51700 Federal Register / Vol. 86, No. 177 / Thursday, September 16, 2021 / Notices 

12 15 U.S.C. 78s(b)(3)(A). 

13 17 CFR 240.19b–4(f)(2). 14 15 U.S.C. 78s(b)(2)(B). 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Exchange Act Release No. 92139 (June 9, 

2021), 86 FR 31774 (June 15, 2021) (‘‘Notice). 

Comments on the proposed rule change can be 

found at: https://www.sec.gov/comments/sr-finra2021-014/srfinra2021014.htm. 

undue burden on intramarket 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act given that not a 

single ETP Holder has qualified for the 

credits under either of the pricing tiers 

that are the subject of this proposed rule 

change for the last six months. To the 

extent the proposed rule change places 

a burden on competition, any such 

burden would be outweighed by the fact 

that none of the pricing tiers proposed 

for deletion have served their intended 

purpose of incentivizing ETP Holders to 

more broadly participate on the 

Exchange. Moreover, ETP Holders can 

choose to trade on other venues to the 

extent they believe that the credits 

provided are too low or the qualification 

criteria are not attractive. 

Intermarket Competition. The 

Exchange believes the proposed rule 

change does not impose any burden on 

intermarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange operates in a highly 

competitive market in which market 

participants can readily choose to send 

their orders to other exchanges and offexchange venues if they deem fee levels 

at those other venues to be more 

favorable. Market share statistics 

provide ample evidence that price 

competition between exchanges is 

fierce, with liquidity and market share 

moving freely from one execution venue 

to another in reaction to pricing 

changes. In such an environment, the 

Exchange must continually adjust its 

fees and rebates to remain competitive 

with other exchanges and with offexchange venues. Because competitors 

are free to modify their own fees and 

credits in response, and because market 

participants may readily adjust their 

order routing practices, the Exchange 

does not believe this proposed fee 

change would impose any burden on 

intermarket competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change is effective 

upon filing pursuant to Section 

19(b)(3)(A) 12 of the Act and 

subparagraph (f)(2) of Rule 19b–4 13

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

Exchange. 

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under Section 19(b)(2)(B) 14 of the Act to 

determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSEArca–2021–78 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2021–78. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NYSEArca–2021–78, and 

should be submitted on or before 

October 7, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–19971 Filed 9–15–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92932; File No. SR–FINRA– 

2021–014] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Granting 

Approval of a Proposed Rule Change 

Relating to Members’ Filing 

Requirements Under FINRA Rule 6432 

(Compliance With the Information 

Requirements of SEA Rule 15c2–11) 

September 10, 2021. 

I. Introduction 

On June 9, 2021, the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’), 

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

Securities Exchange Act of 1934 (‘‘Act’’ 

or ‘‘Exchange Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

amend member firms’ filing 

requirements under FINRA Rule 6432 

(Compliance with the Information 

Requirements of SEA Rule 15c2–11). 

The proposed rule change was 

published for comment in the Federal 

Register on June 15, 2021.3 The 

Commission received one comment 

letter regarding the proposed rule 

Federal Register / Vol. 86, No. 177 / Thursday, September 16, 2021 / Notices 51701 

4Letter from OTC Link LLC to SEC (July 6, 2021) 

(‘‘OTC Link Letter’’). 

5See Letter from Robert McNamee to Vanessa 

Countryman (August 4, 2001) (‘‘FINRA Response’’). 

6Rule 15c2–11 specifies key, basic issuer 

information that must be obtained and reviewed 

before a broker-dealer may initiate (or resume) 

quotations for a security in a market other than a 

national securities exchange, subject to exception. 

On October 27, 2020, the Commission published in 

the Federal Register amendments to Rule 15c2–11. 

