The Commission is also proposing a non-substantive,
grammatical amendment to change the word ``a,'' which precedes the
word ``security'' in the existing rule, to ``an,'' which would
precede the words ``equity security'' in paragraph (b)(3)(v).
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Request for Comments
The Commission generally requests comment from the public on this
aspect of the proposal. More specific requests for comment are set
forth below. As much as possible, commenters are requested to provide
empirical data in support of any arguments or analyses and to offer
explanations for their views.
Q5. In satisfying Rule 15c2-11's information gathering and review
requirements concerning any security, a broker, dealer, or QIDQS
currently must, under paragraph (c)(2), gather and review (if any) a
copy of any trading suspension order, issued by the Commission within a
certain timeframe, regarding ``any securities'' of the security's
issuer or its predecessor.\79\ If the Commission were to adopt the
proposal to revise Rule 15c2-11 to refer to only equity securities,
should the supplemental information in paragraph (c)(2) also be revised
to specify ``any equity securities'' of the issuer or its predecessor?
Would it raise any investor protection concerns if trading suspension
orders for only equity securities were required to be reviewed for
purposes of satisfying Rule 15c2-11's information gathering and review
requirements? Please explain.
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\79\ See supra note 74.
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2. Exceptions
In light of the Commission's proposal to revise Rule 15c2-11 to
refer to only equity securities, the Commission is proposing conforming
amendments to specify that Rule 15c2-11's conditional exceptions in
paragraph (f) would cover quotations for only equity securities.
Certain of these exceptions currently include the word ``security.''
The Commission is therefore proposing to add the word ``equity'' in
front of the word ``security'' in the following paragraphs of Rule
15c2-11: paragraph (f)(1), with respect to quotations for securities
traded on a national securities exchange; paragraphs (f)(3)(i)(A),
(f)(3)(i)(B), (f)(3)(i)(B)(2), (f)(3)(i)(C), and (f)(3)(ii), with
respect to the ``piggyback'' exception for regular and frequent priced
quotations; paragraphs (f)(5)(i) and (f)(5)(ii), with respect to
quotations for securities that meet a specified ADTV value and asset
test; and paragraph (f)(6), with respect to quotations for securities
issued in underwritten offerings.\80\ Rule 15c2-11's other exceptions--
in paragraph (f)(2), concerning quotations representing a customer's
unsolicited indication of interest,\81\ and in paragraph (f)(7),
concerning quotations published in reliance on a publicly available
determination from a QIDQS or RNSA that the conditions of certain rule
exceptions are met \82\--do not include the word ``security'' but,
under the proposal, similarly would cover quotations for only equity
securities.
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\80\ The Commission is also proposing non-substantive,
grammatical amendments to change the word ``a,'' which precedes the
word ``security'' in the existing rule, to ``an,'' which would
precede the words ``equity security'' in certain of these
paragraphs: (f)(1), (f)(3)(i)(A), (f)(3)(i)(C), (f)(5)(i), and
(f)(6).
\81\ Brokers and dealers are reminded that the exception in
paragraph (f)(2) is available only for quotations representing an
unsolicited indication of interest from a customer (other than a
person acting as or for a dealer). The exception would not apply to
a broker's or dealer's proprietary order that is routed by or
through another broker or dealer because a broker's or dealer's
proprietary order does not originate with a customer. See 1984
Release, 49 FR 45119-20 n.13.
\82\ A broker or dealer may publish quotations in reliance on a
QIDQS's or RNSA's publicly available determination that the
conditions of any of the following Rule 15c2-11 exceptions are met:
(f)(1), (f)(3)(i), or (f)(4) or (5). See 17 CFR 240.15c2-11(f)(7). A
QIDQS or RNSA can also make a publicly available determination that
paragraph (b) information is current and publicly available for
purposes of satisfying the conditions in paragraph (f)(2)(iii)(B) or
paragraph (f)(3)(ii)(A). A QIDQS or RNSA that makes any such
publicly available determination must establish, maintain, and
enforce certain reasonably designed written policies and procedures.
See 17 CFR 240.15c2-11(a)(3). Although paragraph (a)(3) of Rule
15c2-11 does not include the word ``security,'' under the proposal,
its requirements would be applied with respect to making any
publicly available determination (described in paragraph
(f)(2)(iii)(B), paragraph (f)(3)(ii)(A), or paragraph (f)(7))
concerning an equity security.
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Additionally, the Commission is proposing to remove Rule 15c2-11's
existing exception for municipal securities, in paragraph (f)(4),
because this exception is expected to no longer be needed if Rule 15c2-
11 referred to only equity securities.\83\ The Commission similarly is
proposing a conforming amendment in paragraph (f)(7) (quotations
published in reliance on a publicly available determination from a
QIDQS or RNSA that the conditions of certain rule exceptions are met)
to remove the existing reference to the municipal securities exception
in paragraph (f)(4) because the municipal securities exception would be
removed from Rule 15c2-11.
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\83\ In addition, although municipal securities have been
excepted from Rule 15c2-11 since 1976, a robust municipal securities
disclosure regime has developed since the Commission's adoption of
Exchange Act Rule 15c2-12 in 1989. See 17 CFR 240.15c2-12 (adopted
``[a]s a means reasonably designed to prevent fraudulent, deceptive,
or manipulative acts or practices''). Furthermore, the MSRB requires
brokers, dealers, and municipal securities dealers to make separate
time of trade disclosures that protect individual investors in the
municipal securities market. See MSRB Rule G-47 (requiring brokers,
dealers, and municipal securities dealers to disclose to customers
at or prior to the time of trade all material information known or
available publicly through established industry sources).
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Request for Comments
The Commission generally requests comment from the public on this
aspect of the proposal. More specific requests for comment are set
forth below. As much as possible, commenters are requested to provide
empirical data in support of any arguments or analyses and to offer
explanations for their views.
Q6. Should Rule 15c2-11 continue to include an exception for
municipal securities, in paragraph (f)(4), if Rule 15c2-11 were revised
to refer to only equity securities? What would be the purpose or
advantage of preserving such an exception if Rule 15c2-11 referred to
only equity securities? Do commenters know of, or anticipate the
possibility of, any municipal securities being structured in a way that
meets the definition of the term ``equity security,'' as defined in
Rule 3a11-1?
3. Record Preservation Requirements
Paragraph (d) of Rule 15c2-11 sets forth requirements for any
broker, dealer, QIDQS, or RNSA to preserve
[[Page 13249]]
records that support, as applicable, their satisfaction of the
information gathering and review requirements, reliance on certain Rule
15c2-11 exceptions, a publicly available determination made pursuant to
paragraph (a)(2)(iv) or paragraph (a)(3), or reliance on any such
publicly available determination.\84\ In light of the proposal to
revise Rule 15c2-11 to refer to only equity securities, the Commission
is proposing conforming amendments to specify the scope of Rule 15c2-
11's record preservation requirements, some of which currently include
the word ``security.'' The Commission is therefore proposing to add the
word ``equity'' in front of the word ``security'' in paragraphs
(d)(1)(i)(A) and (d)(1)(i)(B) of Rule 15c2-11, which pertain to
supporting documents and information for the information gathering and
review requirements.\85\ Rule 15c2-11's other record preservation
requirements \86\ currently do not include the word ``security'' but,
under the proposal, similarly would be applied only with respect to
brokers' or dealers' quotations for equity securities or any QIDQS's or
RNSA's publicly available determinations regarding equity securities.
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\84\ See 17 CFR 240.15c2-11(d)(1), (d)(2).
\85\ The Commission is also proposing non-substantive,
grammatical amendments to change the word ``a,'' which precedes the
word ``security'' in the existing rule, to ``an,'' which would
precede the words ``equity security'' in these paragraphs.
\86\ See 17 CFR 240.15c2-11(d)(1)(ii), (d)(2), (d)(2)(i),
(d)(2)(ii).
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Additionally, the Commission is proposing to amend the existing
record preservation requirement in paragraph (d)(2)(ii) for any broker
or dealer that relies on a publicly available determination described
in paragraph (f)(7), if the publicly available determination pertains
to the availability of the municipal securities exception in paragraph
(f)(4). As discussed above, in Part II.B.2, the Commission is proposing
to remove the municipal securities exception, as well as the reference
to that exception in paragraph (f)(7). In light of these proposed
amendments, the Commission is proposing a conforming amendment in
paragraph (d)(2)(ii) to remove the existing reference to paragraph
(f)(4) because it would no longer be appropriate to include if the
exception that serves as a basis for this record preservation
requirement were removed.
C. Technical Amendments
The Commission is proposing three technical, grammatical
corrections to Rule 15c2-11 that would not change the meaning or
operation of any of the rule's provisions. Specifically, paragraph
(f)(3)(ii) of the piggyback exception currently erroneously repeats the
word ``in.'' The proposed amendments would remove the second, redundant
``in'' from this provision. Additionally, the word ``federal'' appears
twice in Rule 15c2-11, in paragraphs (b)(5)(i)(P) and (e)(5). The
proposed amendments would capitalize the word ``Federal'' in both
instances.
Request for Comments
The Commission generally requests comment from the public on this
aspect of the proposal. As much as possible, commenters are requested
to provide empirical data in support of any arguments or analyses and
to offer explanations for their views.
III. General Request for Comment
The Commission generally requests comment from the public on all
aspects of the proposal. As much as possible, commenters are requested
to provide empirical data in support of any arguments or analyses and
to offer explanations for their views.
Q7. As discussed above, in Parts I and II, the Commission is
proposing to revise Rule 15c2-11 to refer to only equity securities, as
defined in Rule 3a11-1, without changing any of the rule's other
requirements or conditions. Do commenters believe that the proposed
amendments should involve any changes to Rule 15c2-11's requirements or
conditions--other than determining whether the subject security meets
the definition of equity security in Rule 3a11-1--that were not
discussed above, in Part II? Please explain.
Q8. Rule 15c2-11's definitions for the terms ``quotation'' and
``quotation medium,'' in paragraphs (e)(7) and (e)(8), respectively,
currently are consistent with section 15(c)(2) of the Exchange Act,
which applies to any security (other than an exempted security or
commercial paper, bankers' acceptances, or commercial bills). If Rule
15c2-11 were revised to refer to only equity securities, should Rule
15c2-11's definitions for the terms quotation and quotation medium be
amended to add the word ``equity'' preceding any mention of the word
``security?'' Or, is any such amendment redundant or otherwise
unnecessary given the proposed revisions in paragraphs (a), (b), (c),
(d), and (f) of the rule? Please explain.
Q9. Should Rule 15c2-11 be amended to include an exception in
paragraph (f) for equity securities that are ``crypto assets''? Should
such an exception contain any conditions? Why or how are the securities
that would be covered by such an exception less likely to be the
subject of fraudulent or manipulative activity? Please discuss the
advantages and disadvantages of such an exception.
Q10. Should the Commission adopt a specified information paragraph,
for purposes of satisfying Rule 15c2-11's information gathering and
review requirements, that can be more narrowly tailored (than existing
paragraph (b)(5)(i) may be) to address equity securities that are
crypto assets? Please explain.
Q11. In 2020, the Commission proposed a conditional exemption from
Rule 15c2-11 to facilitate the formation and implementation of an
``expert market'' for sophisticated or professional investors in grey
market securities (i.e., securities that trade over-the-counter but for
which no quoted prices are published or submitted in a quotation medium
for buyers and sellers to access).\87\ Should the Commission re-propose
the conditional exemption? \88\ Please explain the purpose of such an
expert market if the Commission were to adopt the proposal to revise
Rule 15c2-11 to refer to only equity securities. Why would such an
exemption to facilitate the formation of an expert market be necessary
or appropriate in the public interest? Should any further safeguards be
included as a condition to this exemption (e.g., a condition that all
quotations be priced, consist of both a bid and an offer, meet a
minimum size requirement, etc.)? Should any other conditions be
included to ensure that this market is limited to sophisticated or
professional investors? Please explain.
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\87\ See Notice of Proposed Conditional Exemptive Order Granting
a Conditional Exemption From the Information Review Requirement and
the Recordkeeping Requirement Under the Securities Exchange Act of
1934 for Certain Publications or Submissions of Broker-Dealer
Quotations on an Expert Market, Exchange Act Release No. 90769 (Dec.
22, 2020) [86 FR 2311 (Jan. 12, 2021)] (``2020 Expert Market
Notice'').
\88\ See 2020 Expert Market Notice.
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Q12. Instead of providing an exemption for the expert market
described in the 2020 Expert Market Notice, should the rule include an
exception in paragraph (f) of Rule 15c2-11 to facilitate the formation
of any expert market, subject to certain conditions? Please explain why
this exception would be needed if the Commission were to adopt the
proposal to revise Rule 15c2-11 to refer to only equity securities.
Additionally, please explain what conditions the exception should
include to promote investor protection; the maintenance of fair,
orderly, and efficient markets; and capital formation.
[[Page 13250]]
Q13. Do some non-reporting companies choose not to make their
paragraph (b) information available to brokers or dealers? If so, how
often does this occur and what is the impact on the liquidity of these
securities? What is the effect on shareholders? What effect would the
formation of an expert market have on the liquidity of the securities
of non-reporting companies that choose not to make their paragraph (b)
information publicly available?
