IAA Supports SEC’s Proposal to Exclude Fixed-Income Securities from Exchange Act Rule 15c2-11
May 18, 2026
Vanessa A. Countryman
Secretary
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-1090
Re: Publication or Submission of Quotations Without Specified Information (Rel. No. 34-105004; File No. S7-2026-08)
Dear Ms. Countryman:
The Investment Adviser Association (IAA)[1] appreciates the opportunity to comment on the Securities and Exchange Commission’s (Commission) proposal to amend Rule 15c2-11 (Rule) under the Securities Exchange Act of 1934 (Exchange Act), which establishes certain information review requirements that broker-dealers must satisfy before publishing quotations for over-the-counter (OTC) securities.[2] The Proposal would narrow the scope of the Rule to cover only “equity securities” rather than all securities.
After the Commission adopted amendments to modernize the Rule in 2020, it took the view, for the first time, that the Rule applied to fixed-income securities.[3] IAA members, which, as fiduciary investment advisers, invest in fixed income markets on behalf of clients, were concerned that applying the Rule to fixed-income securities would reduce market liquidity and transparency, harming their ability to transact efficiently and manage risk on behalf of clients. The IAA and other industry associations sought relief to exclude fixed-income securities from the Rule’s scope, which the Commission granted (discussed below). The Proposal would now codify this relief by explicitly clarifying that the Rule applies only to “equity securities” rather than “securities.” We strongly support the Proposal and commend the Commission for taking this important step.
Background and Need for Amendments to Current Rule 15c2-11
The Rule was adopted in 1971 to prevent, and protect retail investors from, certain manipulative and fraudulent trading schemes that had arisen in connection with the distribution and trading of unregistered securities in the OTC equity markets.[4] The Commission sought to modernize the Rule in 2020, but did not discuss or seek public input on application of the Rule to fixed-income securities during either the proposal[5] or final stage of that rulemaking.
At the request of commenters after the adoption of the Rule, the Commission staff provided a limited compliance date extension in no-action relief that ultimately needed to be further extended and announced unexpectedly that the Rule also applied to fixed-income securities.[6] As discussed in the Proposal, market participants had never read the Rule – historically or as amended in 2020 – to apply beyond equity securities. Industry participants, including the IAA, strongly opposed application of the Rule to fixed-income securities, challenging the Commission’s changed position.[7] We expressed concerns with the potential burdens and unintended consequences of applying the Rule to fixed-income securities. In particular, we noted that applying the existing regulatory framework to fixed-income securities would risk market participants restricting their quoting activities and could reverse decades of improvement in fixed income market transparency and liquidity by reducing electronic trading volumes and the willingness of dealers to provide pricing information to investors. We also shared our members’ concerns that applying the Rule in this way would disrupt the ability of the buyside to access fixed income markets for their clients’ portfolios, unnecessarily harming investors.
The Commission and its staff thereafter issued additional relief relating to the compliance date for fixed-income securities, and ultimately clarified that the Rule as amended in 2020 was not intended and did not apply to fixed-income securities.[8] Following that relief, broker-dealers have not needed to comply with the Rule’s requirements with respect to fixed-income securities. The Proposal now seeks to codify the Commission’s exemptive relief to exclude fixed-income securities from the Rule’s requirements.
IAA Support of the Proposal
We strongly support the Proposal to codify the exclusion for fixed-income securities that we requested in 2021. We commend the Commission for acknowledging that the Rule had not been thought to apply or enforced in the fixed income markets in the 50 years since its adoption. As the Proposal notes, the Commission historically did not take the view that fixed-income securities, held mostly by institutional investors, were subject to the abuses the Rule was intended to address or otherwise raised microcap fraud concerns.[9] The Proposal appropriately recognizes the structural and functional differences between equity and fixed income markets and would align regulatory requirements with the risks the Rule was originally designed to address.
The Commission notes that, while the amendments were intended to enhance protections for retail investors in equity securities by requiring that the information be both current and publicly available, they created potential operational and liquidity difficulties for non-equity securities, for which the applicable information was less likely to be current and publicly available.[10] For example, the affirmative registration requirements imposed on certain issuers of equity securities and registration under Section 12(g) of the Exchange Act trigger many of the information requirements in the Rule.[11] However, and as the Proposal notes, in the case of fixed-income securities this information can be burdensome to locate or may be nonexistent. Moreover, as noted in our 2021 Request Letter, institutional investors currently find that they have sufficient information to transact in fixed-income securities, including for non-public securities such as Rule 144A securities.
We agree with the Commission that applying the Rule to fixed income markets now could drive market fragmentation, reduce electronic trading, and reduce price transparency and market efficiency, while unnecessarily increasing costs to investors. We believe the Proposal will reduce unnecessary burdens, support liquidity in fixed income markets, and better align the Rule with its original policy objectives.