See Exchange Act Release No. 89891 (Sept. 16, 

2020), 85 FR 68124 (Oct. 27, 2020) (‘‘Rule 15c2–11 

Adopting Release’’). Among the amendments to 

Rule 15c2–11 are those to permit broker-dealers to 

publish quotations in reliance on a qualified 

interdealer quotation system’s publicly available 

determination that it complied with the rule’s 

information review requirement, see 17 CFR 

240.15c2–11(a)(1)(ii), as well as those that provide 

certain requirements in order for the qualified 

interdealer quotation system to make such a 

publicly available determination, see 17 CFR 

240.15c2–11(a)(2)(i) through (iv). In addition, the 

amendments allow broker-dealers to publish 

quotations in reliance on a qualified interdealer 

quotation system’s publicly available determination 

that certain exceptions apply, see 17 CFR 240.15c2– 

11(f)(7), and to rely on a publicly available 

determination as to whether certain issuer 

information is current and publicly available, see 17 

CFR 240.15c2–11(f)(2)(iii)(B), (f)(3)(ii)(A). The 

amendments set forth certain policies and 

procedures requirements in order for the qualified 

interdealer quotation system to make any such 

publicly available determination. See 17 CFR 

240.15c2–11(a)(3). 

7As discussed below in Part II.C, FINRA proposes 

to define in FINRA Rule 6432(g) the term ‘‘qualified 

inter-dealer quotation system’’ as ‘‘any interdealer 

quotation system that meets the definition of an 

‘alternative trading system’ under [Rule] 300(a) of 

[Regulation ATS] and operates pursuant to the 

exemption from the definition of an ‘exchange’ 

under [Rule] 3a1–1(a)(2) of [the Exchange Act].’’ 

This definition would track the Commission’s 

definition of the term ‘‘qualified interdealer 

quotation system’’ in Exchange Act Rule 15c2–11. 

See 17 CFR 240.15c2–11(e)(6). 

8See Notice, supra note 3, at 31775 n.16. 

9See Rule 15c2–11 Adopting Release, supra note 

6 at 68172. The compliance date for the 

amendments to Rule 15c2–11 (except for provisions 

involving paragraph (b)(5)(i)(M)) is September 28, 

2021. 

10The term ‘‘non-exchange-listed security’’ is 

defined in FINRA Rule 6432(e) as any equity 

security, other than a Restricted Equity Security, 

that is not traded on any national securities 

exchange. A ‘‘Restricted Equity Security’’ means 

any equity security that meets the definition of 

‘‘restricted security’’ contained in Rule 144(a)(3) 

under the Securities Act of 1933. See 17 CFR 

230.144. 

11See Notice, supra note 3, at 31775. 

12See id. 

13See supra note 6. 

14See Notice, supra note 3, at 31775. A quoting 

broker-dealer member relying on a Qualified IDQS 

would not be required to separately submit any sort 

of Form 211 in connection with the publication of 

its initial quotation pursuant to Rule 15c2– 

11(a)(1)(ii). See id., at 31775 n.19. FINRA states that 

permitting quoting members to rely on a Qualified 

IDQS’s publicly available determination to initiate 

quotations in a security is consistent with the 

Commission’s goals to reduce burdens on brokerdealers while maintaining investor protection. See 

id., at 31776. 

15See id., at 31775. Broker-dealers must initiate 

their quotations in reliance on any such publicly 

available determination within three business days 

after the publicly available determination is made. 

See 17 CFR 240.15c2–11(a)(1)(ii)(B). 

16See Notice, supra note 3, at 31776. 

17FINRA proposes several technical, nonsubstantive changes to update cross-references to 

the renumbered and re-lettered provisions of Rule 

15c2–11 in light of the amendments. FINRA states 

that both the modified and standard Form 211 

would conform to the Commission’s amendments to 

Continued 

change,4 and a response to the comment 

from FINRA.5

II. Summary of the Proposal 

As further described below, in light of 

the Commission’s recent amendments to 

Rule 15c2–11 under the Exchange Act,6

FINRA proposes to amend members’ 

filing requirements under FINRA Rule 

6432 (Compliance with the Information 

Requirements of SEA Rule 15c2–11), 

including (i) the addition of a 

requirement that a qualified inter-dealer 

quotation system (‘‘Qualified IDQS’’) 7

submit a modified Form 211 filing to 

FINRA in connection with each initial 

information review that it conducts; (ii) 

the addition of a requirement that a 

Qualified IDQS that makes a certain 

publicly available determination under 

Rule 15c2–11 submit a daily security 

file to FINRA containing applicable 

summary information for all securities 

quoted on its system; and (iii) other 

changes to FINRA Rule 6432 and the 

Form 211 to further clarify the operation 

of the rule and conform it to amended 

Rule 15c2–11. 