Q14. Have some brokers or dealers ceased market making in
securities currently within the scope of Rule 15c2-11 rather than
comply with its provisions, as amended in 2020? If yes, has this
significantly reduced liquidity in these securities? Please explain,
including by addressing any types or classes of securities in which
brokers or dealers have ceased market making.
Q15. Would having simultaneous compliance and effective dates for
the amendments (proposed to be 60 days after publication of the
proposed amendments in the Federal Register) present any operational
difficulties or other challenges? Please explain.
Q16.
IV. Economic Analysis
This section examines the economic effects of the proposed
amendments, including expected benefits, costs, and effects on
efficiency, competition, and capital formation.\89\
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\89\ Under section 3(f) of the Exchange Act, whenever the
Commission engages in rulemaking under the Exchange Act and is
required to consider or determine whether an action is necessary or
appropriate in the public interest, it must consider, in addition to
the protection of investors, whether the action will promote
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f). In addition, section 23(a)(2) of the Exchange Act prohibits
the Commission from adopting any rule that would impose a burden on
competition not necessary or appropriate in furtherance of the
purposes of the Exchange Act. See 15 U.S.C. 78w(a)(2).
---------------------------------------------------------------------------
As explained in Part I, following the adoption of the 2020
amendments to Rule 15c2-11 that required 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,\90\ 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.\91\ Nevertheless, industry
participants' concerns regarding the application of the rule prompted
the Commission to provide relief for the vast majority of fixed-income
securities.\92\
---------------------------------------------------------------------------
\90\ See supra note 26.
\91\ See supra note 28.
\92\ See supra note 31.
---------------------------------------------------------------------------
Consistent with the Commission's prior provision of exemptive
relief for certain fixed-income securities \93\ and with other
Commission proposals identifying certain non-equity securities as not
requiring Rule 15c2-11 protections,\94\ the Commission is proposing
amendments to Rule 15c2-11 to amend the rule by replacing the term
``security'' with ``equity security.'' Under the proposal, equity
security would be as defined in Rule 3a11-1.
---------------------------------------------------------------------------
\93\ See 144A Exemptive Release.
\94\ See supra note 33.
---------------------------------------------------------------------------
Where possible, the Commission quantifies the expected economic
effects. However, for the proposed rule, the Commission is unable to
fully quantify the expected effects due to data limitations for
securities that are not equity securities as defined in Rule 3a11-1.
For example, we lack data on certain non-equity quotations and broker-
dealers that quote non-equity securities, particularly those non-equity
securities that are not presently covered by the exemptive order or
staff no-action position, which prevent quantification of potential
aggregate cost savings from the proposed amendments. Hence, the
discussion below is mostly qualitative in nature, and we describe, as
feasible, the direction of the economic effects and their economic
significance.
A. Baseline
The baseline against which the benefits, costs, and the effects on
efficiency, competition, and capital formation for the proposed
amendments are measured consists of the current regulatory framework,
including existing exemptions and no-action positions, and the existing
OTC market, including affected securities and parties in that
market.\95\
---------------------------------------------------------------------------
\95\ See, e.g., Nasdaq v. SEC, 34 F.4th 1105, 1111-15 (D.C. Cir.
2022). This approach also follows SEC staff guidance on economic
analysis for rulemaking. See SEC Staff, Current Guidance on Economic
Analysis in SEC Rulemaking (Mar. 16, 2012), available at <a href="https://www.sec.gov/divisions/riskfin/rsfi_guidance_econ_analy_secrulemaking.pdf">https://www.sec.gov/divisions/riskfin/rsfi_guidance_econ_analy_secrulemaking.pdf</a> (``The economic
consequences of proposed rules (potential costs and benefits
including effects on efficiency, competition, and capital formation)
should be measured against a baseline, which is the best assessment
of how the world would look in the absence of the proposed
action.''); id. at 7 (``The baseline includes both the economic
attributes of the relevant market and the existing regulatory
structure.'').
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1. Regulatory Baseline
Rule 15c2-11 is intended to protect investors from certain
manipulative and fraudulent trading schemes by requiring brokers and
dealers to consider financial and other information about the issuer of
a security before they commence making a market in that security. In
particular, brokers and dealers must gather specified current and
publicly available information regarding the security and its issuer
and, based upon a review of such information, along with certain
supplemental information, have a reasonable basis under the
circumstances for believing that such information is accurate in all
material respects and is from a reliable source.\96\ The production of
the required information that brokers and dealers have to gather prior
to publishing quotes benefits investors because not only are quotes
more efficiently priced but investors also have easier access to
current and publicly available information about the securities.
---------------------------------------------------------------------------
\96\ See supra Part I for detail on the information required.
---------------------------------------------------------------------------
Numerous industry participants have stated that they always
understood Rule 15c2-11 to apply only to equity securities.\97\ After
industry participants shared their concerns regarding the rule's
application following the 2020 amendments to Rule 15c2-11, the
Commission provided exemptive relief and the staff issued a no-action
letter addressing the vast majority of fixed-income securities.\98\
Accordingly, consistent with industry participants' understanding of
the application of Rule 15c2-11, we would expect that Rule 15c2-11 is
being applied with respect to non-equity securities only to the extent
that the current regulatory text has been understood by particular
broker-dealers to apply to non-equity OTC securities.
---------------------------------------------------------------------------
\97\ See supra note 28 and accompanying text.
\98\ See supra note 31 (discussing the 144A Exemptive Release
and the 2024 No-Action Letter) and accompanying text.
---------------------------------------------------------------------------
2. Affected Securities
As discussed in Part II.A above, under the proposal, Rule 15c2-11
would continue to apply to equity securities, as defined in Rule 3a11-
1. Regarding the proposed amendments' application to crypto assets,\99\
to the extent a crypto asset is an equity security, as defined in Rule
3a11-1, Rule 15c2-11 would apply to brokers and dealers initiating or
resuming quotations for those equity securities in a quotation medium.
---------------------------------------------------------------------------
\99\ A ``crypto asset'' is any digital representation of value
that is recorded on a cryptographically secured distributed ledger.
The foregoing definition of ``crypto asset'' is identical to the
definition of ``Digital Asset'' in section 2(6) of the Guiding and
Establishing National Innovation for U.S. Stablecoins Act, Public
Law No. 119-27, 139 Stat. 419 (2025).
---------------------------------------------------------------------------
In 2023, the Commission issued exemptive relief for fixed-income
securities sold in reliance on Rule
[[Page 13251]]
144A.\100\ The staff has also issued a no-action position for numerous
categories of fixed-income securities.\101\ Estimating the number of
fixed-income securities to which the no-action position has relevance
is difficult because the no-action position applied to fixed-income
securities or issuers that met certain criteria, and which are not
necessarily reflected in data reported by issuers or market
intermediaries. One source of fixed-income transactions, the Trade
Reporting and Compliance Engine (TRACE), contains transactions for over
53,100 bond issues from over 3,300 issuers in the first quarter of
2025.\102\
---------------------------------------------------------------------------
\100\ See supra note 54.
\101\ See 2024 No-Action Letter.
\102\ Securities that are eligible to be reported to TRACE are
debt securities that are United States dollar-denominated and are:
(1) issued by a U.S. or foreign private issuer, and, if a
``restricted security'' as defined in Securities Act Rule 144(a)(3),
sold pursuant to Securities Act Rule 144A; (2) issued or guaranteed
by an Agency as defined in paragraph (k) or a Government-Sponsored
Enterprise as defined in paragraph (n); (3) U.S. Treasury Securities
as defined in paragraph (p); or (4) Foreign Sovereign Debt
Securities as defined in paragraph (kk) Excluded are debt securities
that are Money Market Instruments as defined in paragraph (o). See
FINRA Rule 6710(a), available at: <a href="https://www.finra.org/rules-guidance/rulebooks/finra-rules/6710">https://www.finra.org/rules-guidance/rulebooks/finra-rules/6710</a>.
---------------------------------------------------------------------------
3. Affected Parties
Rule 15c2-11 would continue to apply to broker-dealers who publish
quotations for OTC equity securities, any QIDQS that undertakes to
satisfy the rule's information gathering and review requirements
concerning an OTC equity security and makes a publicly available
determination regarding such review, and any QIDQS or RNSA that chooses
to make a publicly available determination regarding the public
availability of current paragraph (b) information or the availability
of certain Rule 15c2-11 exceptions for OTC equity securities. According
to available data, 1,261 of 3,388 broker-dealers filing FOCUS reports
report engaging in the ``Retailing Corporate Equity Securities Over The
Counter.'' The Commission estimates that approximately 196 brokers and
dealers,\103\ one QIDQS,\104\ and one RNSA \105\ would be subject to
rule requirements associated with documenting whether the conditions of
an exception in paragraph (f) are met and with preserving corresponding
records.\106\ However, only twelve brokers and dealers filed a Form 211
pursuant to FINRA Rule 6432(a) in 2024.\107\ The Commission believes
that most OTC equity securities are quoted on OTC Link ATS and Global
OTC, to the extent the quotation is subject to Rule 15c2-11.\108\ As of
September 30, 2025, there were 77 broker and dealer subscribers to OTC
Link ATS. As of September 30, 2025, there were 119 brokers and dealers
that trade on Global OTC.\109\
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\103\ As of September 30, 2025, there were 77 brokers and dealer
subscribers to OTC Link ATS. As of September 30, 2025, there were
119 brokers and dealers that trade on Global OTC. The Commission
believes that most OTC equity securities are quoted on OTC Link ATS
and Global OTC, to the extent the quotation is subject to Rule 15c2-
11, and that the total amount of individual brokers and dealers
trading on these systems reasonably estimates the number of brokers
and dealers that may be subject to PRA burdens in satisfying Rule
15c2-11's requirements. See 2020 Release, 85 FR 68174 n.564. The
Commission recognizes that there may be equity securities that are
quoted in other quotation mediums but, at this time, does not have
the empirical data to include them in the PRA burdens estimations.
\104\ See infra note 141.
\105\ Currently, FINRA is the only existing RNSA.
\106\ See infra Part V.D.2.
\107\ The Commission uses this number as a proxy for the number
of brokers and dealers that comply with Rule 15c2-11's information
gathering and review requirements by conducting the review itself,
instead of relying on the QIDQS's publicly available determination
regarding its satisfaction of Rule 15c2-11's information gathering
and review requirement. See infra note 140.
\108\ The Commission believes that most OTC equity securities
are quoted on OTC Link ATS and Global OTC, to the extent the
quotation is subject to Rule 15c2-11, and that the total amount of
individual brokers and dealers trading on these systems reasonably
estimates the number of brokers and dealers that may be subject to
Rule 15c2-11's recordkeeping requirements. See 2020 Release, 85 FR
68174 n.564. The Commission recognizes that there may be equity
securities that are quoted in other quotation mediums but, at this
time, does not have the data to include them in these estimates.
\109\ Id.
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Additionally, there is one QIDQS, which makes publicly available
determinations that it satisfied Rule 15c2-11's information gathering
and review requirements for OTC equity securities or that the
conditions of certain rule exceptions were met for affected
securities.\110\ In addition, there is one RNSA that makes publicly
available determinations that the conditions of certain rule exceptions
are met for OTC equity securities.\111\
---------------------------------------------------------------------------
\110\ A broker or dealer may publish quotations in reliance on a
QIDQS's or RNSA's publicly available determination that the
conditions of certain Rule 15c2-11 exceptions are met. See supra
Part I.
\111\ Id.
---------------------------------------------------------------------------
The proposed amendments to Rule 15c2-11, if adopted, would affect
brokers and dealers that publish or submit quotations for OTC non-
equity securities in a quotation medium that is subject to this rule
only to the extent that those broker-dealers apply the rule more
broadly than to only equity securities. In particular, certain broker-
dealers that quote OTC non-equity securities that are not covered by
the 144A Exemptive Release and 2024 No-Action Letter may have different
understandings of the scope of Rule 15c2-11 and may currently be
applying Rule 15c2-11 to non-equity securities. The Commission lacks
data on the number of such broker-dealers but understands that few, if
any, industry participants understood Rule 15c2-11 to apply to non-
equity OTC securities. Among other limitations, it is difficult to
estimate the scope of brokers' and dealers' quotations in quotation
mediums for non-equity securities, partially due to the same
information availability challenges in the market for non-equity
securities described by market participants.\112\
---------------------------------------------------------------------------
\112\ See supra note 58.
---------------------------------------------------------------------------
Finally, to the extent that certain broker-dealers are not
currently applying Rule 15c2-11 to only equity securities, other
affected parties would include issuers of OTC non-equity securities and
investors in these securities (either investors already holding a
position in OTC non-equity securities or those considering acquiring
such a position).\113\
---------------------------------------------------------------------------
\113\ The Commission does not have the necessary data to
estimate the number of issuers of non-equity securities or investors
currently participating in the OTC market for non-equity securities.
