Supporting Statement (3235-0202-- Final Rule Amendments to Rule 15c2-11)

1
SUPPORTING STATEMENT
for the Paperwork Reduction Act Information Collection Submission for
Rule 15c2-11
OMB Control No. 3235-0202
Partial Revision
This submission is being made pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C.
Section 3501 et seq.
A.

JUSTIFICATION
1.

Information Collection Necessity

On September 13, 1971, effective December 13, 1971, 1 the Securities and Exchange
Commission (the “Commission”) adopted Rule 15c2-11 (17 CFR 240.15c2-11) (the “Rule”) under
the Securities Exchange Act of 19342 to regulate the submission of quotations in a quotation
medium by a broker-dealer for over-the-counter securities (“OTC securities”). The Rule is intended
to prevent broker-dealers from publishing or submitting quotations for OTC securities that may
facilitate a fraudulent or manipulative scheme. Subject to certain exceptions, the Rule prohibits
broker-dealers from publishing or submitting a quotation for a security, or submitting a quotation
for publication, in a quotation medium unless they have reviewed specified information concerning
the issuer.

1

See Initiation or Resumption of Quotations by a Broker or Dealer Who Lacks Certain Information,
Exchange Act Rel. No. 34-9310 (Sept. 13, 1971), 36 FR 18641 (Sept. 18, 1971). The Rule was last substantively
amended in 1991. See 56 FR 19148.

2

15 U.S.C. 78a et seq.

2
Partial Revision to Collection of Information
On September 16, 2020, the Commission adopted amendments3 (the “amendments” or
“amended Rule”) that focus more closely on those OTC securities that the Commission believes are
more likely to be prone to fraud and manipulation by addressing the lack of transparency of some
issuers. The Commission also adopted amendments to reduce regulatory burdens on broker-dealers
for quotations concerning OTC securities that appear to present lower risk.
This partial revision provides new or updated burden estimates in connection with the
amendments. These amendments were originally proposed on September 25, 2019, and the
proposed burdens associated with the proposed rule changes were submitted for review in 2019.4
The information collections in the amended Rule are described in more detail below.5
Information Collection
Recordkeeping associated with the initial publication or
submission of a quotation in a quotation medium 6
Recordkeeping when relying on an exception under
paragraph (f), that paragraph (b) information is current and
publicly available 7

Provision of Amended Rule
Containing Recordkeeping
Requirement
15c2-11(d)(1)
15c2-11(d)(2)

Publication or Submission of Quotations Without Specified Information, Exchange Act Release Nos. 3310842; 34-89891 (Sept. 16, 2020), 85 FR 68124 (Oct. 27, 2020) (the “Release”).

3

See ICR Reference no. 202002-3235-005, available at
https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202002-3235-005.
4

5

See infra, Section 12.

The OMB Control Number was extended in July of 2020 for two information collections associated with
the initiation or resumption of a quotation for an OTC security, which entailed (i) conducting a review of and
maintaining the required information (recordkeeping) and (ii) furnishing the information to an interdealer quotation
system (third-party disclosure). The amended rule retains the recordkeeping requirement but updates the burden
hours to reflect more recent underlying data in the information collection titled “recordkeeping associated with the
initial publication or submission of a quotation in a quotation medium.” The third-party disclosure requirement was
rescinded by the amended Rule, so this information collection is not included in the burden hours discussed herein.
Accordingly, the Commission intends for the burden estimates in this supporting statement to replace the currently
approved information collections.
6

This is the same title that was used for this information collection in the Supporting Statement at the
proposing stage.
7

3

Information Collection
Recordkeeping obligations under unsolicited quotation
exception under paragraph (f)(2) 8
Recordkeeping obligations regarding frequency of a priced
bid or offer quotation under paragraph (f)(3)(i)(A) 9
Recordkeeping obligations concerning determining shell
status under the proviso in paragraph (f)(3)(i)(B) 10
Recordkeeping obligations regarding trading suspensions
under the provision in paragraph (f)(3)(i)(B) 11
Recordkeeping obligations for the exceptions under paragraph
(f)(5) – Asset Test 12
Recordkeeping obligations for the exceptions under paragraph
(f)(5) – ADTV Test 13
Recordkeeping obligations of broker-dealers relying on a
qualified IDQS complying with information
review requirement pursuant to paragraph (a)(1)(ii) 14
Recordkeeping obligations related to the creation of

Provision of Amended Rule
Containing Recordkeeping
Requirement

15c2-11(a)(1)(ii)
15c2-11(a)(3)

This is the same title that was used for this information collection in the Supporting Statement at the
proposing stage.