FINRA states that, if the proposed rule 

changes are approved by the 

Commission, FINRA will publish a 

Regulatory Notice with technical details 

on the revised standard Form 211, 

modified Form 211, and daily file 

submission process.8 In addition, 

FINRA states that the effective date of 

any such rule changes would be the 

same date as the general compliance 

date of the Commission’s amendments 

to Rule 15c2–11 (except for paragraph 

(b)(5)(i)(M) of Rule 15c2–11),9 including 

any extensions to such compliance date. 

A. Proposed Modified Form 211 

Submission Requirement 

FINRA Rule 6432 sets forth the 

standards applicable to member firms 

quoting equity securities for 

demonstrating compliance with Rule 

15c2–11 under the Exchange Act, unless 

an exception or exemption is available. 

Under FINRA Rule 6432, no member 

may publish quotations for a nonexchange-listed security 10 in a 

quotation medium unless the member 

has demonstrated compliance with 

FINRA Rule 6432 and the applicable 

requirements for information 

maintenance under Rule 15c2–11 by 

making a filing with, and in the form 

required by, FINRA (i.e., the Form 211). 

FINRA states that it uses the Form 211 

in connection with its oversight of 

member compliance with Rule 15c2– 

11.11 FINRA also states that the Form 

211 is designed to gather pertinent 

information regarding the subject issuer 

and its security, the member’s 

knowledge of and relationship to the 

issuer, and the member’s intended 

quotation activities with respect to the 

security.12

To account for the new role of a 

Qualified IDQS resulting from the 

amendments to Rule 15c2–11,13 FINRA 

proposes to amend FINRA Rule 6432 by 

adding a new provision to establish an 

after-the-fact filing requirement for a 

Qualified IDQS that performs an initial 

review under Rule 15c2–11(a)(2). This 

new filing requirement would 

supplement FINRA’s existing standard 

Form 211 review process for quoting 

broker-dealer members, which would 

continue to apply where a broker-dealer 

is not relying on a Qualified IDQS’s 

publicly available determination with 

respect to an initial review of issuer 

information.14

FINRA states its belief that requiring 

a Qualified IDQS to submit a modified 

Form 211 is appropriate because the 

submission would provide FINRA with 

information with which to perform 

oversight of a Qualified IDQS’s 

compliance with Rule 15c2–11’s 

requirements for an initial information 

review, without involving any 

additional delay for FINRA to review 

and process the form prior to members 

being permitted to initiate quotations in 

reliance on the Qualified IDQS’s 

publicly available determination.15 In 

addition, FINRA states that the modified 

Form 211 requirement, together with the 

required submission of the daily file, as 

discussed below in Part II.B, would 

make a focused, after-the-fact review 

more manageable and able to be 

accomplished in a shorter period of 

time.16

Under the proposed provision, a 

Qualified IDQS must demonstrate 

compliance with Rule 15c2–11 by 

making a filing with, and in the form 

required by FINRA, no later than 

6:30:00 p.m. Eastern Time on the 

business day following the Qualified 

IDQS’s publicly available determination 

under Rule 15c2–11(a)(2) (i.e., a 

‘‘modified Form 211’’ filing). Like the 

standard Form 211, the modified Form 

211 would contain requests for the 

items of information specified in Rule 

15c2–11(b) with respect to the type of 

issuer involved.17 In addition, as 

51702 Federal Register / Vol. 86, No. 177 / Thursday, September 16, 2021 / Notices 

Rule 15c2–11, as applicable. See id., at 31776 n.20. 

In addition, in light of the addition of the modified 

Form 211 provision in FINRA Rule 6432(b), FINRA 

is re-letting all FINRA Rule 6432 paragraphs that 

follow that provision. Finally, FINRA proposes a 

technical, non-substantive change to correct FINRA 

Rule 6432.01 to read ‘‘.01’’ rather than ‘‘01.’’ per 

FINRA rulebook style. See id., at 31776. 