---------------------------------------------------------------------------
B. Benefits and Costs
1. Affected Brokers, Dealers, QIDQSs, and RNSAs
The Commission expects that the benefits and the costs of the
proposed amendments for brokers, dealers, the QIDQS, and the RNSA to be
minimal. To the extent that certain brokers and dealers, as well as the
QIDQS and RNSA, apply Rule 15c2-11 to non-equity OTC securities, they
would benefit from reduced ongoing costs under the proposed amendments,
while incurring some initial costs to adjust their practices consistent
with the proposed amendments. The proposed amendments would benefit
such affected brokers and dealers, including the QIDQS, by eliminating
the ongoing cost of undertaking the substantive information gathering
and review requirements in Rule 15c2-11(a)(1)(i) and (a)(2) before
initiating or resuming any quotation for a non-equity OTC security that
is neither exempt from nor qualifies for an exception from the rule in
a quotation medium and the corresponding record preservation
requirements.\114\ In addition, such brokers and dealers, including
QIDQSs, as well as RNSAs would benefit from no longer satisfying the
requirements for the exceptions in Rule 15c2-11(f) and corresponding
record preservation requirements.\115\ Similarly, such brokers
[[Page 13252]]
and dealers would no longer incur the costs for non-equity OTC
securities of preserving records concerning Rule 15c2-11(a)(1)(ii) and
(a)(3). The Commission preliminarily estimates that there would be no
change in the costs associated with any necessary ongoing update to
QIDQS or RNSA written policies and procedures due to the proposed
amendments even if the QIDQS and RNSA currently interpret the scope of
Rule 15c2-11 to apply to non-equity OTC securities.\116\
---------------------------------------------------------------------------
\114\ See 17 CFR 240.15c2-11(a)(1)(i), (a)(2), (d)(1)(i)(A),
(d)(1)(i)(B).
\115\ See 17 CFR.240.15c2-11(d)(2), (f).
\116\ See 17 CFR 240.15c2-11(a)(3).
---------------------------------------------------------------------------
Corresponding to any cost savings from the proposed amendments,
there would also be initial costs for affected brokers and dealers as
well as the existing QIDQS and RNSA to the extent that they need to
update their internal systems or renegotiate agreements with third-
party service providers to exclude non-equity securities in their Rule
15c2-11 compliance activities. The QIDQS and RNSA, in addition, would
need to update their policies and procedures under Rule 15c2-11(a)(3)
if those policies and procedures were not already consistent with
applying the rule to only equity OTC securities.
In addition, to the extent that concerns regarding the rule's
application continue to exist, revising the rule to refer to equity
securities could potentially result in reduced costs for all brokers,
dealers, QIDQSs, and RNSAs, with respect to the quotation of non-equity
OTC securities in a quotation medium. In general, uncertainty regarding
the application of regulatory requirements can lead to increased legal
costs even for those firms acting consistently with the general
understanding of industry participants. This increased certainty is not
expected to result in additional costs for market participants.
Lastly, affected brokers and dealers, including QIDQSs, may
continue to have economic incentives to gather and review information
about non-equity OTC securities (e.g., such as for pricing purposes),
and also provide some information to investors (though not necessarily
the information that was required under 15c2-11) should investors
demand such information to trade in affected securities.
2. Affected Issuers
The proposed amendments could reduce incentives for issuers of non-
equity OTC securities to provide information that is current and
publicly available because brokers and dealers could publish quotations
for any non-equity security in a quotation medium whether the issuer
makes information current and publicly available or not. As a result,
it is possible that to the extent issuers of non-equity securities are
currently providing information to the public based on their
understanding of the application of Rule 15c2-11, they may reduce the
amount of information about themselves that is current and publicly
available, and some of those issuers might choose to stop providing
information altogether. This could decrease disclosure costs for those
issuers. However, the effect may be mitigated for several reasons.
First, following the adoption of the 2020 amendments to Rule 15c2-11,
numerous industry participants have stated that they never understood
Rule 15c2-11 to apply to non-equity securities,\117\ so the amendments
are not likely to impact issuer decisions concerning the provision of
information. Second, the Commission has provided exemptive relief and
the staff has issued a no-action letter addressing the vast majority of
fixed-income securities \118\ further reducing the likelihood that the
proposed amendments will affect the incentives for issuers of non-
equity securities to change their behavior. Finally, to the extent that
a lack of information about an issuer's non-equity OTC securities were
to adversely impact a broker or dealer's ability to make markets in
those securities or investor demand for those securities, that issuer
could have incentives to continue to supply some information to brokers
and dealers as well as to investors.
---------------------------------------------------------------------------
\117\ See supra note 28.
\118\ See supra note 31.
---------------------------------------------------------------------------
3. Affected Investors
Under the proposed amendments, investors in non-equity OTC
securities could have less information about those securities, because
affected brokers and dealers, QIDQSs, and RNSAs might no longer gather,
review, and provide information on these securities and issuers could
provide less information that is current and publicly available.\119\
As stated above, investors in non-equity securities are largely
sophisticated or qualified investors.\120\ A reduction in information
to investors could increase the risk that they would be subject to
certain manipulative and fraudulent trading schemes involving affected
securities; however, this risk is mitigated to the extent that
investors in non-equity securities are sophisticated or qualified.
Furthermore, the general understanding of industry participants
regarding the application of Rule 15c2-11 to non-equity OTC securities
means that investors in such securities may already receive less
information.
---------------------------------------------------------------------------
\119\ See supra Part II.A.
\120\ See supra Part II.A. However, the municipal securities
market, which is currently excepted from Rule 15c2-11, historically
has not been dominated by sophisticated investors. See, e.g., SIFMA,
``Quarterly Report: US Fixed Income, 3Q25,'' at 8 (Jan. 2026),
available at <a href="https://www.sifma.org/wp-content/uploads/2025/09/SIFMA-Research-Quarterly-Fixed-Income-O-3Q25.pdf">https://www.sifma.org/wp-content/uploads/2025/09/SIFMA-Research-Quarterly-Fixed-Income-O-3Q25.pdf</a> (reporting that 48.3% of
municipal securities holders are individuals and 28.4% are mutual
funds). See also, e.g., Simon Z. Wu and Nicholas J. Ostroy, MSRB,
``A Comparison of Transaction Costs for Municipal Securities and
Other Fixed-Income Securities,'' at 11 (Mar. 2025), available at
<a href="https://www.msrb.org/sites/default/files/2025-03/Comparison-of-Transaction-Costs.pdf">https://www.msrb.org/sites/default/files/2025-03/Comparison-of-Transaction-Costs.pdf</a> (``Overall, corporate bonds had a lower
proportion of odd-lot customer trades than agency securities and
municipal securities, with 72% of corporate bond trades being odd-
lot trades, compared to 84% for both agency securities and municipal
securities. On the other hand, corporate bonds had a higher
proportion of intermediate customer trades and block customer trades
than agency securities and municipal securities. This suggests a
higher participation rate by institutional investors for corporate
bonds than for agency securities and municipal securities.'').
---------------------------------------------------------------------------
Further, with respect to OTC fixed-income securities, several
factors likely mitigate the cost associated with the loss, if any, of
current and publicly available paragraph (b) information. First, the
OTC fixed-income market is generally dominated by sophisticated
investors that likely do not wholly depend on a broker or dealer's
review of the information specified in Rule 15c2-11. Second, the
``catch-all'' list of information required to be reviewed for a
security of an issuer that does not have registration statements or
other current documents filed with the Commission, is less likely to be
available.\121\ Lastly, to the extent that any loss of information
caused investors to significantly curtail their investment in non-
equity OTC securities, affected brokers and dealers, QIDQSs, and
issuers could have economic incentives to provide some information to
investors to help boost investor demand.
---------------------------------------------------------------------------
\121\ See supra note 72.
---------------------------------------------------------------------------
C. Efficiency, Competition, and Capital Formation
The potential reduction in costs to ascertain compliance
obligations, and any associated reduction in costs in complying with
those obligations, for affected brokers and dealers could enhance
liquidity provision in affected securities. There is also the
possibility that additional brokers and dealers could initiate (or
resume) quotations for affected securities in a quotation medium and
additional competition on quotations could result in quotations that
are more efficiently priced. The lower costs, however, stem in part
from a reduction in gathering and reviewing information. Any reduction
in information could negatively affect
[[Page 13253]]
investor demand for the affected securities, if investors otherwise
relied on the information disclosed regarding non-equity securities and
have no close substitute source for that information. In this case,
investors could perceive investment in the affected securities as
riskier than before and might require a greater return to compensate
for the perceived increase in risk. This could raise the required
return for the affected securities, including in relation to other
securities, possibly making it costlier and more difficult for affected
issuers to raise capital. To address this issue, as discussed above,
brokers and dealers as well as issuers could decide to gather, review,
and provide some information regarding non-equity securities to
investors.
D. Reasonable Alternative
The Commission considered a reasonable alternative to the proposal
and seeks public comments on the following alternative and on all other
alternatives that the public believes are reasonable.
1. Except Crypto Securities That Are Equity Securities
In addition to the proposed amendments, the Commission could also
provide an exception for crypto securities that are equity securities
or otherwise require tailoring of provisions, including the information
provision in paragraph (b)(5). The Commission believes that to the
extent a crypto asset is an equity security, as defined in Rule 3a11-1,
Rule 15c2-11 applies to brokers and dealers publishing quotations for
those equity securities in a quotation medium. The Commission seeks
public comment on various aspects of the application of Rule 15c2-11 to
equity securities that are ``crypto assets.''
E. Request for Comment
The Commission requests comment on all aspects of this initial
economic analysis, including the potential benefits and costs, all
effects on efficiency, competition, and capital formation, and
reasonable alternatives to the proposed rule and amendments. We request
and encourage any interested person to submit comments regarding the
proposed amendments, our analysis of the potential effects of the
proposed amendments, and other matters that may have an effect on the
proposed amendments. We request that commenters identify sources of
data and information as well as provide data and information to assist
us in analyzing the economic consequences of the proposed amendments
and each reasonable alternative. We are also interested in comments on
the qualitative benefits and costs we have identified and any
qualitative benefits and costs we may have overlooked, including those
associated with each reasonable alternative. In addition, we are
interested in comments on any other reasonable alternative.
Q16. Are there any effects on market participants, including
brokers and dealers, investors, and issuers, that have not been
addressed?
Q17. Are there specific types of non-equity OTC securities that
should be included within the scope of Rule 15c2-11? What is the
aggregate market value of these other non-equity OTC securities, and
are their investors retail or institutional?
Q18. How costly is it for issuers and brokers and dealers to
determine whether or not a specific security is an ``equity security''
under Rule 3a11-1?
V. Paperwork Reduction Act
A. Introduction
Certain provisions of Rule 15c2-11 contain ``collection of
information requirements'' within the meaning of the Paperwork
Reduction Act of 1995 (``PRA'').\122\ The title for the information
collection is ``Publication or submission of quotations without
specified information.'' Responses to the collections of information
are mandatory. The Office of Management and Budget (``OMB'') has
assigned control number 3235-0202 to the collection of information. The
Commission is submitting the collections of information as proposed to
be revised to OMB for review in accordance with 44 U.S.C. 3507(d) and 5
CFR 1320.11.\123\ An agency may not conduct or sponsor, and a person is
not required to respond to, a collection of information unless the
agency displays a currently valid control number.\124\
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\122\ 44 U.S.C. 3501 et seq. The burdens associated with the
information collection requirements are referred to as ``PRA
burdens.''
\123\ See 44 U.S.C. 3507; 5 CFR 1320.11.
\124\ See 5 CFR 1320.08.
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B. Rule 15c2-11
Rule 15c2-11 requires that brokers and dealers give some measure of
attention to financial and other information about the issuer of a
security before they commence trading in that security.\125\ To that
end, the rule requires, subject to exceptions,\126\ brokers and
dealers, before initiating (or resuming) any quotation for a security
in a quotation medium,\127\ to gather specified information regarding
the security and its issuer and,\128\ based upon a review of such
information, along with certain supplemental information,\129\ to have
a reasonable basis under the circumstances for believing that such
information is accurate and is from a reliable source.\130\
Alternatively, a broker or dealer may submit a quotation in a quotation
medium that is a QIDQS \131\ that has made a publicly available
determination that it has performed certain information gathering and
review requirements,\132\ if certain conditions are met.\133\ Rule
15c2-11 also includes certain exceptions \134\ and record preservation
requirements.\135\
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\125\ See 1984 Release, 49 FR 45118.
\126\ See 17 CFR 240.15c2-11(f).
\127\ See 17 CFR 240.15c2-11(e)(8).
\128\ See 17 CFR 240.15c2-11(b).
\129\ See 17 CFR 240.15c2-11(c).
\130\ See 17 CFR 240.15c2-11(a).
\131\ See 17 CFR 240.15c2-11(e)(6).
\132\ See 17 CFR 240.15c2-11(a)(1)(ii).
\133\ See 17 CFR 240.15c2-11(a)(2).
\134\ See 17 CFR 240.15c2-11(f).
\135\ See 17 CFR 240.15c2-11(d).
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C. Collection of Information
The proposed amendments would revise Rule 15c2-11 to replace the
terms ``security'' and ``securities'' with the terms ``equity
security'' or ``equity securities,'' as defined in Rule 3a11-1,\136\
but would not change Rule 15c2-11's information collection requirements
as they relate to broker or dealer quotations for equity
securities.\137\ The availability of updated and supplemented OTC
equities market data in the estimates, discussed below in Part V.F,
result in some changes, including increases, to the PRA burden
estimates compared to the PRA Analysis in the 2020 Release \138\ and
PRA Supporting Statement filed with and approved by OMB in 2023.\139\
However, any such changes in PRA burden estimates are the result of
changes to participation and activity in the OTC equity market, the use
of updated and supplemented OTC equity market data, or changes to the
calculation methodology, and are not the result of the proposed
amendments.
