U.S. SEC Proposes to Limit Rule 15c2-11 to Equity Securities

On March 16, 2026, the SEC proposed amendments to Exchange Act Rule 15c2-11 that would limit the rule’s scope to equity securities—excluding fixed-income and other nonequity securities from its coverage.

Rule 15c2-11 generally requires broker-dealers to gather and review certain information about the issuer of a security before publishing or maintaining published quotations in an OTC quotation medium for those securities. The proposed amendments would replace references to “securities” with “equity securities” (as defined in Exchange Act Rule 3a11-1) but would make no other changes to the substantive requirements of the existing rule.

The proposal follows several years of industry feedback after the SEC staff unexpectedly stated in 2021, contrary to years of industry practice, that the rule did cover fixed-income securities. On March 2, 2026, SIFMA sent a letter to the SEC urging it formally to exclude fixed-income securities from the rule’s scope.

I. The SEC Proposes to Limit Rule 15c2-11 to OTC Equity Securities

The SEC is proposing to limit Rule 15c2-11’s applicability to quotations in OTC equity securities by replacing the term “security” with “equity security” without otherwise altering the rule’s substantive requirements. While the proposed amendments would exclude fixed-income and other types of nonequity securities, the proposed definition of “equity security”¹ would leave bonds convertible into equity securities (and warrants, options, and forwards on equity securities) as equity securities still subject to the rule.

Broker-dealers still will be obligated to gather and review certain information about issuers before quoting OTC equity securities. However, those requirements would no longer apply to fixed-income and other nonequity securities. The SEC also is proposing to make certain conforming changes to other aspects of the rule, such as records retention requirements and information required to be reviewed under Rule 15c2-11(b) and (c). The amended rule would also apply to crypto assets to the extent a particular crypto asset qualifies as an “equity security” under Exchange Act Rule 3a11-1, although Commissioner Hester Peirce’s statement highlights the need for comment on how crypto assets ultimately should be treated.²

The SEC stated that the proposal is consistent with the rule’s original purpose of addressing fraud and manipulation in OTC equity markets. The proposal would also remove the existing exception for municipal securities, which the SEC views as unnecessary if the rule is limited to equity securities.

II. The Proposal Reflects Differences Between Equity and Fixed-Income Markets

The proposed amendments reflect the fact that fixed-income markets include many more securities than equity markets and have not historically been associated with the types of retail-focused fraud and manipulation that Rule 15c2-11 was designed to address, features which support different regulatory treatment. Certain aspects of the fixed-income markets (e.g., lower trading volume per CUSIP, prevalence of securitization SPVs, differing rights and payment priorities between CUSIPs, and maturity dates) fundamentally differ from equity markets in ways that prevent the clean application of Rule 15c2-11. In effect, application of Rule 15c2-11 to fixed-income markets attempted to apply an equities-focused regulatory framework into a market with different kinds of participants, financial instruments, liquidity and trading patterns, and risk profiles.

Additionally, the SEC stated that fixed-income investors do not require the protection of Rule 15c2-11 because they already have access to the necessary information about the instruments in which they invest. Fixed-income markets remain subject to a variety of regulatory protections, including best execution obligations, suitability requirements imposed by FINRA rules, and antifraud prohibitions.

III. The Proposal Would Replace the Current Relief Framework

Currently, a patchwork of exemptive and no-action relief mitigates some consequences of applying Rule 15c2-11 to fixed-income markets. However, the proposed amendments should relieve burdens on broker-dealers given that many fixed-income securities remain within the scope of the current Rule 15c2-11.

The proposal should reduce operational burden associated with categorizing and monitoring fixed-income securities, implementing compliance controls, and anticipating regulatory scrutiny of quoting practices.

IV. Key Takeaways and Practical Considerations

Firms should note that while the proposed amendments will be subject to notice and comment, the rule will become effective on the same day that comments are due (i.e., 60 days after the proposed amendments are published in the Federal Register). The comment deadline and effective date is May 18, 2026.

Firms should carefully consider the scope of what is considered an “equity security” under the amended rule, which could affect quoting practices, compliance obligations, and market access for different products, including some products (such as convertible bonds) typically quoted and traded by fixed-income sales and trading desks.

1 As defined in Exchange Act Rule 3a11-1.
2 Hester M. Peirce, Traveling Back From the Road Wrongly Taken: Statement on the Proposed Amendments to Exchange Act Rule 15c2-11 (March 16, 2026), available at https://www.sec.gov/newsroom/speeches-statements/peirce-statement-exchange-act-rule-15c2-11-031626?utm_medium=email&utm_source=govdelivery. On March 17, 2026, the SEC issued interpretive guidance indicating that a tokenized equity security would be considered an equity security, but most other digital assets are not securities at all. See SEC Clarifies the Application of Federal Securities Laws to Crypto Assets (Mar. 17, 2026) (https://www.sec.gov/newsroom/press-releases/2026-30-sec-clarifies-application-federal-securities-laws-crypto-assets). Sidley will issue a separate Update on this digital asset guidance.