8

This is a new information collection not included in the Supporting Statement at the proposing stage. The
Commission adopted this requirement, which is discussed in more detail below, to “avoid unduly impeding liquidity
for investors and capital formation for issuers while still addressing the vulnerability of the piggyback exception to
be used to facilitate potential fraud and manipulation.” See Release at 68150.
9

This is the same title that was used for this information collection in the Supporting Statement at the
proposing stage. The paragraph number has changed from the proposed Rule.

10

This is a new information collection not included in the Supporting Statement at the proposing stage. The
Commission adopted this requirement, which is discussed in more detail below, to eliminate the ability of a brokerdealer to rely on the piggyback exception with respect to a security that is the subject of a trading suspension order
issued by the Commission pursuant to section 12(k) of the Exchange Act until 60 calendar days after the expiration
of such order. See Release at 68150.
11

This is the same title that was used for this information collection in the Supporting Statement at the
proposing stage.

12

This is the same title that was used for this information collection in the Supporting Statement at the
proposing stage.

13

This information collection replaces the proposed exception in Proposed Rule 15c2–11(f)(7), titled
“Recordkeeping obligations concerning reliance on an IDQS under proposed paragraph (f)(7)” in the Supporting
Statement at the proposing stage. The adopted provision is substantively the same as the proposed exception, but
was modified in order to streamline the amended Rule and facilitate compliance. See Release at 68131.

14

4

Information Collection
reasonable written policies and procedures under paragraph
(a)(3) 15
Recordkeeping obligations of broker-dealers relying on
publicly available determinations by qualified IDQSs or
registered national securities associations pursuant to
paragraph (d)(2)(ii) 16
2.

Provision of Amended Rule
Containing Recordkeeping
Requirement

15c2-11 (d)(2)(ii)

Information Collection Purpose and Use

The information collections under the amended Rule are intended to prevent brokerdealers from publishing or submitting quotations for OTC securities that may facilitate a
fraudulent or manipulative scheme and to help ensure compliance with the Rule’s exceptions.
3.

Consideration Given to Information Technology

The amended Rule seeks to, among other things, better protect retail investors from
incidents of fraud and manipulation in OTC securities by modernizing the Rule to be more efficient
and effective. Accordingly, the information collections are designed to incorporate advances in
information technology and the internet that have occurred since the Rule was last amended in
1991.17

This is a new information collection replacing the proposed recordkeeping provision titled “Recordkeeping
obligations related to the creation of reasonable policies under proposed paragraph (f)(8)” at the proposing stage.
The new provision strengthened the proposed Rule’s policies and procedures requirements for making publicly
available determinations based on comments expressing that the proposal would weaken Commission oversight of
compliance with the Rule. See Release at 68132.
15

This is a new information collection not included in the Supporting Statement at the proposing stage,
consistent with the proposal, requiring that a broker-dealer that publishes a quotation in reliance on a publicly
available determination of a qualified IDQS or a registered national securities association preserve a record of the
exception for which the publicly available determination is made and a record of the name of such qualified IDQS or
registered national securities association that made the determination. See Release at 68163.
16

17

See e.g., Release at 68125.

5
The amended Rule provides respondents with flexibility on when and how records should
be kept18 and does not limit respondents to using forms of electronic storage which may become
obsolete as new technology is developed. Accordingly, respondents have the ability to utilize
information technology to meet the requirements of the amended Rule and are permitted to utilize
new future developments in technology in ways that may reduce burdens.
Additionally, the Commission leveraged information technology to avoid redundant or
unnecessary reporting and recordkeeping obligations in the amended Rule. For example,
obligations in paragraph (d)(1) and (d)(2) the amended Rule, provide that paragraph (b) information
is not required to be preserved if it is available on the Commission's Electronic Data Gathering,
Analysis and Retrieval System (“EDGAR”).19
Further, the amended Rule modified the requirement that a broker-dealer make the
information that it obtained and reviewed as a part of the information collection associated with the
publication or submission of quotations “reasonably available upon request” to investors seeking
such information by permitting broker-dealers to direct the investors to the publicly-available
information upon which the broker-dealer relied to comply with the requirement. The amendments
leverage information technology to reduce the burden of the information collection requirement
relative to the previous information collection requirement.20
4.

