On September 16, the Securities and Exchange Commission adopted amendments to the Securities Exchange Act of 1934 (Exchange Act) Rule 15c2-11 to modernize the rule, including by recognizing advances in communications technology. The rule requires broker-dealers to review key, basic issuer information before initiating or resuming quotations for the issuer’s security in the over-the-counter (OTC) market.
Currently, certain of the rule’s exceptions permit broker-dealers to maintain a quoted market for an issuer’s security in perpetuity in the absence of current and publicly available information about the issuer. Recognizing the faster flow of information today, the amendments generally prohibit broker-dealers from publishing quotations for an issuer’s security when issuer information is not current and publicly available, subject to certain exceptions. The amendments also add new exceptions for certain OTC securities that may be less susceptible to fraud or manipulation, such as actively traded securities of well-capitalized issuers, and expand the scope of market participants that may comply with the rule’s required review of issuer information.
The amendments to Exchange Act Rule 15c2-11, which was last substantively amended nearly 30 years ago, will become effective 60 days following publication in the Federal Register.
The SEC press release is available here.