The SEC granted a limited exemption (the "Exemption") from Securities Exchange Act Rule 15c2-11 to permit a broker-dealer to publish, or submit for publication, quotations in certain interdealer quotation systems ("IDQS") for an over-the-counter security ("OTC Security"). The exemption relieves broker dealers from the due diligence requirements of Rule 15c2-11, subject to certain conditions.
Rule 15c2-11, with certain exceptions, requires that a broker-dealer that publishes or submits for publication quotations for OTC Securities in a quotation medium to "gather, review, and preserve certain specified information with respect to such OTC Securities and have a reasonable basis under the circumstances for believing that such information is accurate in all material respects and was obtained from reliable sources" (the "due diligence requirements"). However, Rule 15c2-11 includes an exception to the Rule's due diligence requirements: for when a broker-dealer publishes a quotation for an OTC Security in an IDQS that was already the subject of regular and frequent quotations (the "piggyback exception"). Accordingly, if a quotation for an OTC Security meets all of the requirements of this exception, a broker-dealer can "piggyback" on either its own or other broker-dealers' previously published quotations in an IDQS.
More specifically, the Exemption would allow a broker-dealer to transfer an OTC Security's "piggyback" eligibility by permitting a broker-dealer, subject to certain conditions, to publish or submit for publication quotations in any IDQS for an OTC Security that is piggyback-eligible under Rule 15c2-11 in another IDQS without the broker-dealer separately complying with the due diligence requirements of Rule 15c2-11.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.