Duplication

The information collection requirements under the amended Rule are not duplicated
elsewhere.

18

See Release at 68178.

19

See 17 CFR 240.15c2-11(d)(1), (2).

20

See Release at 68162-68163.

6

5.

Effects on Small Entities

The Commission believes that the amended Rule impacts the 80 broker-dealers that
publish or submit quotations on OTC Markets Group’s systems, one qualified IDQS, and one
national securities association. A broker-dealer is a small entity if it has total capital (net worth
plus subordinated liabilities) of less than $500,000 on the date in the prior fiscal year as of which
its audited financial statements were prepared pursuant to §240.17a-5(d), and it is not affiliated
with any person (other than a natural person) that is not a small business or small organization.
Based on a review of data involving the 80 broker-dealers that publish quotations for
OTC securities, the Commission does not believe that any of the 80 broker-dealers impacted by
the amended Rule are small entities under the above definition because they either exceed
$500,000 in total capital or are affiliated with a person that is not a small entity as defined in
Rule 0-10. 21 It is possible that in the future a small entity may become impacted by the amended
Rule. Based on experience with broker-dealers that participate in this market, however, the
Commission preliminarily believes that this scenario will be unlikely since firms that enter the
market are likely to exceed $500,000 in total capital or be affiliated with a person that is not a
small entity. Additionally, neither the one qualified IDQS nor the one national securities
association are small entities. Accordingly, zero small entities are effected by the adopted
amendments.
6.

21

Consequences of Not Conducting Collection

See Release at 68203.

7
The amendments focus the Rule more closely on those OTC securities that the Commission
believes are more likely to be prone to fraud and manipulation by addressing the lack of
transparency of some issuers.22 The amendments also reduce regulatory burdens on broker-dealers
for quotations concerning OTC securities that appear to present lower risk, such as highly liquid
securities of certain well-capitalized issuers and securities that were issued in offerings underwritten
by the broker-dealer publishing the quote.23
Without the information collection associated with the initial publication or submission of
quotations it would be extremely difficult, if not impossible, for the Commission to determine that
the information review requirements in paragraphs (a)-(c) have been met during an examination.
Further, since the frequency of responses is dependent on the publication or submission of a
quotation, it is not possible to decrease the frequency of the information collection while still
subjecting respondents to the requirement.
Similarly, without the information collections associated with broker-dealers relying on an
exception to the amended Rule, it would be extremely difficult, if not impossible, for the
Commission to determine whether broker-dealers meet the requirements of the exceptions during an
examination. 24 As mentioned above, the amended Rule provides broker-dealers with flexibility in
how they can create records to document reliance on an exception and that many of these records

22

See Release at 68184.

23

Id.

As the Commission noted in the release that proposed the amendments, there have been instances during
examinations where broker-dealers have not had records regarding the basis of their reliance on an exception to the
existing Rule. See Publication or Submission of Quotations Without Specified Information, Exchange Act Rel. No.
34-87115 (Sept. 25, 2019), 84 FR 58206, 58233 (Oct. 30, 2019) (“Proposing Release”).

24

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may not need to be created every time a broker-dealer publishes or submits a quotation relying on
an exemption, 25 which limits the burden of the information collection.
7.

Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)

There are no special circumstances. This collection is consistent with the guidelines in 5
CFR 1320.5(d)(2).
8.

