September 23, 2021

The Honorable Gary Gensler
Chair, U.S. Securities and Exchange Commission
100 F Street NE
Washington, DC 20549-1090

Re: Rule 15c2-11

Dear Chair Gensler,
The Asset Management Group of the Securities Industry and Financial Markets Association (“SIFMA AMG”), the Investment Company Institute (“ICI”), the Investment Adviser Association (“IAA”), the Managed Funds Association (“MFA”), and the U.S. Chamber’s Center for Capital Markets Competitiveness (“CCMC”), together, “The Associations”)1 write to express our deep concern about the potential application of Rule 15c2-11 (the “Rule”) to the fixed income (“FI”) markets without appropriate notice and opportunity to comment, which would adversely affect the liquidity and transparency of these markets and unnecessarily harm investors in these markets. The Associations’ members include some of the largest and most active participants in the FI markets, including registered and private funds that invest in FI on behalf of retail and institutional investors and advisers that manage separately managed accounts (“SMAs”) on behalf of retail and institutional clients. We urge the Securities and Exchange Commission (“Commission”) not to apply the current Rule to these markets, which would threaten the continued expansion of liquidity and transparency in the FI markets and may increase transaction costs.

Introduction

As the Commission is aware, the Rule, which was implemented in 1971, amended in 1991, and amended again in 2020, is and always has been targeted at protecting retail investors from OTC equity market fraud. 2 The Rule prohibits dealers from publishing quotes on securities unless certain information review requirements are met, or certain exceptions are applicable. More specifically, these information review requirements are intended to prevent pump-and-dump and similar schemes that defraud retail investors. While we support the goals of enhanced transparency in the FI markets, we believe the SEC should not apply the Rule to the FI markets without first adapting the Rule’s requirements to the FI markets. Any revisions should be made through the rulemaking process, which would allow the SEC to conduct a cost-benefit analysis, provide an opportunity for public comment, and provide a more complete public policy analysis for the scope of and rationale for application of the Rule to the FI markets. Otherwise, any efforts to apply the existing regulatory framework to FI would risk market participants restricting their quoting activities and reducing liquidity and transparency, which would harm our members’ ability to transact efficiently and manage risk for their clients. Further, the application of the Rule to FI markets would risk reversing decades of improvement in FI market transparency by reducing electronic trading volumes and the willingness of dealers to provide pricing information to investors. If the SEC were to apply the current Rule to the FI markets, we believe that investors–including retail shareholders who invest in FI through registered funds–would be harmed. A rule otherwise intended to protect investors would do the opposite.

1 Please see the last page for information about the Associations.

2 See Publication or Submission of Quotations Without Specified Information, SEC Rel. 34-87115 (Sept. 25, 2019) (2019 Proposal), available at https://www.sec.gov/rules/proposed/2019/34-87115.pdf; SEC Press Release, SEC Proposes
Amendments to Enhance Retail Investor Protections (Sept. 26, 2019), available at https://www.sec.gov/news/press-release/2019-189; Publication or Submission of Quotations Without Specified Information, SEC Rel. 34-89891 (Sept. 16, 2020) (2020 Amendment), available at https://www.sec.gov/rules/final/2020/33-10842.pdf.