18See id.; Regulatory Notice 14–26 (June 2014) 

(stating that the ‘‘Rule 5250 prohibition on 

receiving payments for market making includes 

within its scope the receipt of payments for 

submitting a Form 211 to FINRA pursuant to Rule 

6432’’); see also FINRA Rule 5250 (Payments for 

Market Making). 

19See Notice, supra note 3, at 31776. 

20FINRA proposes a technical, non-substantive 

change to re-letter existing paragraph (c) to 

paragraph (d). See supra note 17. 

21FINRA proposes a technical, non-substantive 

change to re-letter existing paragraph (b)(1) to 

paragraph (c)(1). See supra note 17. 

22Such identifying information may include the 

type of report, report date, the permanent website 

address of the location of the information on the 

website of the Qualified IDQS or its affiliate brokerdealer, and any other information as may be 

requested by FINRA. 

23See Notice, supra note 3 at 31776. 

24 In approving this proposed rule change, the 

Commission has considered the proposed rule 

changes’ impact on efficiency, competition, and 

capital formation. See 15 U.S.C. 78c(f). 

25 15 U.S.C. 78o–3(b)(6). 

26 15 U.S.C. 78o–3(b)(11). 

discussed in Part II.C below, the 

modified Form 211, like the standard 

Form 211, must be reviewed and signed 

by a principal of the Qualified IDQS, 

who must certify, among other things, 

that neither the firm nor its associated 

persons have accepted or will accept 

any payment or other consideration 

prohibited by FINRA Rule 5250 for 

filing the Form 211.18

B. Proposed Daily Security File 

Submission Requirement 

To account for the new role of a 

Qualified IDQS, FINRA also proposes to 

amend Supplementary Material .02 to 

FINRA Rule 6432 by requiring any 

Qualified IDQS that makes one or more 

publicly available determinations 

described in any of the following 

provisions to submit to FINRA a daily 

security file containing certain 

information: Rule 15c2–11(a)(2) 

(compliance with Rule 15c2–11’s 

information review requirement); 

(f)(2)(iii)(B) (information is current and 

publicly available); (f)(3)(ii)(A) 

(information is no longer current and 

publicly available); or (f)(7) (the 

availability of the exchange-traded 

security exception, the ‘‘piggyback’’ 

exception, the municipal security 

exception, or the ADTV and asset test 

exception). FINRA states that it would 

use the information contained in the 

daily file as part of its oversight program 

to perform surveillance and periodic 

reviews of Qualified IDQS and quoting 

member compliance with Rule 15c2– 

11.19

Under this proposed requirement, the 

daily security file must contain the 

following information for all nonexchange-listed equity securities quoted 

on the Qualified IDQS’s system: 

• Security symbol; 

• Issuer name; 

• If the non-exchange-listed equity 

security is being quoted pursuant to a 

processed Form 211 under FINRA Rule 

6432(a); 

• If applicable, the type of publicly 

available determination made by the 

Qualified IDQS (e.g., that the Qualified 

IDQS conducted an initial review 

pursuant to Rule 15c2–11(a)(2), that the 

specified information is current and 

publicly available pursuant to Rule 

15c2–11(f)(2)(iii)(B) or (f)(3)(ii)(A), or 

that an exception under Rule 15c2– 

11(f)(7) is available) and the date on 

which such publicly available 

determination was made by the 

Qualified IDQS; 

• With respect to a non-exchangelisted equity security for which the 

Qualified IDQS has made a publicly 

available determination under Rule 

15c2–11(f)(7) relating to the availability 

of the piggyback exception under Rule 

15c2–11(f)(3), whether the issuer is a 

shell company and, if a shell company, 

the number of days remaining in the 

applicable 18-month period under Rule 

15c–2–11(f)(3)(i)(B)(2); 

• If applicable, that the security is 

being quoted pursuant to an exception 

that does not rely on the Qualified 

IDQS’s publicly available determination 

and, if so, identify the exception relied 

upon by the subscriber; and 

• Such other information as specified 

by FINRA in a Regulatory Notice (or 

similar communication). 