Consultations Outside the Agency

In the Proposing Release, the Commission solicited public comment on the new collection of
information requirements and the associated paperwork burdens. The Commission received one

comment regarding the collection of information requirements, which focused on the
Commission’s estimates of burdens and costs associated with determining an issuer’s status as a
shell company. The commenter stated that the Commission’s one minute average estimate
significantly underestimated the amount of time it would take a broker-dealer to determine
whether an issuer is a shell company. 26 In response to this comment, the Commission noted that
there may be wide disparities in the time it may take to determine whether an issuer is a shell
company depending on whether the issuer discloses its shell company status. 27 In some instances, it
may take less than one minute to assess whether a company is a shell company, while in
other instances, it may take longer than one minute. A broker-dealer, qualified IDQS, or registered
national securities association may rely on an issuer’s self-identification as a shell company in its
review of the issuer’s documents and information, for example, as specified in paragraph (b)(5)(i)(H)
of the amended Rule, regarding a description of the issuer’s business. 28 For the foregoing reasons,

25

See Release at 68178-68179.

26

Letter from Leonard Burningham to SEC (Dec. 30, 2019).

27

See Release at 68180.

28

17 CFR 240.15c2-11(b)(5)(i)(H).

9
the Commission believes that one minute remains an appropriate average estimated length of time to
review and create a record of whether an issuer is a shell company.

9.

Payment or Gift

The Commission did not provide any payment or gift to respondents.
10.

Confidentiality

Not applicable. Respondents receive no assurance of confidentiality.
11.

Sensitive Questions

No information of a sensitive nature, including social security numbers, will be required
under this proposed amendment. The information collection does not collect personally
identifiable information (PII). The agency has determined that a system of records notice and
privacy impact assessment are not required in connection with the collection of information.

10
12.

Information Collection Burden

The commission estimates that the information collections in the amended Rule will be as set forth in the chart below. 29 A
more detailed description of the information collections is immediately below the chart. The new collections were adopted pursuant to
the Commission’s rulemaking authority and, accordingly, were categorized as a program change due to agency discretion.

Name of
Information
Collection

Type of
Burden

Recordkeeping
Associated
with the initial
publication or
Recordkeeping
submission of a
Quotation in a
Quotation
Medium

29

Summary of Hourly Burdens
A.
B.
C.
D.
E.
F.
Initial
Initial
Ongoing
Annual
Number
Burden
Burden
Burden
Burden
Annual
of
per
Annualized
per
Per
Responses
Entities
Entity
per Entity
Entity
Entity
per Entity
Impacted
per
per
per
per
Response Response Response Response
[C / 3
[D + E]
years]

82

54

0

0

5.515

5.515

G.

H.

I.

Total
Annual
Burden
Per
Entity

Total
Industry
Burden

Small
Business
Entities
Affected

[F * B]

[G * A]

297.81

24,421

0

Due to rounding conventions in ROCIS, some of the Total Industry Burdens in Column H. of the chart are an hour higher or
lower than they are calculated in ROCIS.

11
Recordkeeping
when relying
on an
exception
under
paragraph (f),
that proposed
paragraph (b)
information is
current and
publicly
available
Recordkeeping
obligations
under
unsolicited
quotation
exception
under
paragraph
(f)(2)
Recordkeeping
obligations
regarding the
frequency
of a priced bid
or offer
quotation,
pursuant to
paragraph
(f)(3)(i)(A)
Recordkeeping
obligations
regarding
determining
shell status

Recordkeeping

82

1

1

0.33

540

540.33

Recordkeeping

80

1

3

1

Recordkeeping

82

1

3

1

807.939

808.939

Recordkeeping

82

1

3

1

540

541

540.33

44,308

0

96,452

0

808.939

66,333

0

541

44,362

0

1,204.638 1,205.638 1,205.638

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under
paragraph
(f)(3)(i)(B)
Recordkeeping
obligations
concerning
trading
suspensions
under
paragraph
(f)(3)(i)(B)
Recordkeeping
obligations for
the exceptions
under
paragraph
(f)(5) – Asset
Test
Recordkeeping
obligations for
the exceptions
under
paragraph
(f)(5) – ADTV
Test
Recordkeeping
obligations of
broker-dealers
relying on a
qualified IDQS
complying
with
information

