OTC Markets Taking Over 15c2-11 Application Process in September 2021

In September 2020, the SEC amended Rule 15c2-11 to enhance the OTC Market’s efficiency and facilitate capital formation for issuers. We published an article outlining all the details here.

OTC Markets lists a significant 11,000 stocks not listed on national exchanges. The market caters to almost all kinds of industries and companies in all phases. The brokers can list securities on the OTC’s trading platform called OTC Link ATS, either on a proprietary basis or on behalf of a customer. They can access the SEC-registered OTC Link ATS (Alternative Trading System) through OTC Dealer®, user interface, or OTC FIX protocol. For further details, click here.

Rule 15c2-11required brokers to get approval from FINRA on Form 211 under FINRA Rule 6432 before quoting stocks. After approval, other brokers could “piggyback” onto the original quote and publish quotations. The Rule currently does not require public disclosure of financial information, and brokers can maintain a public market for securities of “dark” companies (not providing regular financial disclosures).

Rule 15c2-11 Amendments:

  • Companies wishing to get and remain listed must publish their current information publicly. “Unsolicited” quotations will be allowed in fulfillment of additional requirements.  
  • Brokers will no longer be required to file Form 211. OTC Link ATS will function as a “qualified interdealer quotation system,” allowing dealers to rely on it. FINRA has applied with the SEC, proposing to delete the OTC Bulletin Board® Service (“OTCBB”). For details, click here.
  • OTC is seeking relief for its “Expert Market” that will allow brokers to publish quotations of companies delinquent in current information requirements and shell companies. Expert Market securities are only open to qualified investors, institutions, and accredited investors to protect general investors.  

Treatment of stocks currently quoted on the OTCQX, OTCQB, and Pink markets:

OTCQX, OTCQB, and Pink markets will acknowledge existing current disclosures filed under the SEC Reporting standard, Alternative Reporting Standard, Regulation A, Regulation Crowdfunding, or Rule 12g3-2(b). Although there will be no material change in disclosure requirements, there will be restrictions on public quoting for shells and other non-operational companies quoted on the OTCQB or Pink markets. 

Companies (not included in specific exceptions) failing to provide current information before September 2021 compliance date will move to the Expert or Grey market.

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Colonial has “catch-up” plans and promotions for companies looking to get their SEC EDGAR filings caught up through 2021.  Please contact our Edgar team for more information on the special rates and discounts.

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