On September 16, 2020, the SEC adopted amendments to Exchange Act Rule 15c2-11 which requires that a broker-dealer review basic information about an issuer before providing quotations in over-the-counter (OTC) securities. These amendments are designed to modernize the rule which was last updated nearly 30 years ago by providing greater transparency and enhancing disclosure and investor protection in the OTC market.
The final rule amendments will:
- Require that information about the issuer and it’s security be current and publicly available before a broker-dealer can begin quoting that security.
- Limit broker-dealers’ reliance on certain of the Rule exceptions, including the piggyback exception, when issuer information is not current and publicly available.
- Provide exceptions to reduce unnecessary burdens on broker-dealers to quote certain OTC securities that may be less susceptible to fraud and manipulation.
The Rule will become effective 60 days following publication of the amendments in the Federal Register. The Rule will have a general compliance date that is nine months after the effective date as well as a compliance date that is two years after the effective date regarding provisions to require an issuer’s financial information for the last two fiscal years to be current and publicly available.
Read complete press release here.