Recordkeeping

82

1

3

1

3.549

4.549

4.549

374

0

Recordkeeping

82

1

0

0

3

3

3

246

0

Recordkeeping

82

1

3

1

756

757

757

62,074

0

Recordkeeping

80

1

3

1

0.225

1.225

1.225

98

0

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review
requirement
pursuant to
paragraph
(a)(1)(ii)
Recordkeeping
obligations
related to the
creation of
reasonable
written
policies and
procedures
under
paragraph
(a)(3)
Recordkeeping
obligations of
broker-dealers
relying on
publicly
available
determinations
by qualified
IDQSs or
registered
national
securities
associations
under
paragraph
(d)(2)(ii)

Recordkeeping

2

1

18

6

10

16

16

32

0

Recordkeeping

80

1

3

1

807.938

808.938

808.938

64,716

0

TOTAL HOURLY BURDEN FOR ALL RESPONDENTS

30

Due to rounding conventions in the ROCIS system, the total in ROCIS is calculated as 403,411.

403,416 30

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a.

Burden Associated with the Initial Publication or Submission of
a Quotation in a Quotation Medium

Absent an exception, paragraph (a) of the amended Rule requires broker-dealers to
comply with an information review requirement prior to the initial publication or submission of a
quotation for an OTC security. The Commission believes that the information collections
associated with the information review requirement involve conducting a review of and
maintaining the required information.
A broker-dealer that initiates or resumes a quotation in an OTC equity security is subject
to FINRA Rule 6432, which requires the broker-dealer to demonstrate compliance with, among
other things, Rule 15c2–11 by filing a Form 211. Given the alignment of this FINRA
requirement and the Rule, the Commission believes that the number of Forms 211 filed with
FINRA in 2019 provides a reasonable baseline from which to estimate the burdens associated
with the information review requirement under both the former Rule and the amended Rule.
Based on information provided by FINRA, broker-dealers submitted a total of 384 Forms 211 to
initiate the publication or submission of quotations of OTC securities in 2019: 87 of these Forms
211 concerned securities of prospectus issuers, Reg. A issuers, and reporting issuers; 253
concerned securities of exempt foreign private issuers; and 44 concerned securities of catch-all
issuers. 31 The hourly burdens associated with the initial publication or submission of a quotation
are estimated by multiplying the number of times the information review was completed in 2019
by the number of hours required to complete it and adjusted to account for the adopted
amendments. Consistent with prior estimates, the Commission estimates that it takes about three
hours to review, record, and retain the information pertaining to prospectus issuers, Reg. A

31

See Release at 68175.

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issuers, and reporting issuers, and seven hours to review, record, and retain the information
pertaining to exempt foreign private issuers and catch-all issuers, across 82 respondents. 32 The
Commission does not expect that these changes to the information review requirement would
create any initial burden, as it is unlikely that a broker-dealer or qualified IDQS would need to
modify its systems or training practices to comply with the information review requirement
under the amended Rule. The Commission estimates total industry burden of 73,263 hours 33
over a three year period, or 24,421 hours when annualized. 34
b.

Recordkeeping Demonstrating that the Requirements of an Exception
have been Met

Paragraph (d)(2) requires that certain broker-dealers, qualified IDQSs, or registered
national securities associations preserve documents and information that demonstrate that the
requirements for an exception under paragraph (f) are met. The Commission believes that the
requirements in these exceptions, to have current and publicly available paragraph (b)
information that is timely filed, or filed within 180 calendar days from a specified period, create
ongoing recordkeeping burdens for respondents under paragraph (d)(2). There are 9,895 unique
issuers of quoted OTC securities for which broker-dealers would be required to maintain records
to establish that paragraph (b) information is current and publicly available, timely filed, or filed

82 broker-dealers + 1 qualified IDQS + registered national securities association = 82 respondents. The
burden for all information reviews regardless of issuer type are added together in this discussion and combined into
a single line item in the chart in this section to continue with conventions used in prior supporting statements. The
“Summary of Hourly Burdens” chart below, therefore, uses a blended average number of ongoing burden per entity
per response.

32

33

24,421 hours x 3 = 73,263 hours. All annualized numbers are rounded up to the nearest whole number.

34
As further discussed in item 15 below, the Commission estimates that the total industry-wide burden
associated with the initial publication or submission of a quotation for the information review of prospectus, Reg. A,
or reporting issuers would be 4,869 hours. The Commission also estimates that the total industry-wide burden
associated with the initial publication or submission of a quotation for the information review of exempt foreign
private issuers and catch-all issuers would be 19,551 hours. 24,420 is the sum of these two estimates.