C. Proposed Clarifying and Conforming 

Amendments 

In addition to the proposals discussed 

above with respect to member Qualified 

IDQS requirements, FINRA proposes 

several amendments to clarify the 

operation of FINRA Rule 6432 and 

conform the rule provisions to Rule 

15c2–11, as amended. First, with 

respect to existing member obligations, 

FINRA proposes to clarify that a 

member firm must receive notification 

from FINRA that a standard Form 211 

has been processed (i) before initiating 

or resuming quotations in a quotation 

medium for a security, as in paragraph 

(a) of FINRA Rule 6432; and (ii) before 

entering a priced quotation for the 

security, as in paragraph (d) of FINRA 

Rule 6432.20 As part of this rule change, 

FINRA proposes to delete the 

requirement that the Form 211 be 

received by FINRA at least three 

business days before the filing firm’s 

quotation is published or displayed. 

Second, to ease burdens on brokerdealers when filing a Form 211, FINRA 

proposes in paragraph (c)(1) 21 to 

expand FINRA Rule 6432’s treatment 

currently allowed for documents made 

available through the Commission’s 

Electronic Data Gathering, Analysis, and 

Retrieval (‘‘EDGAR’’) system. In 

particular, FINRA proposes to allow a 

member firm or Qualified IDQS 

submitting a Form 211, in lieu of filing 

a copy of the applicable specified issuer 

information, to include identifying 

information 22 for each issuer report or 

statement upon which the filer relied in 

satisfying the requirements of Rule 

15c2–11’s review of issuer information, 

with respect to information that is 

publicly available through the website 

of a Qualified IDQS or its affiliate 

broker-dealer (but is not available on 

EDGAR). FINRA states its belief that this 

expansion of treatment is appropriate in 

light of the new role of a Qualified IDQS 

under the amendments to Rule 15c2– 

11.23

Third, FINRA proposes in new 

paragraph (g) of FINRA Rule 6432 to 

provide the same definition for term 

‘‘qualified inter-dealer quotation 

system’’ that the term ‘‘qualified 

interdealer quotation system’’ has under 

Rule 15c2–11(e)(6). Finally, to assist 

with oversight of member firm 

compliance with Rule 15c2–11, FINRA 

proposes to require that members 

include in the standard and modified 

Form 211 the names of all officers and 

directors of the subject issuer. 

III. Discussion and Commission 

Findings 

After carefully reviewing the 

proposed rule changes, the comment 

letter, and the FINRA letter, the 

Commission finds that the proposed 

rule changes are consistent with the 

requirements of the Exchange Act and 

the rules and regulations thereunder 

applicable to a national securities 

association.24 In particular, the 

Commission finds that the proposed 

rule changes are consistent with Section 

15A(b)(6) of the Exchange Act 25 in that 

they are designed, among other things, 

to prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. In addition, the 

Commission finds that the proposed 

rule changes are consistent with Section 

15A(b)(11) of the Exchange Act 26 in that 

they include provisions designed to 

produce fair and informative quotations, 

Federal Register / Vol. 86, No. 177 / Thursday, September 16, 2021 / Notices 51703 

27See Notice, supra note 3, at 31774. 

28See id., at 31775. 

29FINRA Rule 6432 would require a principal of 

the filing member Qualified IDQS to review and 

sign the modified Form 211, which would also 

include a certification that neither the firm nor its 

associated persons have accepted or will accept any 

payment or other consideration prohibited by 

FINRA Rule 5250 for filing the Form 211. One 

commenter stated that FINRA Rule 5250 does not 

and should not apply to a Qualified IDQS filing a 

Form 211. See OTC Link Letter. The question of 

whether Rule 5250 prohibits the Qualified IDQS 

from accepting issuer payments for filing Form 211 

in connection with its review under 15c2–11(a)(2) 

is an issue concerning the interpretation of Rule 

5250 (not Rule 6432) and is outside of the scope of 

FINRA’s proposal. 

30For example, FINRA stated that it would use 

the modified Form 211 filings submitted by a 

Qualified IDQS to assess periodically the adequacy 

of the Qualified IDQS’s reviews. See id., at 31775. 

