[Federal Register Volume 88, Number 69 (Tuesday, April 11, 2023)]
[Notices]
[Pages 21731-21732]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-07495]


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SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-196, OMB Control No. 3235-0202]


Proposed Collection; Comment Request; Extension: Rule 15c2-11

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 
20549-2736.
    Notice is hereby given that pursuant to the Paperwork Reduction Act 
of 1995 (``PRA'') (44 U.S.C. 3501 et seq.) the Securities and Exchange 
Commission (``Commission'') is soliciting comments on the existing 
collection of information provided for in Rule 15c2-11 (17 CFR 
240.15c2-11) (``Rule''), under the Securities Exchange Act of 1934 (15 
U.S.C. 78a et seq.). The Commission plans to submit this existing 
collection of information to the Office of Management and Budget 
(``OMB'') for extension and approval.
    Rule 15c2-11 governs the publication of quotations for securities 
in a quotation medium other than a national securities exchange (i.e., 
over the counter (``OTC'') securities). The Rule is designed to prevent 
broker-dealers from publishing or submitting quotations for OTC 
securities that may facilitate a fraudulent or manipulative scheme. 
Subject to certain exceptions, the Rule prohibits broker-dealers from 
publishing any quotation for a security or, directly or indirectly, 
submitting any quotation for publication, in a quotation medium unless 
they have reviewed specified information concerning the issuer.
    Based on the current structure of the market, the Commission staff 
believes that the recordkeeping and review requirements under Rule 
15c2-11 \1\ apply to 86 broker-dealers, one qualified interdealer 
quotation system (``Q-IDQS''), and one registered national securities 
association.\2\ Based on information provided by the Financial Industry 
Regulatory Authority, Inc. (``FINRA''), the Commission staff 
understands that in the 2022 calendar year, 377 Form 211 applications 
were filed to initiate the publication or submission of quotations of 
OTC securities: \3\ 60 of these Forms 211 concerned OTC securities of 
prospectus issuers, Regulation A (``Reg. A'') issuers, and reporting 
issuers; 258 concerned OTC securities of ``exempt foreign private 
issuers''; and 59 concerned OTC securities of ``catch-all issuers.'' 
The collection of information that is submitted to FINRA for review and 
approval is currently not available to the public from FINRA.
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    \1\ In 2021, Commission staff issued a no-action letter, stating 
that the staff of the Division of Trading and Markets would not 
recommend enforcement action under certain conditions for quotations 
of certain fixed-income securities on the over-the-counter markets 
to allow for an orderly and good faith transition into compliance 
with Rule 15c2-11, as amended in 2020. In 2022, this letter was 
withdrawn by the issuance of a new (but consistent) no-action 
letter, which provides a temporary staff position that expires on 
January 4, 2025. Because it is widely understood that broker-dealers 
and other respondents are relying on this no-action position so that 
they do not need to comply with the requirements of Rule 15c2-11 for 
fixed income securities, the estimates contained herein are made 
with regard to equity securities only. Burden estimates that account 
for fixed income securities are, therefore, subject to change.
    \2\ In calendar year 2022, 86 broker-dealers published 
quotations on OTC Markets Group's systems. The Commission staff 
believes that this number reasonably estimates the number of broker-
dealers that would engage in activities that would subject them to 
Rule 15c2-11. Based on the current structure of the market for 
quoted OTC securities, the Commission staff believes that only one 
Q-IDQS would engage in activities that would subject it to Rule 
15c2-11. There currently is one registered national securities 
association. 86 broker-dealers + 1 Q-IDQS + 1 registered national 
securities association = 88 respondents.
    \3\ A broker-dealer that initiates or resumes a quotation in an 
OTC equity security is subject to FINRA Rule 6432, which requires 
the broker-dealer to demonstrate compliance with, among other 
things, Rule 15c2-11 by filing Form 211. Given the alignment of this 
FINRA requirement and Rule 15c2-11, the Commission staff believes 
that the number of Forms 211 filed with FINRA in 2022 provides a 
reasonable baseline from which to estimate the burdens associated 
with the information review requirement under Rule 15c2-11.
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    The Commission staff's estimates of the ongoing annual hour burdens 
associated with the information collection requirements prescribed in 
the Rule are summarized in the chart below.

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                                                           Total annual
                                                              burden
                 Information collection                    industrywide
                                                              (hours)
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Recordkeeping associated with the initial publication or          26,231
 submission of a quotation in a quotation medium........
Recordkeeping when relying on an exception under                  64,339
 paragraph (f), that paragraph (b) information is
 current and publicly available.........................
Recordkeeping obligations under unsolicited quotation            537,954
 exception under paragraph (f)(2).......................
Recordkeeping obligations regarding the frequency of a            95,166
 priced bid or offer quotation under paragraph
 (f)(3)(i)(A)...........................................
Recordkeeping obligations regarding determining shell             64,339
 status under the proviso in paragraph (f)(3)(i)(B).....
Recordkeeping obligations regarding trading suspensions                3
 under the provision in paragraph (f)(3)(i)(B)..........
Recordkeeping obligations for the exceptions under                   393
 paragraph (f)(5)--Asset Test...........................
Recordkeeping obligations for the exceptions under                99,053
 paragraph (f)(5)--ADTV Test............................
Recordkeeping obligations of broker-dealers relying on a              28
 Q[dash]IDQS complying with information review
 requirement pursuant to paragraph (a)(1)(ii)...........
Recordkeeping obligations related to the creation of                  20
 reasonable written policies and procedures under
 paragraph (a)(3).......................................

[[Page 21732]]

 
Recordkeeping obligations of broker-dealers relying on            93,003
 publicly available determinations by Q-IDQSs or
 registered national securities associations pursuant to
 paragraph (d)(2)(ii)...................................
                                                         ---------------
    Total Hour Burden for all Respondents...............         980,529
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    Written comments are invited on: (a) whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the Commission, including whether the information 
shall have practical utility; (b) the accuracy of the Commission's 
estimates of the burden of the proposed collection of information; (c) 
ways to enhance the quality, utility, and clarity of the information 
collected; and (d) ways to minimize the burden of the collection of 
information on respondents, including through the use of automated 
collection techniques or other forms of information technology. 
Consideration will be given to comments and suggestions submitted by 
June 12, 2023.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information under the PRA unless it 
displays a currently valid OMB control number.
    Please direct your written comments to: David Bottom, Director/
Chief Information Officer, Securities and Exchange Commission, c/o John 
Pezzullo, 100 F Street NE, Washington, DC 20549, or send an email to: 
[email protected].

    Dated: April 5, 2023.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-07495 Filed 4-10-23; 8:45 am]
BILLING CODE 8011-01-P