Federal Register / Vol. 88, No. 211 / Thursday, November 2, 2023 / Notices 75343 

8 17 CFR 200.30–3(a)(12). 

1 Initiation or Resumption of Quotations by a 

Broker or Dealer Who Lacks Certain Information, 

Release No. 34–9310 (Sept. 13, 1971), 36 FR 18641 

(Sept. 18, 1971). 

2See Publication or Submission of Quotations 

Without Specified Information, Release No. 34– 

89891 (Sept. 16, 2020), 85 FR 68124, 68125 (Oct. 

27, 2020) (‘‘2020 Rule 15c2–11 Release’’). 

3The term ‘‘security’’ is defined under section 

3(a)(10) of the Exchange Act and specifically 

includes, among others, notes, bonds, debentures, 

and certificates of deposit, which are commonly 

known as fixed-income securities. 15 U.S.C. 

78c(a)(10), (79). For purposes of this order, the term 

‘‘fixed-income security’’ shall mean any note, bond, 

debenture, certificate of deposit for a security, 

certificate of deposit, or asset-backed security. See 

id. 

4See 15 U.S.C. 78o(c)(2)(A). The term ‘‘exempted 

security’’ includes, among others, certain 

government securities, such as securities which are 

direct obligations of, or obligations guaranteed as to 

principal or interest by, the United States. See 15 

U.S.C. 78c(a)(12), (42). 

5 17 CFR 240.15c2–11(f)(4). The term ‘‘municipal 

security’’ includes, among others, securities which 

are direct obligations of, or obligations guaranteed 

as to principal or interest by, a State or any political 

subdivision thereof, or any agency or 

instrumentality of a State or any political 

subdivision thereof, or any municipal corporate 

instrumentality of one or more States. See 15 U.S.C. 

78c(a)(29). 

6See 17 CFR 240.15c2–11(a)(1)(i)(A), (B). The 

terms ‘‘current’’ and ‘‘publicly available’’ are 

defined in paragraphs (e)(2) and (e)(5) of Rule 15c2– 

11, respectively, and have the same meaning in this 

order. 

7See 17 CFR 240.15c2–11(a)(1)(i)(C). See also 

2020 Rule 15c2–11 Release, 85 FR at 68125. These 

rule amendments, among other things, expanded 

the scope of Rule 15c2–11’s requirements for 

obtaining and reviewing specified information. 

Broker-dealers may publish initial quotations in 

reliance on the publicly available determination of 

a ‘‘qualified interdealer quotation system’’ that it 

complied with the information review requirement 

set forth in Rule 15c2–11(a)(2)(i) through (iii). See 

17 CFR 15c2–11(a)(1)(ii). 

8See 17 CFR 240.15c2–11(d)(1)(i)(A). See also 

2020 Rule 15c2–11 Release, 85 FR at 68131, 68162. 

9 17 CFR 230.144A. See also No. 33–6862 (Apr. 

23, 1990), 55 FR 17933, 17939 n.55 (Apr. 30, 1990) 

(‘‘Rule 144A Adopting Release’’) (noting the 

applicability of Rule 15c2–11 to Rule 144A 

offerings). 

10 15 U.S.C. 77a. 

11 17 CFR 201.192(a). 

12See, e.g., Letter from Andrew Pincus to Vanessa 

Countryman, Petition for Rulewriting and 

Application for Exemption from Rule 15c2–11 

(Nov. 22, 2022), https://www.sec.gov/files/rules/ 

petitions/2022/petamend-rule-15c211-4795.pdf. 

13 15 U.S.C. 78mm. 

14 17 CFR 240.15c2–11(g). 

15The Petition was limited to Rule 144A fixedincome securities and expressly excluded equity 

Continued 

withdrew the proposed rule change 

(SR–CboeBYX–2023–013). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

J. Matthew DeLesDernier, 

Deputy Secretary. 

