The SEC proposed exemptive relief from the information review and diligence requirements under Rule 15c2-11 ("Initiation or Resumption of Quotations without Specific Information") "to permit broker-dealers to publish or submit proprietary quotations for securities, on a continuous basis, in a market where the distribution of such quotations is restricted to sophisticated or professional investors."
The proposed relief is the result of a request by OTC Link LLC, as to its "Expert Market" platform. "Expert Market" is an automated trading system that provides limited access (for experts only). Qualified "experts" would include both qualified institutional buyers and accredited investors, as well as qualified purchasers, as defined in the Section 2(a)(51)(A) of the Investment Company Act. In addition to limiting direct access, Expert Market would require that data vendors limit the persons to whom they distribute pricing information as to Expert Market Securities.
Recent amendments to Rule 15c2-11 (see previous coverage) significantly reduced the piggybacking exemption such that broker-dealers must withdraw from publishing quotations in a quotation medium for securities of issuers for which information is not current and "publicly available." The proposed exemption would relieve broker-dealers from compliance with the information review and recordkeeping requirements of amended Rules 15c2-11(a)(1)(i) and (d)(1)(i)(A), respectively. The SEC stated that the proposed conditional exemptive relief would allow the Expert Market to serve as a centralized location for published quotations in securities that otherwise would migrate to the grey market. The SEC acknowledged the benefit of an expert market that would enhance liquidity for sophisticated or professional investors and promote growth opportunities for certain small companies.
Comments on the proposal must be received on or before February 11, 2021.
- Federal Register: Notice of Proposed Conditional Exemptive Order Granting a Conditional Exemption from the Information Review Requirement and the Recordkeeping Requirement under the Securities Exchange Act of 1934 for Certain Publications
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