Securities Regulation Daily Wrap Up, BROKER-DEALERS—SEC proposes limiting Rule 15c211 to equity securities, (Mar 17, 2026)
The amendment affirms that the rule applies only to equity securities and would not change any existing information gathering and review requirements.
The SEC has proposed amendments to Exchange Act Rule 15c211 to limit the rule’s application to equity securities. The proposed amendments would replace the term "security" in the rule with "equity security." The Commission said that the proposal is intended to clarify regulatory obligations and to confirm industry participants' understanding that the rule was never meant to apply to fixed-income securities (Publication or Submission of Quotations Without Specified Information, Exchange Act Release No. 105004 (March 16, 2026)).
Rule 15c2-11. As amended in 2020, Rule 15c2-11 requires brokers or dealers to gather and review specified information about a security and its issuer before initiating or resuming any quotation for an over-the-counter security in a quotation medium. After these amendments—which modernized the rule—were adopted, industry participants responded that they had never understood the rule to apply to non-equity securities and expressed concerns about the potential burdens of applying it to fixed-income securities. FINRA, for example, has always structured its rule implementing the 2020 amendments to apply only to equity securities not traded on a national exchange.
In response, the Commission provided exemptive relief, and the staff issued a no-action letter. The 2021 no-action letter provided that the Commission would not recommend enforcement regarding fixed income securities in the Rule 15c2-11 context. In 2023, the Commission exempted Rule 144A fixed-income securities from Rule 15c2-11, and a 2024 no-action letter addressed additional categories of fixed income securities. The proposing release notes further that subsequent proposals identified certain non-equity securities as not requiring protection under the rule.
Proposed amendment. To resolve uncertainty about the application of the rule and to affirm the industry understanding, the proposed amendment revises Rule 15c2-11 to replace the term "security" with "equity security," as defined in Exchange Act Rule 3a11-1. The substantive information gathering and review requirements that brokers and dealers must satisfy before initiating or resuming a quotation for equity securities would not otherwise be changed.
According to the release, the definition under Rule 3a-11 includes a broad range of equity interests while providing more specificity than the statutory definition in Section 3(a)(11). Additionally, to the extent a crypto asset is an equity security, Rule 15c2-11 would apply. Additional conforming amendments to Rule 15c2-11 would clarify that the rule's scope, and exceptions, apply only to equity securities.
"Regulations should be appropriately tailored to fit the asset class to which they apply," said SEC Chairman Paul S. Atkins. "This proposal would clarify regulatory obligations when publishing quotations and affirm what was always understood: Rule 15c2-11 applies to equity securities."
In a statement supporting the proposal, Commissioner Peirce expressed regret for the "protracted and unnecessarily burdensome process" that led to the proposed amendments. She noted that the tension between the text of the rule and its understood application to equity securities came to a head after the 2020 amendment. Peirce says she blames herself for failing to ensure that the 2020 amendments made the scope of the rule clear and took pains to point out that the Commission staff was not at fault for "following the bizarre directive of the Commission to start reading the rule with a breadth at odds with historical understanding and market reality."
Comments. The SEC invited comments in general and, among other, more specific items, on whether the Rule 3a111 definition provides sufficient clarity as to Rule 15c2-11's scope. The comment period will remain open for 60 days after the release is published in the Federal Register.
The release is No. 34-105004.
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