The US Securities and Alternate Fee is pushing to clear up years of confusion over a key broker-dealer reporting rule that prevented sure belongings from being quoted by broker-dealers on the over-the-counter (OTC) market.
The SEC Rule 15c2-11 was first adopted in 1971, aimed toward lowering fraud within the penny inventory market. It requires broker-dealers to keep up up-to-date public details about an issuer earlier than it may possibly publish over-the-counter quotes.
In 2021, the rule was reinterpreted to additionally embody fixed-income securities (resembling authorities or company bonds), which noticed backlash from the market. There have additionally been questions on whether or not it applies to crypto securities.
In a statement on Monday, the SEC proposed an modification to Rule 15c2-11 that might restrict the scope of reporting necessities for over-the-counter broker-dealers to “fairness securities,” reversing the interpretation from 2021.
Hester Peirce, SEC commissioner and chief of the agency’s crypto task force, additionally welcomed the proposal, explaining that the SEC had created years of uncertainty by way of an modification underneath the earlier management in 2020, which went into effect in 2021.
“By its phrases, the textual content of Rule 15c2-11 all the time has utilized to quotations of a ‘safety.’ Market contributors and different observers together with me, nevertheless, understood the rule to use solely to quotations of over-the-counter (‘OTC’) fairness securities,” she stated, including:
“The Fee ought to have granted long-term no-action reduction whereas we assessed whether or not the applying of the rule to the mounted earnings market was applicable after which amended the rule as vital. As a substitute, the Fee… granted a number of rounds of restricted reduction, typically for as quick a interval as three months… fostering uncertainty on this market.”
SEC to hunt remark about software to crypto
The SEC defines an fairness safety as any inventory, comparable safety or convertible safety that represents an possession curiosity in an organization.
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Regardless of the SEC’s latest proposal, there isn’t any choice but made on whether or not “fairness securities” might embody crypto belongings. The SEC has opened a 60-day interval for public remark.
“I’m notably serious about commenters’ views as to the questions in regards to the definition of ‘fairness safety,’ the rule’s software to crypto belongings, and the suitable subsequent steps with respect to the formation of an ‘professional market,’” she stated.
Each the SEC and Commodities Futures Buying and selling Fee (CFTC) have been pushing exhausting to determine regulatory readability for crypto within the US underneath the present administration.
Final week, the duo signed a memo agreeing to coordinate oversight of economic markets, together with crypto. The companies stated this could put an finish to a long time of “regulatory turf wars” between them.
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