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\136\ See supra note 34.
\137\ The changes to the estimated burdens based on the updated
and supplemented data will be included in an upcoming extension
request for OMB Control No. 3235-0202 and will be noticed for public
comment in connection with that request.
\138\ See 2020 Release, 85 FR 68174-84 (containing the Paperwork
Reduction Act Analysis of the 2020 Release).
\139\ See 2023 Supporting Statement for the Paperwork Reduction
Act Information Collection Submission for Rule 15c2-11, OMB Control
No. 3235-0202 (``2023 PRA Extension''), at 9, available at <a href="https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202303-3235-044">https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202303-3235-044</a>.
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[[Page 13254]]
D. Respondents
Respondents to Rule 15c2-11 include brokers and dealers who publish
quotations for equity securities. Respondents also include any QIDQS
that undertakes to satisfy the rule's information gathering and review
requirements concerning an equity security and makes a publicly
available determination regarding such review, as well as any QIDQS or
RNSA that chooses to make a publicly available determination regarding
the public availability of current paragraph (b) information or the
availability of certain exceptions to Rule 15c2-11.
1. Respondents Related to Rule 15c2-11's Information Gathering and
Review Requirements and Corresponding Record Preservation Requirements
The Commission estimates that approximately twelve brokers and
dealers \140\ and one QIDQS \141\ would be subject to PRA burdens
associated with gathering and reviewing paragraph (b) information and
supplemental information in satisfying amended Rule 15c2-11's
information gathering and review requirements, as well as with
preserving corresponding records under paragraph (d).\142\
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\140\ Twelve brokers and dealers filed a Form 211 pursuant to
FINRA Rule 6432(a) in 2024. The Commission uses this number as a
proxy for the number of brokers and dealers that comply with Rule
15c2-11's information gathering and review requirements. FINRA Rule
6432, which similarly applies to equity securities, other than a
Restricted Equity Security, that are not traded on a national
securities exchange, sets forth the requirements for filing a Form
211. As discussed below, in Part V.F.3, any broker or dealer that
initiates a quoted market in an equity security in reliance on a
QIDQS's publicly available determination regarding its satisfaction
of Rule 15c2-11's information gathering and review requirements
would be required under paragraph (d)(1)(ii) of Rule 15c2-11 to
preserve records of the name of the QIDQS that made the publicly
available determination.
\141\ One QIDQS filed a Form 211 pursuant to FINRA Rule 6432(b)
in 2024. The Commission uses this number as a proxy for the number
of QIDQSs that comply with Rule 15c2-11's information gathering and
review requirements.
\142\ The estimate of 13 respondents for this requirement is a
significant decrease from the prior estimate of 88 respondents
contained in the 2023 Supporting Statement. This updated estimate is
based on the total number of brokers, dealers, and QIDQSs that filed
a Form 211 in 2024, which should be more accurate than the estimated
number of respondents included in the 2023 Supporting Statement,
which included all brokers and dealers that published or submitted a
quotation on OTC Markets Group's systems, plus one IDQS and one
RNSA. See 2023 PRA Extension.
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2. Respondents Related to Rule 15c2-11's Exceptions and Corresponding
Record Preservation Requirements
The Commission estimates that approximately 196 brokers and
dealers,\143\ one QIDQS,\144\ and one RNSA \145\ would be subject to
PRA burdens associated with documenting whether the conditions of an
exception in paragraph (f) are met and with preserving corresponding
records.
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\143\ As of September 30, 2025, there were 77 brokers and dealer
subscribers to OTC Link ATS. As of September 30, 2025, there were
119 brokers and dealers that trade on Global OTC. The Commission
believes that most OTC equity securities are quoted on OTC Link ATS
and Global OTC, to the extent the quotation is subject to Rule 15c2-
11, and that the total amount of individual brokers and dealers
trading on these systems reasonably estimates the number of brokers
and dealers that may be subject to PRA burdens in satisfying Rule
15c2-11's requirements. See 2020 Release, 85 FR 68174 n.564.
\144\ See supra note 141.
\145\ Currently, FINRA is the only existing RNSA.
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3. Respondents Related to Other Record Preservation Requirements
The Commission estimates that approximately 77 brokers and dealers
would be subject to PRA burdens associated with preserving records
related to their initiation of a quoted market in an equity security
based on a QIDQS's publicly available determination that it satisfied
Rule 15c2-11's information gathering and review requirements pursuant
to paragraph (a)(1)(ii).\146\ The Commission also estimates that
approximately 196 brokers and dealers would be subject to PRA burdens
associated with preserving records related to their publication or
submission of quotations pursuant to paragraph (a)(3) for equity
securities in reliance on a QIDQS's or an RNSA's publicly available
determination described in paragraph (f)(2)(iii)(B), (f)(3)(ii)(A), or
(f)(7).\147\
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\146\ As of September 30, 2025, there were 77 broker and dealer
subscribers to OTC Link ATS. The Commission believes that this
number reasonably estimates the number of broker-dealers that may
rely on a QIDQS's publicly available determination pursuant to
paragraph (a)(1)(ii), because OTC Link ATS is the only QIDQS making
such determinations and that would be subject to PRA burdens in
preserving corresponding records.
\147\ See supra note 143.
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4. Respondents Related to a QIDQS's or RNSA's Written Policies and
Procedures
Additionally, the Commission estimates that one QIDQS would be
subject to PRA burdens in establishing, maintaining, and enforcing
reasonably designed written policies and procedures for making publicly
available determinations pursuant to paragraph (a)(3) of Rule 15c2-11.
E. Use of Information
The information collected under Rule 15c2-11(a)'s information
gathering and review requirements helps protect investors by deterring
fraudulent or manipulative quotations for thinly-traded equity
securities whose issuers are relatively unknown and helps brokers and
dealers guard against becoming unwitting participants in fraudulent or
manipulative schemes.\148\ The information collected under Rule 15c2-
11(f)'s exceptions helps to ensure that only those equity securities
that are less likely to be the subject of fraudulent or manipulative
activity are being quoted pursuant to an exception.
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\148\ See supra note 25.
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The information collected under Rule 15c2-11(d)'s applicable record
preservation requirements helps to promote compliance with Rule 15c2-
11's information gathering and review requirements, prevent abuse of
the rule's exceptions, and facilitate the Commission in conducting
examinations of brokers and dealers that publish quotations for OTC
equity securities, any QIDQS that makes a publicly available
determination pursuant to paragraph (a)(2)(iv), or any QIDQS or RNSA
that makes a publicly available determination pursuant to paragraph
(a)(3). The information collected under Rule 15c2-11(a)(3), which
requires a QIDQS or RNSA to establish, maintain, and enforce reasonably
designed written policies and procedures for making publicly available
determinations, similarly helps prevent brokers' or dealers' abuse of
any Rule 15c2-11 exceptions for which publicly available determinations
are made.
F. Collections of Information for Equity Quotations
The proposed amendments would revise Rule 15c2-11 to refer to only
equity securities, as defined by Rule 3a11-1. Discussed below in this
Part V.F, are the collections of information that would continue to
apply to quotations for equity securities should the proposed
amendments be adopted.
Any broker, dealer, or QIDQS that undertakes to satisfy Rule 15c2-
11's information gathering and review requirements concerning an equity
security would continue to be required to gather and review applicable
paragraph (b) information and supplemental information for that equity
security under paragraph (c). Such broker, dealer, or QIDQS would also
continue to incur PRA burdens preserving paragraph (b) and (c)
information under the recordkeeping requirements of paragraph (d).
Additionally, respondents who determine whether the conditions of a
Rule 15c2-11 exception are met pursuant to paragraph (f) or make
[[Page 13255]]
publicly available determinations pursuant to paragraph (a)(3) would
continue to incur PRA burdens in gathering and preserving applicable
documentation concerning equity securities. Finally, any QIDQS or RNSA
that makes a publicly available determination pursuant to paragraph
(a)(3) would continue to incur PRA burdens in establishing,
maintaining, and enforcing reasonably designed written policies and
procedures concerning equity securities.
The following table summarizes the PRA burdens estimated in this
Part V.F, all of which are estimated to have associated recordkeeping
burdens. Any changes, including increases, in the below PRA burden
estimates, when compared to the 2020 or 2023 PRA analyses,\149\ are the
result of changes to participation and activity in the OTC equity
market, the use of updated and supplemented OTC equity market data, or
changes to the underlying calculation methodology, and are not a result
of the proposed amendments.
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\149\ See supra notes 138 and 139.
PRA Summary Table 1--Estimated Burdens
----------------------------------------------------------------------------------------------------------------
Total annual
Information collections Type of burden Number of industry burden
respondents (hours/year)
----------------------------------------------------------------------------------------------------------------
IC1: 17 CFR 240.15c2-11(a)(1)(i), Recordkeeping................ 13 1,558
(d)(1)(i)(A), (a)(2) and (d)(1)(i)(B)
(broker or dealer and QIDQS information
gathering and review requirements;
corresponding record preservation
requirements).
IC2: 17 CFR 240.15c2-11(f)(2)(ii)(B), Recordkeeping................ 198 67,310
(f)(3)(i)(C), (d)(2)(i), (d)(2)(ii)
(determining currentness of publicly
available paragraph (b) information;
corresponding record preservation
requirements).
IC3: 17 CFR 240.15c2-11(f)(2), (d)(2)(ii) Recordkeeping................ 196 1,007,683
(determining availability of the
unsolicited quotation exception and
corresponding record preservation
requirements).
IC4: 17 CFR 240.15c2-11(f)(3)(i)(A), Recordkeeping................ 198 327,124
(d)(2)(i), (d)(2)(ii) (determining the
frequency of a priced bid or offer
quotation and corresponding record
preservation requirements).
IC5: 17 CFR 240.15c2-11(f)(3)(i)(B)(1), Recordkeeping................ 198 40
(d)(2)(i), (d)(2)(ii) (determining trading
suspension status for availability of the
piggyback exceptions and corresponding
record preservation requirements).
IC6: 17 CFR 240.15c2-11(f)(3)(i)(B)(2), Recordkeeping................ 198 35,555
(d)(2)(i), (d)(2)(ii) (determining shell
company status for availability of the
piggyback exceptions and corresponding
record preservation requirements).
IC7: 17 CFR 240.15c2-11(f)(5)(i), Recordkeeping................ 198 6,542
(d)(2)(i), (d)(2)(ii) (determining
availability of the ADTV and asset test
exception and corresponding record
preservation requirements)--ADTV Test.
IC8: 17 CFR 240.15c2-11(f)(5)(ii), Recordkeeping................ 198 1,558
(d)(2)(i), (d)(2)(ii) (determining
availability of the ADTV and asset test
exception and corresponding record
preservation requirements)--Asset Test.
IC9: 17 CFR 240.15c2-11(d)(1)(ii) (record Recordkeeping................ 77 144
preservation requirements for brokers and
dealers relying on publicly available
determinations described in paragraph
(a)(2)(iv)).
IC10: 17 CFR 240.15c2-11(d)(2)(ii) (record Recordkeeping................ 196 323,819
preservation requirements for brokers and
dealers relying on publicly available
determinations described in paragraph
(a)(3)).
IC11: 17 CFR 240.15c2-11(a)(3) (QIDQS or Recordkeeping................ 1 10
RNSA written policies and procedures for
making publicly available determinations).
-------------------------------------
Total for All Information Collections.. ............................. ................. 1,771,343
----------------------------------------------------------------------------------------------------------------
1. Burden Estimates Related to Rule 15c2-11(a)(1)(i), (a)(2),
(d)(1)(i)(A), and (d)(1)(i)(B)--Broker or Dealer or QIDQS Information
Gathering and Review Requirements and Corresponding Record Preservation
Requirements
Under the proposed amendments, any broker or dealer that publishes
a quotation for an equity security in a quotation medium pursuant to
paragraph (a)(1)(i), or any QIDQS that undertakes to satisfy Rule 15c2-
11's information gathering and review requirements pursuant to
paragraph (a)(2), would continue to be required to gather and review
specified information regarding that equity security.\150\ Based on
information provided by FINRA in 2024, 12 non-QIDQS brokers and dealers
submitted a total of 154 Form 211 filings to initiate (or resume) a
quoted market in an equity security, while one QIDQS submitted 112 Form
211 filings after making publicly available determinations that it had
undertaken to satisfy Rule 15c2-11's information gathering and review
requirements.\151\
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\150\ See 17 CFR 240.15c2-11(a)(1)(i), (a)(2).
\151\ Based on data from FINRA, in 2024, Form 211 filings were
submitted pursuant to FINRA Rule 6432(b) for 266 equity securities,
with corresponding information reviews conducted by using the
following paragraph (b) information: 3 paragraph (b)(1), 0 paragraph
(b)(2), 73 paragraph (b)(3), 163 paragraph (b)(4), and 27 paragraph
(b)(5)(i).
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Consistent with prior estimates,\152\ the Commission estimates
that, for purposes of satisfying Rule 15c2-11(a)(1)(i) and (a)(2)'s
information gathering and review requirements for an equity security,
it would take approximately
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\152\ See 2023 PRA Extension. See also 2020 Release, 85 FR
68175.
