SIFMA Says Application of Rule on Public Quotations Will Damage Markets for Private Debt Securities
SIFMA asserted that the SEC did not anticipate the negative impact that applying SEA Rule 15c2-11 ("Initiation or resumption of quotations without specific information"), to fixed income securities would have on the market for securities that are sold in reliance on Securities Act Rule 144A (“Persons deemed not to be engaged in a distribution and therefore not underwriters”). (See also, previous coverage.)
In an earlier post, SIFMA said that the SEC decision to expand the applicability of Rule 15c2-11 to the fixed income markets would have "significant, deleterious" effects on fixed income markets and urged the SEC to create a separate rule that would govern quotations in fixed income markets and ensure that the rulemaking process has an appropriate public comment period.
In the new Pennsylvania + Wall blog post on Rule 15c2-11, SIFMA argued that the application of the Rule to Rule 144A securities was particularly ill-advised given that Rule 15c2-11 mandates that an issuer's information is to be made "publicly available" while Rule 144A requires that information as to Rule 144A securities be limited to institutional investors that are "qualified institutional buyers" within the meaning of the Rule.
SIFMA urged the SEC to suspend the "prescriptive requirements" for private issuers to make financial reports public, and argued that there should be an opportunity for public comment before Rule 15c2-11 is applied to Rule 144A debt securities.
Related Articles
-
SIFMA criticized the SEC for its decision to extend the applicability of the "Penny Stock Quote" rule, which requires broker-dealers to base public quotations for OTC securities on specified information and to maintain records of that information, to the fixed income markets.
-
SIFMA raised "serious concerns" that the application of the SEA rule on quotations without specific information to private debt securities would adversely affect the value and liquidity of private resales of securities to institutions.
-
SEC Chair Gary Gensler previewed current and future agency efforts to further regulate the "$50 trillion-plus U.S. bond markets." Mr. Gensler asserted that the fixed income markets need (i) greater transparency, (ii) additional rules for electronic platforms and (iii) to increase financial resiliency.
-
The SEC adopted rule amendments that impose additional conditions on the ability of a broker-dealer to publish a quotation for securities that are not listed on a national securities exchange.
-
SEC Chair Jay Clayton and SEC Division of Trading and Markets Director Brett Redfearn reviewed agency efforts to improve equity market structure.
-
The SEC proposed rule amendments that would tighten the requirements that broker-dealers must meet before being permitted to post public quotations on OTC securities.