Application of Rule 15c2-11 to Fixed-Income Securities
Summary
SIFMA 1 and SIFMA AMG 2 provided comments to the U.S. Securities and Exchange Commission (SEC) on the application of the Rule to fixed-income securities 3 and reiterate SIFMA and SIFMA AMG’s long-standing positions on this issue, highlighted by our August 26, 2021, exemptive request 4 and other communications, and SIFMA AMG et. al.’s September 23, 2021, letter. 5
Excerpt
In remarks from May 2025, you noted that “[i]n years past, the Commission has unfortunately demonstrated a tendency to prioritize regulatory expansion over meticulous economic analysis, potentially jeopardizing this delicate balance” of investor protection with promoting capital formation and market efficiency. 6 The unwarranted expansion of the scope of Rule15c2-11 is an example of the concerns you expressed in these remarks.
This Rule, for the fi rst 50 years of its 55-year history, was only applied to OTC equity securities and their markets. There was no serious consideration of application to, or any enforcement in, fi xed-income markets until 2021. SIFMA’s long-standing position remains that application of the rule by the Commission should be reverted to its pre-2021 scope. Until the Commission has had the opportunity to examine the expansion of the rule through a separate, specifi c, open, and transparent notice-and-comment process, this Rule or any similar rule should not apply beyond OTC equity markets to fi xed income (or substantially similar) securities. 7
1. Executive Summary
We urge the Commission to take this opportunity to correct previous failures to follow good regulatory practice and revert the application of the Rule solely to OTC equity markets, reversing the unexpected and unjustified application of an ill-fitting Rule to fixed-income securities. This will ensure that the application of the Rule reflects decades of regulatory and enforcement practice, as well as the significant differences between fixed-income and equity market structure.
In this letter, we discuss the following topics:
– The application of the Rule beyond OTC equity markets was not supported by any economic analysis, public notice and comment, or other rulemaking actions;
– The rule was developed with a focus on penny stocks traded in retail OTC equity markets, as shown by its history, amendments, and historic application;
– Fixed-income markets are very different from equity markets; they are far larger, primarily institutional, and almost entirely OTC;
– The Rule cannot accommodate fi xed-income markets and OTC equity markets at the same time; no-action letters (“NAL”) and exemptive relief are not a permanent solution;
– The burdens of compliance with this equity-focused rule are proportionally more burdensome in fi xed-income markets; and
– Rule 15c2-11 should apply only to those markets for which it was designed – OTC equity markets.
- SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s one million employees, we advocate on legislation, regulation and business policy affecting retail and institutional investors, equity and fixed income markets, and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets
Association (GFMA). - SIFMA’s Asset Management Group (SIFMA AMG) brings the asset management community together to provide views on U.S. and global policy and to create industry best practices. SIFMA AMG’s members represent U.S. and global asset management firms whose combined assets under management exceed $45 trillion. The clients of SIFMA AMG member firms include, among others, tens of millions of individual investors, registered investment companies, endowments, public and private pension funds, UCITS and private funds such as hedge funds and private equity funds. For more information, visit http://www.sifma.org/amg.
- This letter relates solely to the expansion of the scope of application of the Rule to fi xed-income and other similar securities that occurred in 2021.
- Letter from SIFMA and Bond Dealers of America (August 26, 2021), https://www.sifma.org/wp-content/uploads/2021/09/SIFMA-BDA-Exemptive-
Request-FI-2021-08-26.pdf (“SIFMA Request”). - Letter from SIFMA AMG, Investment Advisor Association, Investment Company Institute, U.S. Chamber’s Center for Capital Markets Competitiveness, and the Managed Funds Association, https://www.sifma.org/wp-content/uploads/2021/09/Investor-15c2-11-letter-fi nal-2021-09-23.pdf (“Investor Letter”).
- See, Chairman Paul S. Atkins, “Remarks at the 12th Annual Conference on Financial Market Regulation”, May 16, 2025, https://www.sec.gov/newsroom/speeches-statements/atkins-conference-fi nancial-market-regulation-051625. (“May 2025 Remarks”)
- SIFMA members do not view the current enforcement relief, or a subsequent SEC rule based on the current enforcement relief, as an optimal, long-term regulatory solution for U.S. fi xed income markets.