16
within 180 calendar days from the specified period, as applicable, and respondents would create
such documentation no more frequently than quarterly for SEC/Reg. A/bank reporting obligation
issuers and foreign private issuers, and annually for catch-all issuers. 35 Of these 9,895 issuers,
3,081 are SEC/Reg. A/Bank Reporting Obligation issuers, 4,413 are exempt foreign private
issuers, and 2,401 are catch-all issuers. 36
It is estimated that it would take one minute to create such documentation regarding the
determination that the paragraph (b) information is current and publicly available, timely filed, or
filed within 180 calendar days from the specified period, as applicable. The Commission
believes that respondents already have systems and personnel in place to create these records, so
the initial burden of putting procedures in place to ensure compliance with the amendments
would be limited to one hour of internal cost per respondent, or 0.33 annualized hours, and an
ongoing burden of approximately 540 hours per respondent per year (including the first year), 37
across 82 respondents. 38 As stated in the Adopting Release, the Commission estimates an
industry-wide initial burden of 82 hours 39 in the first year, and an ongoing burden of 44,280

35

See Release at 68179.

36

See Release at 68178.

[(3,081 SEC/Reg. A/Bank Reporting Obligation issuers x 1 minute x 4 responses per year) + (4,413 exempt
foreign private issuers x 1 minute x 4 responses per year) + (2,401 catch-all issuers x 1 minute x 1 responses per
year)] / 60 = 540 hours. Given the multiple steps, rounding, and small numbers involved in calculating this
estimate, the Commission will show one response per entity in the “Summary of Hourly Burdens” chart below to
ensure that the result in the “Total Industry Burden” column exactly matches the rounded number.

37

38

80 broker-dealers + 1 qualified IDQS + registered national securities association = 82 respondents.

39

1 hour x 82 respondents = 82 hours.

17
hours per year (including the first year). 40 Over a three year period, the total industry burden is
estimated to be 132,922 hours, 41 or 44,308 hours per year when annualized. 42
c.

Unsolicited Quotation Exception—Rule 15c2–11(f)(2)

Paragraph (f)(2) excepts the publication or submission by a broker or dealer, solely on
behalf of a customer (other than a person acting as or for a dealer), of a quotation that represents
the customer’s unsolicited indication of interest. The Commission believes that this amendment
creates ongoing recordkeeping burdens for broker-dealers relying on the unsolicited quotation
exception to demonstrate that the quotation is not by or on behalf of a company insider or an
affiliate of the issuer. Based on data from OTC Markets Group, there were 5,782,286 quotations
published in reliance on the unsolicited quotation exception in 2019. 43 The Commission is
including all unsolicited customer quotations in its estimate and estimating that the number
would remain consistent on an annual basis for the purpose of this analysis.
It is estimated that it would take a respondent approximately one minute to create a
record regarding such unsolicited customer quotation or to review and document the written
representation of a customer’s broker that the quotation is not on behalf of a company insider or
an affiliate of the issuer. The Commission believes that respondents would already have systems
and personnel in place that they would use to create these records, so the initial burden of putting
procedures in place to ensure compliance would be limited to three hours of internal cost per

40

540 hours per respondent x 82 respondents = 44,280 hours.

(82 hours in the first year + 44,280 hours in the first year) + 44,280 hours in the second year + 44,280 hours
in the third year = 132,922 hours.

41

42

132,922 hours / 3 years = 44,308 hours per year.

43

See Release at 68179.

18
broker-dealer to reprogram systems and capture the records, or one annualized hour, and an
ongoing burden of 1,205 hours per broker-dealer per year (including the first year), 44 across 80
broker-dealers. As stated in the Adopting Release, the Commission estimates an industry-wide
initial burden of 240 hours 45 in the first year, and an ongoing burden of 96,371 hours per year
(including the first year). 46 Over a three year period, the total industry burden is estimated to be
289,353 hours, 47 or 96,452 hours per year when annualized. 48
d.