31Broker-dealers must initiate their quotations 

within three business days after the Qualified IDQS 

makes a publicly available determination regarding 

its review of issuer information. See 17 CFR 

240.15c2–11(a)(1)(ii)(B). If broker-dealers needed to 

wait for notification from FINRA that the Qualified 

IDQS’s form has been processed before initiating or 

resuming quotations, as with the timing 

requirement of the standard Form 211, more than 

three days could elapse. In such case, the Qualified 

IDQS may need to repeat its review, a broker-dealer 

may need to review the issuer information itself to 

initiate a quoted market, or no market may develop 

whatsoever. Such a result would be inconsistent 

with the amendments’ goal, among others, of easing 

broker-dealers’ burdens where Rule 15c2–11’s 

investor protections can be achieved by alternative 

means. See, e.g., Rule 15c2–11 Adopting Release, 

supra note 6, at 68131. 

32See Rule 15c2–11 Adopting Release, supra note 

6, at 68131. 

33See supra Part II.B for a list of the specified 

information. 

34See generally 17 CFR 240.15c2–11(d) 

(requiring, among other things, the preservation of 

information related to a publicly available 

determination that the rule’s requirements for the 

review of specified information have been fulfilled, 

as well as information supporting a publicly 

available determination as to whether an issuer’s 

information is current and publicly available or 

Continued 

to prevent fictitious or misleading 

quotations, and to promote orderly 

procedures for collecting, distributing, 

and publishing quotations. 

A. Proposed Modified Form 211 

Submission Requirement 

The Commission finds that the 

proposed requirements set forth in 

FINRA Rule 6432(b), with respect to the 

modified Form 211 submission, are 

consistent with the Exchange Act. 

First, the proposed requirement on 

any member Qualified IDQS that makes 

a publicly available determination 

pursuant to Rule 15c2–11(a)(2) to file a 

Form 211 with FINRA to demonstrate 

compliance with Rule 15c2–11 is 

designed, among other things, to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. As FINRA noted, ‘‘[t]he 

amendments to Rule 15c2–11 make 

substantial changes to the prior 

framework.’’ 27 This filing requirement, 

therefore, was proposed primarily to 

account for the new role of a Qualified 

IDQS under Rule 15c2–11’s 

amendments.28 FINRA’s proposal to 

extend the existing obligation for any 

member firm representing that it 

complied with the requirements of Rule 

15c2–11’s review of specified issuer 

information to any member Qualified 

IDQS that makes a publicly available 

determination that it complied with the 

requirements for such review 29 would 

update FINRA’s framework for its 

oversight of member Qualified IDQSs, 

facilitate its oversight efforts, and 

enhance investor protection.30

Second, the requirement for a member 

Qualified IDQS’s modified Form 211 to 

be received by FINRA no later than 

6:30:00 p.m. Eastern Time on the 

business day following the Qualified 

IDQS’s publicly available determination 

made pursuant to Rule 15c2–11(a)(2) is 

designed to produce fair and 

informative quotations, to prevent 

fictitious or misleading quotations, and 

to promote orderly procedures for 

collecting, distributing, and publishing 

quotations. The Commission believes 

that the proposed deadline for the 

modified Form 211 filing (i.e., after-thefact) appropriately balances the 

protection of investors, with respect to 

the prevention of fraudulent and 

manipulative schemes involving 

fictitious quotations, while preventing 

the potential for undue delay in the 

initiation of quoted markets following a 

Qualified IDQS’s publicly available 

determination that it has complied with 

Rule 15c2–11’s requirements for the 

review of specified issuer information.31

Further, the Commission believes that 

the after-the-fact nature of the 

submission of the modified Form 211, 

together with the requirement for the 

submission of a daily security file, could 

facilitate FINRA’s oversight of a member 

Qualified IDQS’s compliance with the 

Rule 15c2–11 review by making 

FINRA’s efforts more focused and 

efficient. 