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[[Page 13256]]
three hours to gather, review,\153\ and preserve the information
specified in paragraph (b)(1), paragraph (b)(2), or paragraph (b)(3),
which generally is available on the Commission's Electronic Data
Gathering, Analysis, and Retrieval (``EDGAR'') system, along with any
applicable supplemental information.\154\ The Commission estimates that
it would take approximately seven hours to gather, review, and preserve
the information specified in paragraph (b)(4) or paragraph
(b)(5)(i),\155\ which generally is not available on the EDGAR system,
along with any applicable supplemental information.\156\ The difference
in these PRA burden estimates is intended to take account of any
additional time a broker, dealer, or QIDQS may require in gathering the
information required in paragraphs (b)(4) and (b)(5) from sources
outside the EDGAR system. The Commission, therefore, estimates that,
for the 12 brokers or dealers and one QIDQS, the total annual PRA
burden resulting from Rule 15c2-11(a)'s information gathering and
review requirements and corresponding record preservation requirements
\157\ would be 1,558 hours,\158\ or approximately 120 hours per
respondent.\159\
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\153\ The information gathering and review requirements under
paragraphs (b)(1), (b)(2) or (b)(3) are dependent upon the issuer's
regulatory status, including whether the issuer (1) filed a
registration statement under the Securities of Act of 1933 (a
``prospectus issuer''), (2) filed an offering statement under
Regulation A (a ``Reg. A issuer''), or (3) is subject to the
periodic reporting requirements of the Exchange Act, Regulation A or
Regulation Crowdfunding, or is the issuer of a security covered by
section 12(g)(2)(G) of the Exchange Act (a ``reporting issuer'').
See 2020 Release, 85 FR 68129.
\154\ This preliminary estimate is consistent with the
Commission's previous burden estimate of three hours to gather,
review, and preserve the applicable documents and information
specified in paragraph (b)(1), (b)(2), or (b)(3). The Commission
does not believe that the amendments to the supplemental information
in paragraph (c) affects the information gathering and review
requirement itself because the amendments do not change the scope of
securities for which a trading suspension must be reviewed and are
not expected to have an impact on the overall time burden related to
the information gathering and review requirement. See 2023 PRA
Extension. See also 2020 Release, 85 FR 68175 n.575.
\155\ The information gathering and review requirements under
paragraphs (b)(4) and (b)(5) are dependent upon whether the issuer
is a foreign private issuer that is exempt from registration under
Exchange Act section 12(g) pursuant to Rule 12g3-2(b) (an ``exempt
foreign private issuer'') or does not fall within any of the
categories described in paragraphs (b)(1) through (b)(4) and is
generally not subject to similar statute- or rule-based disclosure
and reporting requirements under the Federal securities laws (a
``catch-all issuer''). See 2020 Release, 85 FR 68129.
\156\ This preliminary estimate is consistent with the
Commission's previous burden estimate of seven hours to gather,
review, and preserve the applicable documents and information
specified in paragraph (b)(4) or (b)(5)(i).
\157\ See 17 CFR 240.15c2-11(d)(1)(i)(A), (d)(1)(i)(B)
(describing the relevant recordkeeping requirements).
\158\ ((76 Form 211 filings concerning information specified in
paragraphs (b)(1), (b)(2), and (b)(3)) x 3 hours) + ((190 Form 211
filings concerning information specified in paragraphs (b)(4) and
(b)(5)(i)) x 7 hours) = 1,558 hours.
\159\ 1,558 hours/(12 brokers and dealers that submitted a Form
211 to FINRA in 2024 + one QIDQS that submitted a Form 211 to FINRA
in 2024) = 119.85 hours per respondent.
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2. Burden Estimates Related to Rule 15c2-11's Exceptions and
Corresponding Record Preservation Requirements
The PRA burden estimates below, in this Part V.F.2, include
estimates for preserving corresponding records for determining that the
conditions of Rule 15c2-11(f)'s exceptions are met.\160\
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\160\ As discussed above, in Part II, the proposed amendments
would not change any of the rule's requirements or conditions as
they apply to quotations for equity securities. The Commission
therefore does not expect that any broker, dealer, QIDQS, or RNSA
would incur an initial PRA burden under the proposed amendments.
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Rule 15c2-11(f)(2)(ii)(B), (f)(3)(i)(C), (d)(2)(i), (d)(2)(ii)--
Determining Currentness of Publicly Available Paragraph (b) Information
and Corresponding Record Preservation Requirements
Certain of Rule 15c2-11's exceptions--the unsolicited quotation
exception in paragraph (f)(2)(ii)(B) and the piggyback exception in
paragraph (f)(3)(i)(C)--are conditioned, in part, upon the currentness
of publicly available paragraph (b) information. The Commission
estimates that there are 19,341 unique issuers of quoted OTC equity
securities for which respondents would continue to be required to
gather, review, and preserve documentation to establish that paragraph
(b) information is current and publicly available.\161\ Of those
issuers, respondents would gather, review, and preserve documentation
specified in paragraph (b)(1) for 5,091 issuers, in paragraph (b)(2)
for 304 issuers, in paragraph (b)(3) for 352 issuers, in paragraph
(b)(4) for 9,693 issuers; and in paragraph (b)(5)(i) for 3,901
issuers.\162\
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\161\ The estimated number of unique issuers of quoted OTC
equity securities is based on data compiled by the Commission's
Division of Economic and Risk Analysis as of Dec. 11, 2025.
\162\ See supra note 161.
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The Commission estimates that, for purposes of determining the
currentness of publicly available paragraph (b) information concerning
an equity security, it would take respondents approximately one minute
to create documentation to establish that paragraph (b) information is
current and publicly available.\163\ Respondents would gather, review,
and preserve such documentation no more frequently than once for
information specified in paragraph (b)(1) or paragraph (b)(2),
quarterly for information specified in paragraph (b)(3), and no more
frequently than annually for information specified in paragraph (b)(4)
and paragraph (b)(5)(i).\164\ The Commission estimates that for the 196
brokers or dealers, one QIDQS, and one RNSA who would determine the
currentness of publicly available paragraph (b) information for
purposes of Rule 15c2-11(f)'s exceptions, as well as comply with Rule
15c2-11's corresponding record preservation requirements,\165\ the
annual PRA burden per respondent would be approximately 340 hours,\166\
or approximately 67,310 total annual industry burden hours.\167\
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\163\ See 2023 PRA Extension. See also 2020 Release, 85 FR
68178-79.
\164\ The Commission estimates that, once a respondent has
gathered, reviewed, and preserved the applicable paragraph (b)
information concerning an equity security, the respondent would not
need to do so again, during this timeframe, for the same equity
security. For example, a respondent that determines, for purposes of
satisfying the conditions of paragraph (f)(2)(ii)(B), that the
paragraph (b) information concerning an equity security is current
and publicly available would not again, during the applicable
timeframe, need to determine, for purposes of satisfying the
conditions of paragraph (f)(3)(i)(C), that the same paragraph (b)
information is current and publicly available.
\165\ See 17 CFR 240.15c2-11(d)(2)(i), (d)(2)(ii) (describing
the relevant recordkeeping requirements).
\166\ ((5,091 issuers for which information is specified in
paragraph (b)(1) x 1 minute x 1 response per year) + (304 issuers
for which information is specified in paragraph (b)(2) x 1 minute x
1 response per year) + (352 issuers for which information is
specified in paragraph (b)(3) x 1 minute x 4 responses per year) +
(9,693 issuers for which information is specified in paragraph
(b)(4) x 1 minute x 1 responses per year) + 3,901 issuers for which
information is specified in paragraph (b)(5)(i) x 1 minute x 1
response per year))/60 minutes per hour = 339.95 hours.
\167\ 339.95 hours x (196 brokers and dealers + one QIDQS + one
RNSA) = 67,310.10 hours.
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Rule 15c2-11(f)(2), (d)(2)(ii)--Determining Availability of the
Unsolicited Quotation Exception and Corresponding Record Preservation
Requirements
Under the proposed amendments, the conditional exception in
paragraph (f)(2) would continue to apply to brokers' or dealers'
quotations that represent a customer's unsolicited order for an equity
security. This exception would continue to be unavailable for
unsolicited orders submitted on behalf of an insider or affiliate of
the issuer of an equity security, unless the applicable paragraph (b)
information were current
[[Page 13257]]
and publicly available.\168\ To submit an unsolicited quotation for an
equity security in reliance on this exception, brokers and dealers
would continue to be able to rely upon a written representation from
the customer's broker that such customer is not a company insider or
affiliate of the issuer if certain conditions are met.\169\ According
to data from OTC Markets Group Inc., there were 11,073,440 quotations
published in reliance on the unsolicited quotation exception in 2024.
According to data from Global OTC, there were 49,387,514 unsolicited
quotations published in 2024.\170\ The Commission therefore estimates
that, annually, 60,460,954 quotations would be submitted in reliance on
the unsolicited quotation exception and would require brokers and
dealers to gather, review, and preserve \171\ documentation
demonstrating that the quotation does not represent an insider's or
affiliate's unsolicited order. The Commission is including all
unsolicited customer quotations in its estimate and estimates that the
number would remain consistent on an annual basis for the purpose of
this analysis.
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\168\ See 17 CFR 240.15c2-11(f)(2)(ii)(B).
\169\ See 17 CFR 240.15c2-11(f)(2)(iii)(A).
\170\ See supra note 143.
\171\ See 17 CFR 240.15c2-11(d)(2)(ii) (describing the relevant
recordkeeping requirements).
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Additionally, the Commission estimates that brokers and dealers
would spend approximately one minute in gathering, reviewing, and
preserving such documents and information.\172\ The Commission
estimates that, annually, 196 brokers and dealers, would spend an
industry total of approximately 1,007,683 hours in determining whether
the unsolicited quotation exception is available and in complying with
its corresponding record preservation requirement,\173\ or
approximately 5,141 hours per broker or dealer.\174\
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\172\ This preliminary estimate is consistent with the
Commission's previous burden estimate of one minute to gather,
review, and preserve the required documents and records. See 2023
PRA Extension. See also 2020 Release, 85 FR 68179.
\173\ (60,460,954 quotations x 1 minute)/60 minutes =
1,007,682.57 hours. Any change in this estimate from prior Rule
15c2-11 PRA burden estimates is due to changes in certain market
metrics over time and/or changes in data collection methods, and not
from the proposed amendments.
\174\ 1,007,682.57 hours/196 brokers and dealers = 5,141.24
hours per broker or dealer.
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Rule 15c2-11(f)(3)(i)(A), (d)(2)(i), (d)(2)(ii)--Determining Frequency
of a Priced Quotation for Availability of the Piggyback Exception and
Corresponding Record Preservation Requirements
Under the proposed amendments, paragraph (f)(3)(i)(A) of Rule 15c2-
11 would continue to require that, in order for a broker or dealer to
rely on the rule's piggyback exception, there be no more than four
business days in succession without a bid or offer priced quotation. To
comply with this requirement, brokers and dealers relying on the
piggyback exception, and each QIDQS or RNSA that makes publicly
available determinations regarding the availability of the piggyback
exception, must preserve documents and information regarding this
frequency of priced bid or offer quotation requirement. Consistent with
prior estimates, the Commission estimates that respondents would make
determinations regarding the frequency of quotation requirement once
per trading day and take approximately one second to create a record
regarding the frequency of a priced bid or offer quotation, pursuant to
paragraph (f)(3)(i) of the rule.\175\ The Commission estimates that 198
respondents \176\ would each have an annual burden of approximately
1,652 hours per year,\177\ for an industrywide annual burden of
approximately 327,124 hours per year.\178\
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\175\ See 2023 PRA Extension. See also 2020 Release, 85 FR
68180.
\176\ 196 brokers and dealers + 1 QIDQS + 1 RNSA= 198
respondents.
\177\ 1/3600 (one second) x 252 (trading days per year) x 23,602
(total quoted OTC securities as of Dec. 11, 2025) = 1,652.14 hours
per respondent.
\178\ 198 respondents x 1,652.14 hours = 327,123.72 hours.
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Rule 15c2-11(f)(3)(i)(B)(1), (d)(2)(i), (d)(2)(ii)--Determining Trading
Suspension Status for Availability of the Piggyback Exception and
Corresponding Record Preservation Requirements
Under the proposed amendments, paragraph (f)(3)(i)(B)(1) of Rule
15c2-11 would continue to limit the ability of a broker, dealer, QIDQS,
or RNSA to rely on the piggyback exception with respect to a security
that is the subject of a trading suspension order issued by the
Commission pursuant to section 12(k) of the Exchange Act until 60
calendar days after the expiration of such order. The Commission
estimates that respondents would create records only for securities
that have been the subject of a trading suspension issued by the
Commission pursuant to section 12(k). In 2025, the Commission issued
trading suspensions for twelve securities. Consistent with prior
estimates, the Commission estimates that it would take respondents one
minute to create a record regarding whether a security has been subject
to a trading suspension.\179\ Therefore, the Commission estimates that
198 respondents \180\ would spend a total of approximately 40 hours
\181\ per year complying with this recordkeeping requirement, resulting
in an annual burden of approximately .2 hours per respondent.\182\
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\179\ See 2023 PRA Extension. See also 2020 Release, 85 FR
68181.
