SIFMA has criticized the SEC for its decision to extend the applicability of Penny Stock Quote, SEA Rule 15c2-11 (“Initiation or Resumption of Quotes Without Specific Information”), which requires brokers to base public quotes for OTC securities on specific information and to maintain records of such information, to fixed income securities markets.
In a Pennsylvania + Wall blog post, SIFMA claimed that this broad interpretation of the rule would have “significant and deleterious” effects on fixed income markets. SIFMA chastised the SEC for releasing the interpretation without any public comment and on “extraordinarily short notice.” SIFMA argued that the SEC’s interpretation “would increase costs, decrease liquidity, and risk reversing gains in transparency that fixed income markets have achieved through recent modernization and listing and electronic trading”. SIFMA also pointed out that applying the 15c2-11 rule to the fixed income markets was inconsistent with the stated views of two of the then SEC Commissioners, Hester M. Peirce and former Commissioner Elad Roisman. , who said the rule only applies to OTC stock exchanges.
SIFMA urged the SEC to conduct a formal rulemaking process with an appropriate public comment period to determine a rule governing public listings in the fixed income markets.
SEC Chairman Gary Gensler likes the mantra “like should be treated like” as justification for why digital assets should be regulated the same way as corporate stocks. This frees the SEC from thinking about how the two types of assets are different and should be regulated differently.
The president did not expressly use this mantra to justify expanding the scope of Rule 15c2-11 from equity to debt, but the same thought process is implicit in the actions of the SEC: if the rule serves to equity, it must be used for debt.
Our securities rules don’t treat all securities the same for a good reason, because similar doesn’t mean identical.