BDA in a letter yesterday to the SEC supported proposed changes to SEC Rule 15c2-11 to specify that the Rule applies only to equity securities.
BDA told the SEC “The Commission has proposed to amend SEC Rule 15c2-11 to address the action taken by the previous Commission to apply the Rule to fixed income securities for the first time ever. BDA fully supports the Proposal, thanks the SEC addressing this issue, and urges the Commission to move the initiative forward.” We also told the SEC “The previous SEC administration took an inappropriate action with respect to Rule 15c2-11 which has resulted in uncertainty and inefficiency in the market for corporate and other bonds.”
The Commission in 2021 specified that Rule 15c2-11, which since 1971 had been a rule for over-the-counter equities, suddenly applied to fixed income for the first time. The Rule requires traders, before publishing a quotation to a quotation medium, review certain issuer financial information and ensure that information is available publicly. Confusion resulted. The SEC attempted to mitigate the effects of their decision through no-action letters and exemptive relief, but the 2021 change remains as burdensome and confusing regulation, and BDA has consistently pressed the SEC to reverse the decision. This proposal, if and when it becomes adopted, will finally fix the problem.
BDA’s letter is available here. Please call or write with any questions.