\180\ 196 broker and dealers + 1 QIDQS + 1 RNSA = 198
respondents.
\181\ 198 respondents x (1/60 hour) x 12 securities = 39.6
hours.
\182\ 39.6 hours/198 respondents = .2 hours.
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Rule 15c2-11(f)(3)(i)(B)(2), (d)(2)(i), (d)(2)(ii)--Determining Shell
Company Status for Availability of the Piggyback Exception and
Corresponding Record Preservation Requirements
Under the proposed amendments, paragraph (f)(3)(i)(B)(2) of Rule
15c2-11 would continue to eliminate eligibility for the piggyback
exception for quotations for securities of shell companies that are
published or submitted 18 months following the publication or
submission of the initial priced quotation for such issuer's security
in an IDQS. Consistent with prior estimates, the Commission estimates
that how often respondents would determine whether the issuer of an
equity security is a shell company, as required by paragraph
(f)(3)(i)(B)(2) of the piggyback exception, depends on how frequently
the applicable paragraph (b) information is filed (in the EDGAR system)
or made current and publicly available. The Commission estimates that
each respondent would continue to spend, on average, one minute per
issuer in making a shell company determination and preserving
applicable documentation.\183\ Accordingly, the Commission estimates
that each respondent would spend approximately 180 hours, annually, in
determining whether an equity security's issuer is a shell
company,\184\ or approximately 35,555 hours across all
respondents.\185\
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\183\ See 17 CFR 240.15c2-11(d)(2)(i), (d)(2)(ii) (describing
the relevant recordkeeping requirements). This preliminary estimate
is consistent with the Commission's previous burden estimate of one
minute per determination. See 2023 PRA Extension. See also 2020
Release, 85 FR 68180.
\184\ ((2,503 issuers for which information is specified in
paragraph (b)(1), paragraph (b)(2), paragraph (b)(3), or paragraph
(b)(4) x 1 minute x 4 responses per year) + (654 issuers for which
information is specified in paragraph (b)(5)(i) x 1 minute x 1
responses per year))/60 minutes = 179.57 hours.
\185\ 179.57 hours x (196 brokers and dealers + one QIDQS + one
RNSA) = 35,554.86 hours. Any change in this estimate from prior Rule
15c2-11 PRA burden estimates is due to changes in certain market
metrics over time and/or changes in data collection methods, and not
from the proposed amendments.
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[[Page 13258]]
Rule 15c2-11(f)(5)(i), (d)(2)(i), (d)(2)(ii)--Determining Availability
of the ADTV and Asset Test Exception and Corresponding Record
Preservation Requirements--ADTV Test
Under the proposed amendments, paragraph (f)(5) of Rule 15c2-11
would continue to except securities with (i) a worldwide average daily
trading volume value of at least $100,000 reported during the 60
calendar days immediately before the publication of the quotation of
such security (``ADTV Test'') and (ii) the issuer of such security has
at least $50 million in total assets and $10 million in shareholders'
equity as reflected in the issuer's publicly available audited balance
sheet issued within six months after the end of its most recent fiscal
year (``Asset Test''). The Commission estimates that there are
approximately 472 securities that meet the paragraph (f)(5) ADTV and
Asset tests.\186\ The Commission estimates that, through an automated
process needing minimal direct human intervention, it would take
approximately one second for a respondent to gather, review, and
preserve documents and information that demonstrate that the
requirements of the ADTV Test have been met,\187\ and that each
respondent would do this 252 times a year (i.e., each trading
day).\188\ Accordingly, each respondent would spend approximately 33
hours \189\ in determining whether the ADTV Test is met, or
approximately 6,542 hours across all respondents.\190\
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\186\ See 2023 PRA Extension. See also 2020 Release, 85 FR
68181, 68190 n.684. The Commission estimates that approximately 472
(2%) of quoted OTC securities would be eligible for the ADTV and
assets exception. 23,602 total quoted OTC securities as of Dec. 11,
2025 x 2% = 472 securities eligible for the ADTV value and asset
test exception.
\187\ This preliminary estimate differs from the Commission's
previous burden estimate of one minute per record. See 2023 PRA
Extension. See also 2020 Release, 85 FR 68181. This decrease in
estimated burden per response is explained by the increased
automation and accessibility of global trade volume data for OTC
securities and is not a product of the proposed amendments.
\188\ Respondents would likely make such determination as often
as each trading day on which a quotation for an equity security
could be published (or 252 times per year) because the test would
require that the ADTV value be calculated for a specified period
immediately preceding the publication of a quotation of the equity
security. See 17 CFR 240.15c2-11(f)(5)(i).
\189\ (252 trading days per year x 472 equity securities x 1
second)/3,600 seconds = 33.04 hours.
\190\ 33.04 hours x (196 brokers and dealers + one QIDQS + one
RNSA) = 6,541.92 hours.
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Rule 15c2-11(f)(5)(ii), (d)(2)(i), (d)(2)(ii)--Determining Availability
of the ADTV and Asset Test Exception and Corresponding Record
Preservation Requirements--Asset Test
As stated above, the Commission estimates that there are
approximately 472 securities that meet the paragraph (f)(5) ADTV and
Asset Tests.\191\ Consistent with prior estimates, the Commission
estimates it would take one minute to create documentation supporting
respondents' reliance on the Asset Test prong of the exception and that
a respondent would do this once annually per issuer.\192\ Accordingly,
each respondent would spend approximately 8 hours \193\ on this
information collection annually, for an annual industrywide burden of
approximately 1,558 hours per year.\194\
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\191\ See 2020 Release, 85 FR 68181, 68190 n.684. The Commission
estimates that approximately 472 (two percent) of quoted OTC
securities would be eligible for the ADTV and assets exception.
23,602 total quoted OTC securities as of Dec. 11, 2025 x 2 percent =
472 securities eligible for the ADTV value and asset test exception
(rounded to the nearest whole number).
\192\ See 2023 PRA Extension. See also 2020 Release, 85 FR
68181.
\193\ 472 securities x 1 minute/60 minutes = 7.87 hours.
\194\ 7.87 hours x 198 respondents = 1,558.26 hours.
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Under the proposed amendments to Rule 15c2-11, paragraph (f)(7)
would continue to provide an exception for any broker's or dealer's
quotation that is published pursuant to a QIDQS's or an RNSA's publicly
available determination that an exception in paragraph (f)(1),
paragraph (f)(3)(i), or paragraph (f)(5) is available with respect to
an equity security. As discussed above, in this Part V.F.2, any
respondent that determines whether the conditions of the exception in
paragraph (f)(3)(i) or paragraph (f)(5) are met would continue to incur
PRA burdens in compiling documents to reach that determination and in
preserving corresponding records.\195\ Accordingly, any QIDQS or RNSA
that makes a publicly available determination that the exception in
paragraph (f)(3)(i) or paragraph (f)(5) is available for an equity
security would incur PRA burdens consistent with the discussion above,
in this Part V.F.2. The PRA burdens that would be incurred by brokers
and dealers in publishing quotations for equity securities in reliance
on any such publicly available determination concerning an equity
security are discussed below, in Part V.F.3.
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\195\ See 17 CFR 240.15c2-11(d)(2)(i), (d)(2)(ii) (describing
the applicable recordkeeping requirements).
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3. Burden Estimates Related to Other Record Preservation Requirements
Under the proposed amendments, Rule 15c2-11's record preservation
requirements would continue to apply to records concerning brokers' or
dealers' quotations for equity securities and any QIDQS's or RNSA's
publicly available determinations (made pursuant to paragraph
(a)(2)(iv) or paragraph (a)(3)) regarding equity securities. The
estimates discussed herein address PRA burden estimates not already
discussed above, in Parts V.F.1 and V.F.2. These estimates are for PRA
burdens incurred by brokers or dealers in preserving records related to
their (1) initiation of a quoted market in an equity security based on
a QIDQS's publicly available determination that it satisfied Rule 15c2-
11's information gathering and review requirements pursuant to
paragraph (a)(1)(ii) and (2) publication or submission of quotations
pursuant to paragraph (a)(3) for equity securities in reliance on a
QIDQS's or an RNSA's publicly available determination described in
paragraph (f)(2)(iii)(B), paragraph (f)(3)(ii)(A), or paragraph
(f)(7).\196\
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\196\ As discussed above, in Part II, the proposed amendments
would not change any of the rule's requirements or conditions as
they apply to quotations for equity securities. The Commission
therefore does not expect that any broker, dealer, QIDQS, or RNSA
would incur an initial PRA burden under the proposed amendments.
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Rule 15c2-11(d)(1)(ii)--Record Preservation Requirements for Brokers
and Dealers Relying on Publicly Available Determinations Described in
Paragraph (a)(2)(iv)
Under the proposed amendments to Rule 15c2-11, any broker or dealer
that initiates (or resumes) a quoted market in an equity security in
reliance on a QIDQS's publicly available determination regarding its
satisfaction of Rule 15c2-11's information gathering and review
requirements pursuant to paragraph (a)(1)(ii) would continue to be
required under paragraph (d)(1)(ii) to preserve records of the name of
the QIDQS that made the publicly available determination. Because the
information required to satisfy this requirement must be publicly
available, the Commission estimates that each broker or dealer
publishing an initial quotation in reliance on a QIDQS's publicly
available determination made pursuant to paragraph (a)(2)(iv) would
incur a PRA burden by spending approximately one minute in creating
each record \197\
[[Page 13259]]
(or 1.87 hours annually per broker and dealer).\198\ The Commission
estimates that the aggregate annual PRA burden related to this
information collection would be approximately 144 hours across 77
brokers and dealers.\199\
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\197\ This preliminary estimate is consistent with the
Commission's previous burden estimate of one minute per record. See
2023 PRA Extension. See also 2020 Release, 85 FR 68182.
\198\ 112 equity securities for which a QIDQS filed a Form 211
pursuant to FINRA Rule 6432(b) in 2024 x 1 minute/60 minutes = 1.87
hours.
\199\ 112 equity securities for which a QIDQS filed a Form 211
pursuant to FINRA Rule 6432(b) in 2024 x1 minute x 77 brokers and
dealers that may rely on a QIDQS's publicly available
determination)/60 minutes = 143.73 hours. Any change in this
estimate from prior Rule 15c2-11 PRA burden estimates is due to
changes in certain market metrics over time and/or changes in data
collection methods, and not from the proposed amendments.
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Rule 15c2-11(d)(2)(ii)--Record Preservation Requirements for Brokers
and Dealers Relying on Publicly Available Determinations Described in
Paragraph (a)(3)
Under the proposed amendments to Rule 15c2-11, any broker or dealer
that relies on a QIDQS's or an RNSA's publicly available determination
described in paragraph (f)(2)(iii)(B), paragraph (f)(3)(ii)(A), or
paragraph (f)(7) to quote an equity security would continue to be
required to preserve the name of the QIDQS or RNSA that made the
determination. Any broker or dealer that relies on a publicly available
determination pursuant to paragraph (f)(7) to quote an equity security
would also continue to be required to preserve a record of the
exception provided in paragraph (f)(1), paragraph (f)(3)(i), or
paragraph (f)(5) for which the publicly available determination was
made. The Commission estimates that brokers and dealers would compile,
through an automated process needing minimal direct human intervention,
if any, records required by paragraph (d)(2)(ii) each trading day,
spending approximately one second per record. This preliminary estimate
is consistent with the Commission's previous burden estimate of one
second per record.\200\ The 196 brokers and dealer respondents
therefore would have an estimated aggregate annual information
collection burden of approximately 323,819 hours,\201\ or approximately
1,652 hours per respondent.\202\
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\200\ See 2023 PRA Extension. See also 2020 Release, 85 FR
68183.
\201\ (196 brokers and dealers) x (1/3600 hour (one second)) x
(252 trading days per year) x (23,602 unique OTC securities with at
least one published quotation) = 323,819.44 hours. Any change in
this estimate from prior Rule 15c2-11 PRA burden estimates is due to
changes in certain market metrics over time and/or changes in data
collection methods, and not from the proposed amendments.
\202\ 323,819.44 hours/196 brokers and dealers = 1,652.14 hours.
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4. Burden Estimates Related to Rule 15c2-11(a)(3)--QIDQS or RNSA
Written Policies and Procedures for Making Publicly Available
Determinations
Under the proposed amendments to Rule 15c2-11, any QIDQS or RNSA
that makes a publicly available determination pursuant to paragraph
(a)(3) of Rule 15c2-11 would continue to be required to update its
written policies and procedures to address equity securities as defined
in Rule 3a11-1.\203\ The Commission has preliminarily estimated, for
the purposes of this release, that its previous annual burden estimate
of 10 hours per respondent to review and update these written policies
and procedures continues to be reasonable and takes account of any
updates that would be needed to address the proposed amendments.\204\
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\203\ See supra note 82.
\204\ See 2023 PRA Extension. See also 2020 Release, 85 FR
68182.