[FR Doc. 2023–24171 Filed 11–1–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98819; File No. 4–795] 

Order Granting Broker-Dealers 

Exemptive Relief, Pursuant to Section 

36(a) and Rule 15c2–11(g) Under the 

Securities Exchange Act of 1934, From 

Rule 15c2–11 for Fixed-Income 

Securities Sold in Compliance With the 

Safe Harbor of Rule 144A Under the 

Securities Act of 1933 

October 30, 2023. 

I. Introduction 

The Securities and Exchange 

Commission (‘‘Commission’’) adopted 

17 CFR 240.15c2–11 (‘‘Rule 15c2–11’’) 

under the Securities Exchange Act of 

1934 (‘‘Exchange Act’’) in 1971.1 In 

September 2020, the Commission 

adopted amendments to Rule 15c2–11 

to, among other things, provide greater 

transparency to investors and other 

market participants by requiring brokers 

or dealers to have in their records 

specified information about the issuer 

and its security that is current and 

publicly available before a broker-dealer 

can begin quoting that security.2 Rule 

15c2–11 governs the publication of 

quotations for securities 3 in a quotation 

medium other than a national securities 

exchange, i.e., over-the-counter (‘‘OTC’’) 

securities, other than exempted 

securities 4 and municipal securities.5

Rule 15c2–11 sets forth certain 

information review and recordkeeping 

requirements for brokers and dealers to 

initiate or resume quotations for 

securities in the OTC market. Under 17 

CFR 240.15c2–11(a)(1)(i), a broker or 

dealer, before it may publish any 

quotation for a security or, directly or 

indirectly, submit any such quotation 

for publication, in a quotation medium 

other than a national securities 

exchange, must obtain, have in its 

records, and review key, basic 

information regarding the subject 

security and its issuer, as specified in 17 

CFR 240.15c2–11(b) (‘‘paragraph (b) 

information’’), that is ‘‘current’’ and 

‘‘publicly available.’’ 6 In addition, 

based upon a review of the applicable 

paragraph (b) information, together with 

any other supplemental documents and 

information specified in 17 CFR 

240.15c2–11(c), the broker or dealer 

must have a reasonable basis under the 

circumstances for believing that the 

paragraph (b) information is accurate in 

all material respects and is from a 

reliable source.7 Further, the reviewing 

broker or dealer must also preserve 

documents and information that are 

required to be obtained under the 

applicable paragraphs (a), (b), and (c) of 

Rule 15c2–11.8

Following the Commission’s 2020 

adoption of amendments to Rule 15c2– 

11, certain market participants stated 

that Rule 15c2–11’s information review 

and recordkeeping requirements should 

not apply with regard to quotations for 

fixed-income securities that are sold in 

compliance with the safe harbor in 17 

CFR 230.144A (‘‘Rule 144A’’) 9 under 

the Securities Act of 1933 10 (‘‘Rule 

144A fixed-income securities’’). In 

particular, on November 22, 2022, the 

National Association of Manufacturers 

and the Kentucky Association of 

Manufacturers submitted a petition to 

the Commission pursuant to 17 CFR 

201.192(a) of the Commission’s Rules of 

Practice 11 for a rulemaking to amend 

Rule 15c2–11, to expressly exempt from 

Rule 15c2–11 Rule 144A fixed-income 

securities (‘‘Petition’’). The Petition also 

requested, in the alternative, that the 

Commission expressly exempt Rule 

144A fixed-income securities from Rule 

15c2–11 pursuant to the exemptive 

authority set forth in 17 CFR 240.15c2– 

11(g).12

For the reasons discussed below, this 

Order exempts Rule 144A fixed-income 

securities from Rule 15c2–11, thus 

effectively granting the alternative relief 

sought in the Petition. 

