How the New SEC Rule 15c2-11 Affects Investors

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The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

Benzinga held an exclusive conversation with Cass Sanford, Associate General Counsel for OTC Markets Group OTCM, an operator of financial markets for 11,000 U.S. and global securities. The interview focused on an amendment to an existing U.S. Securities and Exchange Commission (SEC) rule 15c2-11.

The practical takeaway of these amendments for over-the-counter (OTC)-trading brokers — entities such as Interactive Brokers IBKR —  is that current information about OTC-traded companies must be publicly posted or otherwise made publicly available in order for the company’s securities to be quoted by broker-dealers. 

For a complete and thorough explanation of Rule 15c2-11 by the SEC, please visit here. As always, it is best to check with your broker-dealer as to whether your investments may be impacted. 

Given the timing and enhancements of the current rule, its practical application helps streamline how small-cap companies go public. OTC Markets Group can now conduct “Initial Reviews” under Rule 15c2-11 for companies joining the OTCQX and OTCQB markets, providing an alternative to the traditional FINRA Form 211 process. Last month, Grayscale Stellar Lumens Trust GXLM, Grayscale Horizen Trust HZEN, and Grayscale Zcash Trust ZCSH, qualified to trade on the OTCQX® Best Market under OTC Markets Group’s “Initial Review” process.  To qualify for OTCQX, companies must meet high financial standards, follow best practice corporate governance, and demonstrate compliance with applicable securities laws.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.