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Based on available data that was submitted to FINRA pursuant to
Supplementary Material .02 to FINRA Rule 6432, in 2024, one QIDQS made
publicly available determinations pursuant to paragraph (a)(3) of Rule
15c2-11, while the one RNSA has not made any publicly available
determinations pursuant to paragraph (a)(3) of Rule 15c2-11. The
Commission therefore estimates that the total annual PRA burden of the
information collection associated with satisfying paragraph (a)(3)'s
requirements for making publicly available determinations would be 10
hours.\205\
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\205\ One QIDQS x 10 hours = 10 hours. As discussed above, in
Part II, the proposed amendments would not change any of the rule's
requirements or conditions as they apply to quotations for equity
securities. The Commission therefore does not expect that the QIDQS
would incur an initial PRA burden under the proposed amendments.
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G. Collection of Information Would Be Mandatory
Under the proposed amendments to Rule 15c2-11, the information
collections for the information gathering and review requirements
pursuant to paragraph (a)(1) and record preservation requirements
pursuant to paragraph (d) would continue to be mandatory if a broker or
dealer publishes a quotation for an equity security, or if a QIDQS
makes a publicly available determination pursuant to paragraph
(a)(2)(iv). Additionally, the information collections involving
documentation supporting the conditions of an exception would continue
to be mandatory if a broker or dealer publishes any quotation for an
equity security in reliance on an exception in paragraph (f) of Rule
15c2-11 or if a QIDQS or RNSA makes a publicly available determination
pursuant to paragraph (a)(3).
H. Confidentiality of Responses to Collection of Information
The Commission typically would not receive confidential information
as a result of these information collections. To the extent that the
Commission receives, through its examination and oversight program,
through an investigation, or by some other means, records or
disclosures that are not publicly available, from any respondent
supporting, as applicable, its satisfaction of the information
gathering and review requirements, reliance on an exception or a
publicly available determination, or making of a publicly available
determination, such information would be kept confidential, subject to
the provisions of applicable law.
I. Retention Period for Record Preservation Requirement
Under the proposed amendments to paragraph (d)(1) of Rule 15c2-11,
any broker or dealer that initiates (or resumes) a quoted market in an
equity security, or any QIDQS that undertakes to satisfy Rule 15c2-11's
information gathering and review requirements concerning an equity
security, would continue to be required to preserve the applicable
documents and information, for a period of not less than three years,
the first two years in an easily accessible place. Under paragraph
(d)(2) of Rule 15c2-11, any broker or dealer publishing or submitting
any quotation for an equity security, or any QIDQS or RNSA making a
publicly available determination pursuant to proposed paragraphs
(f)(2)(iii)(B), (f)(3)(ii)(A), or (f)(7) of Rule 15c2-11, would
continue to be required to preserve the applicable documents and
information, for a period of not less than three years, the first two
years in an easily accessible place.\206\
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\206\ The proposed amendments would revise Rule 15c2-11 to refer
to only ``equity securities,'' as defined in Rule 3a11-1, but would
not otherwise change the existing retention periods required under
existing Rule 15c2-11(d)(1) and (d)(2).
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J. Request for Comment
Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission solicits
comments to (1) evaluate whether the proposed collections of
information are necessary for the proper performance of the functions
of the Commission, including whether the information would have
practical utility; (2) evaluate the accuracy of the Commission's
estimate
[[Page 13260]]
of the burden of the proposed collections of information; (3) determine
whether there are ways to enhance the quality, utility, and clarity of
the information to be collected; and (4) determine whether there are
ways to minimize the burden of the collections of information on those
who are to respond, including through the use of automated collection
techniques or other forms of information technology.
Q19. Do the Commission's estimates in Part V.D accurately capture
the number of respondents who would be subject to PRA burdens under
Rule 15c2-11 if it is amended to refer to only equity securities, as
defined in Rule 3a11-1? Please explain.
Q20. Do the Commission's estimates in Part V.F accurately estimate
the number of PRA burden hours for respondents under Rule 15c2-11 if it
is amended to refer to only equity securities, as defined in Rule 3a11-
1? Are any PRA burden estimates too low or too high? Please explain.
Q21. How would Rule 15c2-11 compliance tools or data products be
updated to address the proposed amendments? If the section 3(a)(11)
definition of ``equity securities'' were instead referenced, how would
these tools or products be updated? Would having to update these tools
or products increase or decrease the PRA burden estimates included in
Part V.F? Would reliance on these updated tools increase or decrease
the PRA burden estimates included in Part V.F? Please explain.
Q22. Are there any additional costs or burdens that respondents
would incur under the proposed amendments? Please explain.
Q23. The Commission recognizes that some respondents may choose to
utilize third-party vendors for purposes of complying with Rule 15c2-
11's information gathering and review requirements or making certain
determinations, such as whether paragraph (b) information is current
and publicly available or whether certain rule exceptions are
available, rather than conduct these activities themselves. The PRA
burden estimates included in this release are based on respondents
gathering applicable documents and information to conduct these
activities, internally, without the use of third-party vendors, because
the Commission lacks information from which to form a more precise
estimate of the proportion of respondents who would use third-party
vendors. The Commission welcomes comments on this approach, including
the likelihood, burdens, and costs of using third-party vendors for
these purposes.
Persons submitting comments on the collection of information
requirements should direct them to the Office of Management and Budget,
Attention: Desk Officer for the Securities and Exchange Commission,
Office of Information and Regulatory Affairs, Washington, DC 20503, and
should also send a copy of their comments to Secretary, Securities and
Exchange Commission, 100 F Street NE, Washington, DC 20549-1090, with
reference to File Number S7-2026-08. Requests for materials submitted
to OMB by the Commission with regard to this collection of information
should be in writing, with reference to File Number S7-2026-08 and be
submitted to the Securities and Exchange Commission, Office of FOIA/PA
Services, 100 F Street NE, Washington, DC 20549-2736. As OMB is
required to make a decision concerning the collection of information
between 30 and 60 days after publication, a comment to OMB is best
assured of having its full effect if OMB receives it within 30 days of
publication.
VI. Present Values and Annualized Values of Monetized Benefits and
Costs
In addition to discussing the benefits, costs, and reasonable
alternatives in the Economic Analysis in Part IV, consistent with the
requirements of Executive Order 12866, and estimating burdens under the
PRA in Section V, the Commission reports estimated total monetized
benefits and costs for all affected entities in two ways specified in
OMB Circular A-4.\207\ These additional analyses include only benefits
and costs that are monetized in the Economic Analysis and thus do not
encompass all of the proposed amendments' benefits and costs. The two
presentations are intended to address the fact that the various
benefits and costs of the proposed amendments would not accrue at the
same point in time; rather, benefits and costs that accrue sooner are
generally more valuable than those that occur later in time.\208\
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\207\ See Exec. Order No. 12866 (Sept. 30, 1993), 58 FR 51735,
51741 (Oct. 4, 1993) (requiring agencies to provide an analysis of
benefits, costs, and regulatory alternatives to OIRA for significant
regulatory actions); OMB, Circular A-4, at 31-34, 45 (Sept. 17,
2003) (providing guidance to agencies regarding compliance with
Executive Order 12866). See also Exec. Order No. 14215 (Feb. 18,
2025), 90 FR 10447, 10448 (Feb. 24, 2025) (requiring independent
agencies to comply with Exec. Order No. 12866). In addition,
Executive Order 14192 requires agencies to provide their best
approximation of the total costs or savings associated with each new
regulation or repealed regulation consistent with the analyses
required by Executive Order 12866. See Exec. Order No. 14192 (Jan.
31, 2025), 90 FR 9065, 9066 (Feb. 6, 2025). Although Circular A-4
applies to only significant regulatory actions under section 3(f) of
Executive Order 12866 and OIRA has determined this rulemaking is not
significant, we are providing these additional analyses in this
release to promote transparency and comparability of aggregated
monetized benefits and costs across our rulemakings. See supra Part
IV.
\208\ See OMB, Circular A-4, at 32.
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We report below (1) the present values of expected benefits and
costs that are monetized in our economic analysis over a 10-year time
horizon, starting in 2026, as well as (2) the annualized values over
the same time horizon that are derived from the present values. This
10-year time horizon represents the period over which the principal
benefits and costs that are monetized in the Economic Analysis are
expected to accrue.\209\ The present values and annualized values
account for the timing of benefits and costs through discounting, which
is a procedure that accounts for the time value of money.\210\
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\209\ See id. at 31 (stating that ``[t]he ending point should be
far enough in the future to encompass all the significant benefits
and costs likely to result from the rule''). For the purposes of
this analysis, we assume the effective date of the proposed
amendments, as well as the start year for the analysis's 10-year
time horizon, is the present year.
\210\ See id. at 32 (``The Rationale for Discounting'') & 45
(``Treatment of Benefits and Costs over Time''). See also OIRA,
Regulatory Impact Analysis: A Primer, at 11 (Aug. 15, 2011),
available at <a href="https://www.reginfo.gov/public/jsp/Utilities/circular-a-4_regulatory-impact-analysis-a-primer.pdf">https://www.reginfo.gov/public/jsp/Utilities/circular-a-4_regulatory-impact-analysis-a-primer.pdf</a> (``To provide an
accurate assessment of benefits and costs that occur at different
points in time or over different time horizons, an agency should use
discounting. Agencies should provide benefit and cost estimates
using both 3 percent and 7 percent annual discount rates expressed
as a present value as well as annualized.''); Harvey S. Rosen & Ted
Gayer, Public Finance 151 (8th ed. 2008) (defining present value as
``the value today of a given amount of money to be paid or received
in the future'').
---------------------------------------------------------------------------
Table 1 reports the discounted present values of monetized benefits
and costs, combining one-time and recurring monetized benefits and
costs, for all affected entities. This analysis uses annual real
discount rates of 3 percent and 7 percent over a 10-year time horizon,
starting in 2026.\211\ As discussed above, the Commission does not
estimate any monetized benefits or costs because the Commission is
unable to quantify the expected effects because it lacks data necessary
to fully quantify effects for securities that are not equity securities
as defined in Rule 3a11-1.
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\211\ This approach is consistent with OMB Circular A-4. See
Circular A-4, at 31-34 (stating that, ``[f]or regulatory analysis,
[agencies] should provide estimates of net benefits using both 3
percent and 7 percent'' discount rates and discussing why those
rates are reasonable default rates). Also, we use a mid-year
discount rate. See OMB, Circular A-94, at 21-22 (Oct. 19, 1992)
(stating that, ``When costs and benefits occur in a steady stream,
applying mid-year discount factors is more appropriate.'').
[[Page 13261]]
Table 1--Present Discounted Value of Monetized Benefits and Costs Over
10 Years From 2026 to 2035
[2025 Dollars] \a\
------------------------------------------------------------------------
3% Real discount 7% Real discount
Estimated effects rate rate
------------------------------------------------------------------------
Benefits........................ Not monetized..... Not monetized.
Costs........................... Not monetized..... Not monetized.
------------------------------------------------------------------------
Notes:
\a\ This Table includes only benefits and costs that are monetized. As
discussed in Economic Analysis, in Part IV, there are other benefits
and costs that the Commission is not able to monetize.
Table 2 reports annualized monetized benefits and costs using real
discount rates of 3 percent and 7 percent over a 10-year horizon.\212\
The lump sum present values of monetized benefits and costs reported in
Table 1 are converted in Table 2 into a constant stream of annualized
benefits and costs over a 10-year time horizon, starting in 2026.\213\
Annualized benefits and costs may differ from the recurring monetized
annual benefits and costs discussed earlier in this economic analysis
because they incorporate the timing of benefits and costs, through
discounting, and combine one-time and recurring benefits and
costs.\214\
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\212\ This approach is consistent with the recommended treatment
of benefits and costs over time in Circular A-4. See id. at 45
(``You should present annualized benefits and costs using real
discount rates of 3 and 7 percent'').
\213\ For each discount rate, the annualized monetized benefits
(costs, respectively) in Table 2 represent the constant annual
stream of benefits (costs, respectively) whose present value over
the 10-year horizon equates the corresponding present value in Table
1.
\214\ The annualized benefits and costs present these values
over the 10-year time horizon, starting in present year, even if
recurring annual benefits and costs would actually start to be
incurred at a later date due to compliance periods.
Table 2--Annualized Monetized Benefits and Costs Over 10 Years From 2026
to 2035
[2025 Dollars] \a\
------------------------------------------------------------------------
3% Real discount 7% Real discount
Estimated effects rate rate
------------------------------------------------------------------------
Benefits........................ Not monetized..... Not monetized.
Costs........................... Not monetized..... Not monetized.
------------------------------------------------------------------------
Notes:
\a\ This Table includes only benefits and costs that are monetized. As
discussed in the Economic Analysis in Part IV, there are other
benefits and costs that the Commission is not able to monetize.
In sum, Tables 1 and 2 report in two alternative ways expected
total benefits and costs, across all affected entities, which are
monetized in our Economic Analysis in Part IV, using real discount
rates of 3 percent and 7 percent over a 10-year time horizon.
VII. Regulatory Flexibility Act Certification
The Regulatory Flexibility Act of 1980 (``RFA'') requires the
Commission, when issuing a rulemaking proposal, to prepare and make
available for public comment an initial regulatory flexibility analysis
(``IRFA'') that describes the impact of the proposed rule on small
entities,\215\ unless the Commission certifies that the rule, if
adopted, would not have a significant economic impact on a substantial
number of small entities.\216\ Pursuant to 5 U.S.C. 605(b), the
Commission hereby certifies that the proposed amendments to Rule 15c2-
11 would not, if adopted, have a significant economic impact on a
substantial number of small entities.