Finally, not requiring quoting member 

firms to file any Form 211 if they are 

relying on a Qualified IDQS’s publicly 

available determination regarding its 

compliance with Rule 15c2–11’s review 

of specified issuer information is 

designed to produce fair and 

informative quotations, to prevent 

fictitious or misleading quotations, and 

to promote orderly procedures for 

collecting, distributing, and publishing 

quotation. The Commission believes 

that its goal, among others, in amending 

Rule 15c2–11 to reduce burdens on 

broker-dealers while maintaining 

investor protection 32 would be 

furthered, in part, by the modified Form 

211 submission. In light of this 

requirement, the Commission believes 

that also requiring quoting member 

firms (relying on a Qualified IDQS’s 

publicly available determination 

regarding its review of issuer 

information) to file a Form 211 would 

be redundant, including with respect to 

the information provided, without 

necessarily providing any new 

information for FINRA or the 

Commission to use in its oversight 

efforts to prevent fictitious or 

misleading quotations and to protect 

investors. 

B. Proposed Daily Security File 

Submission Requirement 

The Commission finds that the 

proposed requirements set forth in 

Supplementary Material .02 to FINRA 

Rule 6432, with respect to the daily file 

submission requirement for any member 

Qualified IDQS that makes certain 

publicly available determinations, are 

consistent with the Exchange Act. 

The proposed requirement under 

Supplementary Material .02 regarding 

the submission of a daily security file is 

designed, among other things, to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. Under this proposed 

requirement, a member Qualified IDQS 

must submit a daily file containing 

certain information 33 regarding all nonexchange-listed equity securities quoted 

on its system if the Qualified IDQS 

makes a publicly available 

determination involving any of the 

following: Whether the Qualified IDQS 

complied with the requirements of Rule 

15c2–11’s review of specified issuer 

information; whether an issuer’s 

information is current and publicly 

available, pursuant to Rule 15c2–11’s 

unsolicited quotation exception or 

piggyback exception; or whether Rule 

15c2–11’s exchange-traded security 

exception, municipal security 

exception, piggyback exception, or 

ADTV and asset test exception is 

available. 

The proposed daily security file list 

includes basic information regarding a 

quoted security, its issuer, and, as 

applicable, the publicly available 

determination or exception that already 

would be preserved as part of a 

Qualified IDQS’s compliance with its 

existing recordkeeping requirement 

under Rule 15c2–11.34 The Commission 

51704 Federal Register / Vol. 86, No. 177 / Thursday, September 16, 2021 / Notices 

whether certain of the rule’s exceptions apply, as 

applicable). 

35FINRA states that the daily security file 

information would provide consolidated daily Rule 

15c2–11 compliance information to complement a 

member Qualified IDQS’s modified Form 211 

submission so that FINRA could have a more 

complete overview of the activities of its members 

in the over-the-counter market, including of a 

Qualified IDQS’s compliance with Rule 15c2–11’s 

obligations. See Notice, supra note 3, at 31776. 

36See id. 

37See Rule 15c2–11 Adopting Release, supra note 

6, at 68144. 

38See id., at 68166. 

39See, e.g., id., at 68167. 

40 15 U.S.C. 78s(b)(2). 

41 17 CFR 200.30–3(a)(12). 

believes that the daily security file will 

facilitate FINRA’s oversight efforts 

where FINRA might otherwise lack 

efficient access to such information. In 

this regard, FINRA’s access to the daily 

security file could aid its oversight 

efforts and protect investors by 

providing FINRA with a wider range of 

information to use in determining 

whether a Qualified IDQS has complied 

with its Rule 15c2–11 obligations (e.g., 

with respect to making a certain type of 

publicly available determination) or 

whether a publicly available 

determination is being used in 

connection with a fraudulent and 

manipulative scheme.35

C. Proposed Clarifying and Conforming 

Amendments 

The Commission finds that the 

proposed clarifying and conforming 

amendments set forth in FINRA Rule 

6432 are consistent with the Exchange 

Act. 