II. Discussion of Exemptive Relief 

Section 36 of the Exchange Act 

authorizes the Commission to, 

conditionally or unconditionally, 

exempt any person, security, or 

transaction, or any class or classes of 

persons, securities, or transactions, from 

any provision or provisions of the 

Exchange Act, or of any rule or 

regulation thereunder, to the extent that 

such exemption is necessary or 

appropriate in the public interest, and is 

consistent with the protection of 

investors.13 Paragraph (g) of Rule 15c2– 

11 under the Exchange Act similarly 

provides that the Commission may, 

conditionally or unconditionally, 

exempt any person, security, or 

transaction, or any class or classes of 

persons, securities, or transactions, from 

any provision or provisions of Rule 

15c2–11 to the extent that such 

exemption is necessary or appropriate 

in the public interest, and is consistent 

with the protection of investors.14

This exemptive relief is limited to 

Rule 144A fixed-income securities.15


khammond on DSKJM1Z7X2PROD with NOTICES
75344 Federal Register / Vol. 88, No. 211 / Thursday, November 2, 2023 / Notices 

securities sold in compliance with the safe harbor 

in Rule 144A. See Petition at n.1. Moreover, the 

amendments to Rule 15c2–11 have applied to Rule 

144A equity securities since the compliance date of 

those amendments which was September 2021. 

Accordingly, this exemption does not address 

equity securities sold in compliance with the safe 

harbor in Rule 144A. 

16Accredited Investor Definition, Release No. 33– 

10824 (Aug. 26, 2020), 85 FR 64234, 64236 (Oct. 9, 

2020) (‘‘Accredited Investor Release’’) (citing Resale 

of Restricted Securities; Changes to Method of 

Determining Holding Period of Restricted Securities 

Under Rules 144 and 145, Release No. 33–6806 

(Oct. 25, 1988), 53 FR 44016 (Nov. 1, 1988)) (‘‘1988 

Rule 144A Proposing Release’’). 

17 1988 Rule 144A Proposing Release, 53 FR at 

44028. 

18 17 CFR 230.144A(a)(1) (definition of ‘‘qualified 

institutional buyer’’). 

19 17 CFR 230.144A(d)(4). 

20 Id. With respect to asset-backed securities, the 

Commission has interpreted the information 

requirement to mandate provision of ‘‘basic, 

material information concerning the structure of the 

securities and distributions thereon, the nature, 

performance and servicing of the assets supporting 

the securities, and any credit enhancement 

mechanism associated with the securities.’’ See 

Rule 144A Adopting Release, 55 FR at 17939. 

21 15 U.S.C.78mm(a). 

22 17 CFR 240.15c2–11(g). 

23 17 CFR 230.144A. 

24 15 U.S.C. 77a et seq. 

25 15 U.S.C. 78i(a), 78j(b); 17 CFR 240.10b–5. 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). 

4 17 CFR 240.19b–4(f)(4). 

