Publication or Submission of Quotations Without Specified Information

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. 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 • Use the Commission's internet comment form ( https://www.sec.gov/comments/s7-2026-08/publication-or-submission-quotations-without-specified-information ); or • Send an email to rule-comments@sec.gov. Please include File Number S7-2026-08 on the subject line. Paper Comments • 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 ( https://www.sec.gov/rules-regulations/2026/03/s7-2026-08 ). 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 www.sec.gov to receive notifications by email. A summary of the proposal of not more than 100 words is posted on the Commission's website ( https://www.sec.gov/rules-regulations/2026/03/s7-2026-08 ). 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 1 15 U.S.C. 78a et seq. 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 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 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)”). 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 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. 78 o (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”). 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 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 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 https://www.ici.org/system/files/2024-11/24-cl-joint-rule-15c2-11-extension.pdf; Letter from Kristi Leo, President, Structured Finance Assoc. (“SFA”) (Dec. 9, 2021) (“SFA Letter”), available at https://structuredfinance.org/wp-content/uploads/2021/12/SFA_15c2-11_vf_website-1.pdf; Group Letter from Lindsey Weber Keljo, Managing Director, SIFMA AMG, et al. (Sept. 23, 2021) (“SIFMA AMG Group Letter”), available at https://www.sifma.org/wp-content/uploads/2021/09/Investor-15c2-11-letter-final-2021-09-23.pdf; 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 https://www.sifma.org/wp-content/uploads/2021/09/SIFMA-BDA-Exemptive-Request-FI-2021-08-26.pdf (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 https://www.sec.gov/comments/sr-finra-2021-014/srfinra2021014-9038478-246207.pdf. 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 https://www.sec.gov/files/investment/no-action/fixed-income-rule-15c2-11-no-action-letter-finra-112224.pdf. 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. 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”). 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. 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. 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. 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 § 240.3a11-1 of this chapter.” 37 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). 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. 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). 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. 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). 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 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 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. 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 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. 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 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. 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 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). 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 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 https://www.sec.gov/files/rules/petitions/2022/petamend-rule-15c211-4795.pdf. 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 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 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. 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.”). Further, many exceptions from Rule 15c2-11 available to equity securities 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. 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). 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 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. 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. 73 See, e.g., Letter from Karl Trinko (Mar. 3, 2026), available at https://www.sec.gov/files/rules/petitions/2026/petn4-888.pdf (discussing the securities of certain royalty trusts). 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 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). 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 “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. 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). 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. 79 See supra note 74. 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. 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. 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. 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). 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 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. 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). 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 w