OTC Markets Comments on SEC Proposal 15c2-11

OTC Markets Group has weighed in on SEC Rule Proposal 15c2-11 which governs the public quoting of securities on our OTCQX, OTCQB and Pink markets.

In its letter, the exchange explains how the critical changes suggested to date could efficiently work in practice. This submission includes a redline version of our suggested changes to the SEC’s proposed rule, as well as detailed explanations as to how these changes would streamline the rule and create more efficient, effective markets. Summary points include:

  1. Simplify the Rule:  We have simplified the requirements for public quoting, eliminating the piggyback exemption and the distinction between initial versus ongoing quoting, such that there is one simple rule: company information must be current and publicly available in order for broker-dealers to publish quotations in OTC securities, unless one of the enumerated exemptions is met.
  2. Shell Companies:  Rather than banning all public quoting in shell companies, we propose that the SEC adopt a bright-line definition for shells based on current financial information and impose additional disclosure obligations related to insider and affiliate activities for all companies that fall within the definition.
  3. Expert Market:  In line with our prior comments, and supported by other commenters, we have added an exemption to the information requirements of the rule which would allow quote submission and publication in a qualified IDQS, provided that those quotes are “made known,” i.e., distributed for viewing, only to specified investors, including Qualified Institutional Buyers (“QIBs”), accredited investors, registered entities (broker-dealers, investment companies and advisors) and banks.

A brief overview of the 211 rule proposal can be found in the following video and on OTC Markets Public Policy Page.

The complete comment letter can bee found here