First, the proposed clarifying 

amendments to Rule 6432(a) and (d), 

with respect to the requirement that a 

member firm receive notification from 

FINRA that its standard Form 211 has 

been processed before initiating or 

resuming quotations in a quotation 

medium or before entering a priced 

quotation for the security, respectively, 

are designed, among other things, to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. FINRA states that these 

amendments are proposed to clarify 

existing member firm obligations when 

filing a standard Form 211 under FINRA 

Rule 6432.36 The Commission believes 

that stating explicitly what event must 

occur before a member firm may begin 

publishing quotations provides a greater 

degree of clarity as to when a member 

firm may initiate or resume quotations 

than stating when the standard Form 

211 must be received by FINRA does. 

These clarifications could facilitate 

broker-dealers’ compliance measures 

and make them more efficient by 

removing any uncertainty as to when 

quotations may begin. In addition, these 

clarifications could protect investors by 

preventing the likelihood that a member 

firm would initiate a quoted market 

before its compliance with Rule 15c2– 

11’s requirements for an initial 

information review have been subject to 

oversight and verified. 

Second, the proposed requirements in 

FINRA Rule 6432(c)(1), with respect to 

filing member firms’ ability to point 

FINRA to issuer information publicly 

available on the website of a Qualified 

IDQS or its affiliate broker-dealer, 

including the manner for doing so, are 

designed, among other things, to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. The Commission 

believes that the ability of a member 

firm or Qualified IDQS to include in its 

Form 211 filing certain identifying 

information for the issuer reports or 

statements upon which it relied in 

complying with Rule 15c2–11’s 

requirements for reviewing issuer 

information appropriately balances the 

protection of investors while reducing 

compliance burdens on the filing 

member. Specifically, this rule change 

would allow any such member to point 

FINRA to the applicable issuer 

information that is publicly available on 

a regulated market participant’s 

website,37 in lieu of filing a copy of the 

applicable issuer reports or statements, 

while providing FINRA with an 

alternative means to conduct its 

oversight of the member’s compliance 

with Rule 15c2–11 in order to protect 

investors. In addition, the Commission 

believes that the list of identifying 

information (i.e., the type of report, 

report date, the permanent website 

address of the location of the 

information on the website of the 

Qualified IDQS or its affiliate brokerdealer, and any other information as 

may be requested by FINRA) may aid 

FINRA in accessing the applicable 

issuer reports or statements relied upon 

as part of its oversight efforts. 

Third, the proposed definition in 

FINRA Rule 6432(g) of the term 

‘‘qualified inter-dealer quotation 

system’’ is designed, among other 

things, to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, and, in general, to protect 

investors and the public interest. 

FINRA’s proposed definition tracks the 

definition of the term ‘‘qualified 

interdealer quotation system’’ that is 

provided in Rule 15c2–11(e)(6). This 

uniformity between FINRA Rule 6432 

and Rule 15c2–11 under the Exchange 

Act could facilitate compliance efforts 

on the part of member firms and 

Qualified IDQSs due to an enhanced 

understanding of the application of the 

two rules’ requirements regarding that 

term. Similarly, such uniformity could 

facilitate FINRA’s oversight by 

providing an efficient means to monitor 

compliance with Rule 15c2–11. The 

Commission continues to believe that 

the regulatory requirements for a 

member that meets the definition of a 

Qualified IDQS—and the concomitant 

FINRA and Commission oversight of 

this type of entity—would help to 

ensure investor protection and to 

prevent fraud and manipulation.38

Finally, the proposal in FINRA Rule 

6432(c)(2) to require any member firm 

or Qualified IDQS to include in the 

standard or modified Form 211, as 

applicable, a list of all officers and 

directors of the subject issuer is 

designed, among other things, to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. The Commission 

believes that this list appropriately 

captures persons who manage a 

company or have a greater degree of 

access to issuer information and who 

may have a heightened incentive to 

engage in fraudulent or manipulative 

conduct.39 Such additional information, 

therefore, could aid FINRA in its 

oversight of Rule 15c2–11 compliance 

and the market for an issuer’s security. 

IV. Conclusion 

It is therefore ordered that, pursuant 

to Section 19(b)(2) of the Exchange 

Act,40 the proposed rule change (File 

No. SR–FINRA–2021–014) be, and 

hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.41

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–19968 Filed 9–15–21; 8:45 am] 

BILLING CODE 8011–01–P