Because the exemption applies only to 

fixed-income securities issued in 

accordance with the requirements of 

Rule 144A, it is limited to resales of 

securities to an investor base that ‘‘can 

be conclusively assumed to be 

sophisticated,’’ 16 is able to obtain 

certain basic financial information 

concerning the issuers’ business, and 

has extensive experience in the private 

resale market for restricted securities.17

Under the requirements of Rule 144A, 

securities can be sold only to ‘‘qualified 

institutional investors’’ (or purchasers 

that the seller or a person acting on its 

behalf reasonably believes are qualified 

institutional investors), which, with the 

exception of registered dealers, must in 

the aggregate own and invest on a 

discretionary basis at least $100 million 

in securities of issuers that are not 

affiliated with such a qualified 

institutional buyer.18 Furthermore, in 

the case of issuers that do not file 

periodic reports under the Exchange Act 

or furnish home country information to 

the Commission pursuant to 17 CFR 240 

12g3–2(b), Rule 144A requires that any 

prospective purchaser of Rule 144A 

fixed-income securities has the right to 

obtain from the issuer reasonably 

current financial information (‘‘Rule 

144A information’’): 19

[A] very brief statement of the nature of the 

business of the issuer and the products and 

services it offers; and the issuer’s most recent 

balance sheet and profit and loss and 

retained earnings statements, and similar 

financial statements for such part of the two 

preceding fiscal years as the issuer has been 

in operation (the financial information 

should be audited to the extent possible).20

The availability of the Rule 144A 

information can be used by prospective 

qualified institutional buyers to make 

better informed investment decisions 

and assess potential risks in investing in 

the security. While the Rule 144A 

information that is required to be 

provided to qualified institutional 

buyers upon request is not the current 

publicly available information defined 

in paragraph (b) of Rule 15c2–11, the 

Rule 144A information serves the same 

purpose of investor protection. 

The Commission finds it is 

appropriate in the public interest, and 

consistent with the protection of 

investors, to exempt brokers and dealers 

from the requirements of Rule 15c2–11, 

with respect to Rule 144A fixed-income 

securities. 

III. Conclusion 

Accordingly, it is hereby ordered, 

pursuant to section 36(a) of the 

Exchange Act 21 and Rule 15c2–11(g) 

under the Exchange Act,22 that a broker 

or dealer is exempt from the 

requirements of Rule 15c2–11 with 

respect to a fixed-income security to be 

sold in compliance with the safe harbor 

in Rule 144A 23 under the Securities Act 

of 1933.24

This exemptive relief is subject to 

modification or revocation at any time 

by the Commission but will be in effect 

unless and until the Commission 

determines that modification or 

revocation is necessary or appropriate in 

furtherance of the purposes of the 

Exchange Act, or the relief is otherwise 

superseded by future Commission 

action such as a rulemaking addressing 

the Rule 144A safe harbor or issues 

pertaining to the fixed income markets 

more generally. 

Persons relying on this exemption are 

directed to the anti-fraud and antimanipulation provisions of the 

Exchange Act, particularly sections 9(a) 

and 10(b), and 17 CFR 240.10b–5 

thereunder.25 Responsibility for 

compliance with these and any other 

applicable provisions of the Federal 

securities laws must rest with the 

persons relying on this exemption. This 

order should not be considered a view 

with respect to any other question that 

the proposed transactions or quotations 

may raise, including, but not limited to 

the adequacy of the disclosure 

concerning, and the applicability of 

other Federal or State laws to, the 

proposed transactions or quotations. 

By the Commission. 

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–24245 Filed 11–1–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98814; File No. SR–NSCC– 

2023–010] 

Self-Regulatory Organizations; 

National Securities Clearing 

Corporation; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Modify the Clearing 

Agency Operational Risk Management 

Framework 

October 27, 2023. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on October 

20, 2023, National Securities Clearing 

Corporation (‘‘NSCC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

below, which Items have been prepared 

by the clearing agency. NSCC filed the 

proposed rule change pursuant to 

Section 19(b)(3)(A) of the Act 3 and Rule 

19b–4(f)(4) thereunder.4 The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

The proposed rule change consists of 

modifications to the Clearing Agency 

Operational Risk Management 

Framework (‘‘ORM Framework’’ or 

‘‘Framework’’) of the National Securities 

Clearing Corporation (‘‘NSCC’’) and its 

affiliates The Depository Trust Company 

(‘‘DTC’’) and Fixed Income Clearing 

Corporation (‘‘FICC,’’ and together with 

NSCC and DTC, the ‘‘Clearing 

Agencies’’) in order to (i) revise 

nomenclature and process changes to 

Risk Profiles, (ii) update the ORM 

Framework to align programs, policies, 

procedures, and controls within 

Technology Risk Management (‘‘TRM’’) 

to the Cyber Risk Institute (‘‘CRI’’) 

Profile instead of the National Institute 

of Standards and Technology (‘‘NIST’’) 

standards, (iii) update recovery times for 


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