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We appreciate your consideration of our comments on this important issue. Please do not hesitate to contact the undersigned at (202) 293-4222 if we can be of further assistance.
Respectfully Submitted,
Gail C. Bernstein
General Counsel and Head of Public Policy
Monique S. Botkin
Associate General Counsel
cc:
The Honorable Paul S. Atkins, Chairman
The Honorable Hester M. Peirce, Commissioner
The Honorable Mark T. Uyeda, Commissioner
Jamie Selway, Director, Division of Trading and Markets
Brian Daly, Director, Division of Investment Management
[1] The IAA is the leading organization dedicated to advancing the interests of fiduciary investment advisers. For more than 85 years, the IAA has been advocating for advisers before Congress and U.S. and global regulators, promoting best practices and providing education and resources to empower advisers to effectively serve their clients, the capital markets, and the U.S. economy. Our members range from global asset managers to the medium- and small-sized firms that make up most of our industry. Together, the IAA’s member firms manage more than $57 trillion in assets for a wide variety of individual and institutional clients, including pension plans, trusts, mutual funds, private funds, endowments, foundations, and corporations. For more information, please visit www.investmentadviser.org.
[2] Publication or Submission of Quotations Without Specified Information, SEC Rel. No. 34-105004, 91 Fed. Reg. 13243 (Mar. 19, 2026) (Proposal), available at https://www.govinfo.gov/content/pkg/FR-2026-03-19/pdf/2026-05401.pdf.
[3] Publication or Submission of Quotations Without Specified Information, SEC Rel. No. 34-89891 (Oct. 27, 2020), available at https://www.govinfo.gov/content/pkg/FR-2020-10-27/pdf/2020-20980.pdf.
[4] Proposal at 13244 (citing Initiation or Resumption of Quotations by a Broker or Dealer Who Lacks Certain Information, Exchange Act Rel. No. 9310 (Sept. 13, 1971)).
[5] Publication or Submission of Quotations Without Specified Information, SEC Rel. No. 34-87115 (Oct. 30, 2019), available at https://www.govinfo.gov/content/pkg/FR-2019-10-30/pdf/2019-21260.pdf.
[6] SEC Staff No-Action Letter to FINRA (Sept. 24, 2021), available at https://www.sec.gov/files/rule-15c2-11-fixed-income-securities-092421.pdf (staff no-action relief providing a short compliance date extension for fixed-income securities, noting its view that the rule “has applied to all securities including fixed income securities” except for exempt securities such as government securities including treasuries, and municipal securities); see also Statement on Staff No-Action Letter Regarding Amended Rule 15c2-11 in Relation to Fixed Income Securities, Statement of Commissioner Hester M. Peirce (Sept. 24, 2021), available at https://www.sec.gov/newsroom/speeches-statements/peirce-nal-rule-15c2-11-2021-09-24.
[7] IAA and Joint Trades Letter to SEC Chairman Gary Gensler on Application of Rule 15c2-11 to the Fixed Income Markets (Sept. 23, 2021) (2021 Request Letter), available at https://www.investmentadviser.org/resources/application-of-rule-15c2-11-to-the-fixed-income-markets/. We also supported Representative Troy Downing’s (R. MT) 2025 bill, H.R. 3959, Protecting Private Job Creators Act, which would have exempted fixed-income securities from Rule 15c2-11.
[8] See SEC Staff No-Action Letter to FINRA (Dec. 16, 2021), available at https://www.sec.gov/files/fixed-income-rule-15c2-11-nal-finra-121621.pdf; SEC Staff No-Action Letter to FINRA (Nov. 23, 2022), available at https://www.sec.gov/files/fixed-income-rule-15c2-11-nal-finra-113022.pdf; Order Granting Broker-Dealers Exemptive Relief, Pursuant to Section 36(a) and Rule 15c2-11(g) under the Securities Exchange Act of 1934, from Rule 15c2-11 for Fixed-Income Securities Sold in Compliance with the Safe Harbor of Rule 144A under the Securities Act of 1933, SEC Rel. No. 34-98819 (Oct. 30, 2023), available at https://www.sec.gov/files/rules/exorders/2023/34-98819.pdf; and SEC Staff No-Action Letter to FINRA (Nov. 22, 2024), available at https://www.sec.gov/files/investment/no-action/fixed-income-rule-15c2-11-no-action-letter-finra-112224.pdf.
[9] Proposal at 13245, n. 33 (discussing Commission proposals in 1998 and 1999).
[10] Proposal at 13246 (citing 2021 Request Letter).
[11] Proposal at 13247 (Rule 15c2-11(b) “information is more likely to be readily available to brokers and dealers with respect to equity securities than it is for non-equity securities, given the affirmative registration requirements imposed on certain issuers of equity securities, but not non-equity securities, by section 12(g)”).