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\215\ 5 U.S.C. 603(a).
\216\ 5 U.S.C. 605(b).
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Small entities include broker-dealers with total capital (net worth
plus subordinated liabilities) of less than $500,000 on the date in the
prior fiscal year as of which its audited financial statements were
prepared pursuant to Rule 17a-5(d) under the Exchange Act,\217\ or, if
not required to file such statements, a broker-dealer who had total
capital (net worth plus subordinated liabilities) of less than $500,000
on the last day of the preceding fiscal year (or in the time it has
been in business, if shorter), and is not affiliated with any person
(other than a natural person) who is not a small business or small
organization.\218\ A small business or small organization, for purposes
of ``issuers'' or ``person'' other than an investment company, is
defined as a person who, on the last day of its most recent fiscal
year, had total assets of $5 million or less.\219\
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\217\ See 17 CFR 240.17a-5(d).
\218\ See 17 CFR 240.0-10(c).
\219\ 17 CFR 242.0-10(a).
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The proposed amendments to Rule 15c2-11 impact brokers and dealers
that publish or submit quotations for securities in a quotation medium.
Based on a review of available data involving those broker and dealers,
the Commission does not believe that any of them are small entities
because they either exceed $500,000 in total capital or are affiliated
with a person that is not a small entity as defined in Rule 0-10. It is
possible that in the future a small entity may become impacted by the
rule and the proposed amendments. Based on experience with broker-
dealers that participate in this market, however, the Commission
preliminarily believes that this scenario will be unlikely because
firms that enter the market are likely to exceed $500,000 in total
capital or be affiliated with a person that is not a small entity.
The Commission encourages written comments on the certification.
The Commission solicits comment as to whether the proposed rule could
have an effect on small entities that has not been considered. The
Commission asks that commenters describe the nature of any impact on
small entities and provide empirical data to support the extent of the
impact.
VIII. Congressional Review Act
For purposes of Subtitle E of the Small Business Regulatory
Enforcement Fairness Act of 1996 (also known as the Congressional
Review Act),\220\ the Commission must seek OMB's determination as to
whether a final regulation constitutes a ``major'' rule. Under the
Congressional Review Act, a rule is considered ``major'' where, if
adopted, it results in or is likely to result in:
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\220\ See 5 U.S.C. chapter 8.
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<bullet> An annual effect on the economy of $100 million or more;
<bullet> A major increase in costs or prices for consumers or
individual industries; or
<bullet> Significant adverse effects on competition, investment, or
innovation.\221\
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\221\ See 5 U.S.C. 804(2) defining ``major rule.''
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To help inform OMB's determination as to whether any final rule
that results from the proposal would be a ``major rule'', the
Commission requests comment and data on:
<bullet> The potential effect on the U.S. economy on an annual
basis;
<bullet> Any potential increase in costs or prices for consumers or
individual industries; and
<bullet> Any potential effect on competition, investment, or
innovation.
Commenters are requested to provide empirical data and other
factual support for their views to the extent possible.
IX. Other Matters
The Office of Management and Budget has determined that this action
is not a significant regulatory action as defined in Executive Order
12866, as amended, and therefore it was not subject to Executive Order
12866 review.
Statutory Authority
The rule amendments contained in this release are being proposed
under the authority set forth in sections 3, 10(b), 15(c), 15(h),
17(a), 23(a), and 36 of the Securities Exchange Act of 1934 [15 U.S.C.
78c, 78j(b), 78o(c), 78o(g), 78q(a), 78w(a), and 78mm].
[[Page 13262]]
List of Subjects in 17 CFR Part 240
Brokers; Fraud; Reporting and recordkeeping requirements;
Securities.
Text of Rule Amendments
For the reasons set forth in the preamble, the Commission is
proposing to amend title 17, chapter II of the Code of Federal
Regulations as follows:
PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934
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1. The authority citation for part 240 continues to read as follows:
Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3,
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f,
78g, 78i, 78j, 78j-1, 78j-4, 78k, 78k-1, 78l, 78m, 78n, 78n-1, 78o,
78o-4, 78o-10, 78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78dd, 78ll,
78mm, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11,
1681w(a)(1), 6801-6809, 6825, 7201 et seq., and 8302; 7 U.S.C.
2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 U.S.C. 1350; and Pub. L. 111-
203, 939A, 124 Stat. 1376 (2010); and Pub. L. 112-106, sec. 503 and
602, 126 Stat. 326 (2012), unless otherwise noted.
* * * * *
Section 240.15c2-11 also issued under 15 U.S.C. 78j(b), 78o(c),
78q(a), and 78w(a).
* * * * *
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1. Amend Sec. 240.15c2-11 by revising paragraphs (a)(1), (b)(3)(v),
(b)(4), (b)(5)(i)(D), (b)(5)(i)(E), (b)(5)(i)(F), (b)(5)(i)(P),
(b)(5)(ii), (c), (d)(1)(i)(A), (d)(1)(i)(B), (d)(2)(ii), (e)(5),
(f)(1), (f)(3)(i)(A), (f)(3)(i)(B), (f)(3)(i)(B)(2), (f)(3)(i)(C),
(f)(3)(ii), (f)(4), (f)(5)(i), (f)(5)(ii), (f)(6) and (f)(7) to read as
follows:
Sec. 240.15c2-11 Publication or submission of quotations without
specified information.
(a) * * *
(1) Brokers or dealers. A broker or dealer to publish any quotation
for an equity security as defined in Sec. 240.3a11-1 of this chapter
or, directly or indirectly, to submit any such quotation for
publication, in any quotation medium, unless:
* * * * *
(b)(3) * * *
(v) An annual statement referred to in section 12(g)(2)(G)(i) of
the Act (in the case of an issuer of an equity security that falls
within the provisions of section 12(g)(2)(G) of the Act); or
(4) A copy of the information that, since the first day of its most
recently completed fiscal year, the issuer has published as required to
establish the exemption from registration under section 12(g) of the
Act pursuant to Sec. 240.12g3-2(b) of this chapter, which the broker
or dealer must make available upon the request of a person expressing
an interest in a proposed transaction in the issuer's equity security
with the broker or dealer, such as by providing the requesting person
with appropriate instructions regarding how to obtain the information
electronically; or
(b)(5)(i) * * *
(D) The title, class, and ticker symbol (if assigned) of the equity
security;
(E) The par or stated value of the equity security;
(F) The number of shares or total amount of the equity securities
outstanding as of the end of the issuer's most recent fiscal year;
* * * * *
(P) Whether the quotation is being submitted or published, directly
or indirectly, by or on behalf of the issuer or a company insider and,
if so, the name of such person and the basis for any exemption under
the Federal securities laws for any sales of such equity securities on
behalf of such person.
(ii) The broker or dealer must make the documents and information
specified in paragraph (b)(5)(i) of this section available upon the
request of a person expressing an interest in a proposed transaction in
the issuer's equity security with the broker or dealer, such as by
providing the requesting person with appropriate instructions regarding
how to obtain such publicly available documents and information
electronically. If such information is made available to others upon
request pursuant to this paragraph, such delivery, unless otherwise
represented, shall not constitute a representation by such broker or
dealer that such information is accurate but shall constitute a
representation by such broker or dealer that the information is current
in relation to the day the quotation is submitted, the broker or dealer
has a reasonable basis under the circumstances for believing the
information is accurate in all material respects, and the information
was obtained from sources that the broker or dealer has a reasonable
basis under the circumstances for believing are reliable. The documents
and information specified in paragraph (b)(5) of this section must be
reviewed where paragraphs (b)(1) through (4) of this section do not
apply to such issuer. For purposes of compliance with paragraph
(a)(1)(i)(B) or (a)(2)(ii) of this section, the documents and
information specified in paragraph (b)(5) of this section must be
reviewed for an issuer for which the documents and information
specified in paragraph (b)(1), (2), (3), or (4) of this section
regarding such issuer are not current.
(c) Supplemental information. With respect to any equity security
the quotation of which is within the provisions of this section, the
broker or dealer submitting or publishing such quotation, or any
qualified interdealer quotation system that makes known to others the
quotation of a broker or dealer pursuant to paragraph (a)(2) of this
section, shall have in its records the following documents and
information:
* * * * *
(d) * * *
(1)(i) * * *
(A) Any broker or dealer that publishes or submits a quotation
pursuant to paragraph (a)(1) of this section for an equity security; or
(B) Any qualified interdealer quotation system that makes known to
others the quotation of a broker or dealer pursuant to paragraph (a)(2)
of this section for an equity security;
* * * * *
(d) * * *
(2) * * *
(ii) Any broker or dealer that publishes or submits a quotation
pursuant to paragraph (f) of this section; Provided, however, That any
broker or dealer that relies on a publicly available determination
described in paragraph (f)(2)(iii)(B) or (f)(3)(ii)(A) of this section
shall preserve only a record of the name of the qualified interdealer
quotation system or registered national securities association that
determined whether the documents and information specified in paragraph
(b) of this section are current and publicly available in addition to
the documents and information that demonstrate that the other
requirements of the exception provided in paragraph (f)(2) or (3),
respectively, are met; and that any broker or dealer that relies on a
publicly available determination described in paragraph (f)(7) of this
section shall preserve only a record of the exception provided in
paragraph (f)(1), (f)(3)(i), or (f)(5) for which the publicly available
determination is made and the name of the qualified interdealer
quotation system or registered national securities association that
determined that the requirements of that exception are met.
* * * * *
(e) * * *
(5) Publicly available shall mean available on EDGAR; on the
website of a state or Federal agency, a qualified interdealer quotation
system, a registered national securities association, an issuer, or a
registered broker or dealer; or through an
[[Page 13263]]
electronic information delivery system that is generally available to
the public in the primary trading market of a foreign private issuer as
defined in Sec. 240.3b-4 of this chapter; Provided, however, that
publicly available shall mean where access is not restricted by user
name, password, fees, or other restraints.
* * * * *
(f) * * *
(1) The publication or submission of a quotation for an equity
security that is admitted to trading on a national securities exchange
and that is traded on such an exchange on the same day as, or on the
business day next preceding, the day the quotation is published or
submitted.
* * * * *
(3)(i)(A) The publication or submission, in an interdealer
quotation system that specifically identifies as such unsolicited
customer indications of interest of the kind described in paragraph
(f)(2) of this section, of a quotation for an equity security that has
been the subject of a bid or offer quotation (exclusive of any
identified customer interests) in such a system at a specified price,
with no more than four business days in succession without such a
quotation;
(B) Provided, however, that this paragraph (f)(3) shall not apply
to a quotation that is published or submitted by a broker or dealer for
the equity security of an issuer that:
* * * * *
(2) Such broker or dealer, or any qualified interdealer quotation
system or registered national securities association, has a reasonable
basis under the circumstances for believing is a shell company, unless
such quotation is published or submitted within the 18 months following
the initial quotation for such issuer's equity security that is the
subject of a bid or offer quotation in an interdealer quotation system
at a specified price;
(C) Provided further, that this paragraph (f)(3) shall apply to the
publication or submission of a quotation for an equity security of an
issuer only if the documents and information regarding such issuer that
are specified in:
* * * * *
(ii) If the documents and information specified in paragraph (b) of
this section (excluding paragraphs (b)(5)(i)(N) through (P)) regarding
an issuer are no longer current and publicly available, timely filed,
or filed within 180 calendar days, as specified in paragraph
(f)(3)(i)(C) of this section, a broker or dealer may continue to
publish or submit a quotation for such issuer's equity security in an
interdealer quotation system during the time frame specified in
paragraph (f)(3)(ii)(C) if:
* * * * *
(4) [Reserved]
* * * * *
(5) * * *
(i) An equity security with a worldwide average daily trading
volume value of at least $100,000 reported during the 60 calendar days
immediately before the publication of the quotation of such equity
security; and
(ii) The issuer of such equity security has at least $50 million in
total assets and $10 million in shareholders' equity as reflected in
the issuer's publicly available audited balance sheet issued within six
months after the end of its most recent fiscal year.
(6) The publication or submission of a quotation for an equity
security by a broker or dealer that is named as an underwriter in a
registration statement for an offering of that class of equity security
referenced in paragraph (b)(1) of this section or in an offering
statement for an offering of that class of equity security referenced
in paragraph (b)(2) of this section; Provided, however, that this
paragraph (f)(6) shall apply only to the publication or submission of a
quotation for such equity security within the time frames specified in
paragraph (b)(1) or (2) of this section.
(7) The publication or submission of a quotation by a broker or
dealer that relies on a publicly available determination by a qualified
interdealer quotation system or registered national securities
association that the requirements of an exception provided in paragraph
(f)(1), (f)(3)(i), or (f)(5) of this section are met; Provided,
however, that any qualified interdealer quotation system or registered
national securities association that makes a publicly available
determination that the requirements of the exception provided in
paragraph (f)(3)(i) of this section are met must subsequently make a
publicly available determination under paragraph (f)(3)(ii)(A) of this
section, as applicable.
* * * * *
By the Commission.
Dated: March 16, 2026.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-05401 Filed 3-18-26; 8:45 am]
BILLING CODE 8011-01-P
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