Piggyback Exception—Rule 15c2–11(f)(3)

The piggyback exception in paragraph (f)(3) requires that there be no more than four
business days in succession without a bid or offer priced quotation. To comply with this
requirement, broker-dealers relying on the piggyback exception, and each qualified IDQS or
registered national securities association that makes publicly available determinations regarding
the availability of the piggyback exception, must preserve documents and information regarding
this frequency of priced bid or offer quotation requirement. The Commission estimates that
respondents would make determinations regarding the frequency of quotation requirement once
per trading day and take approximately one second to create a record regarding the frequency of
a priced bid or offer quotation, pursuant to paragraph (f)(3)(i) of the amended Rule.

(5,782,286 quotations x 1 minute) / 60 minutes = 96,371 hours for the industry. 96,371 hours / 80 brokerdealers = 1,205 hours. Given the multiple steps, rounding, and small numbers involved in calculating this estimate,
the Commission will show one response per entity in the “Summary of Hourly Burdens” chart below to ensure that
the result in the “Total Industry Burden” column matches the estimated rounded number.
44

45

3 hours x 80 broker-dealers = 240 hours.

46

(5,782,286 quotations x 1 minute) / 60 minutes = 96,371 hours.

(240 hours in first year + 96,371 hours in the first year) + 96,371 hours in the second year + 96,371 hours
in the third year = 289,353 hours.

47

289,353 hours / 3 years = 96,452 hours per year. All annualized numbers are rounded up to the nearest
whole number based on the Summary of Hourly Burdens Chart above.

48

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The Commission believes that respondents would already have systems and personnel in
place that they would use to create these records, so the initial burden of putting procedures in
place to ensure compliance would be limited to three hours of internal cost per respondent to
reprogram systems and capture the records, or one annualized hour, and an ongoing burden of
808 hours per respondent per year (including the first year), 49 across 82 respondents. 50 As stated
in the Adopting Release, the Commission estimates an estimated industry-wide initial burden of
246 hours 51 in the first year, and an ongoing burden of 66,251 hours per year (including the first
year). 52 Over a three year period, the total industry burden is estimated to be 198,999 hours, 53 or
66,333 hours per year when annualized. 54
The proviso in paragraph (f)(3)(i)(B) eliminates eligibility for the piggyback exception
for quotations for securities of shell companies that are published or submitted 18 months
following the publication or submission of the initial priced quotation for such issuer’s security
in an IDQS. The Commission estimates that respondents would spend one minute per issuer to
identify shell companies and preserve documents and information that demonstrate that the
issuer of the OTC security is not a shell company, and that respondents would review such
information based on how frequently information for that issuer is filed or made current and

1/3600 (one second) × 252 (trading days per year) × 11,542 (number of securities) = 808 hours per
respondent.

49

50

80 broker-dealers + 1 qualified IDQS + registered national securities association = 82 respondents.

51

3 hours x 82 respondents = 246 hours.

82 respondents × 1/3600 (one second) × 252 (trading days per year) × 11,542 (number of securities) =
66,251 hours.
52

(246 hours in the first year + 66,251 hours in the first year) + 66,251 hours in the second year + 66,251
hours in the third year = 198,999 hours.

53

54

198,999 hours / 3 years = 66,333 hours per year.

20
publicly available. There are 9,895 unique issuers of quoted OTC securities. Of these 9,895
issuers, 3,081 are SEC/Reg. A/Bank Reporting Obligation issuers, 4,413 are exempt foreign
private issuers, and 2,401 are catch-all issuers. 55
The Commission believes that respondents already have systems and personnel in place
to create these records, so the initial burden of putting procedures in place to ensure compliance
with the amendments would be limited to three hours of internal cost, or one annualized hour,
and an ongoing burden of 540 hours per respondent per year (including the first year), 56 across
82 respondents. 57 As stated in the Adopting Release, the Commission estimates an industrywide initial burden of 246 hours, 58 and an ongoing burden of 44,280 hours (including the first
year). 59 Over a three year period, the total industry burden is estimated to be 133,086 hours, 60 or
44,362 hours when annualized. 61
The proviso in paragraph (f)(3)(i)(B) amended Rule also limits the ability of a brokerdealer, qualified IDQS, or national securities association to rely on the piggyback exception with
respect to a security that is the subject of a trading suspension order issued by the Commission

55

See Release at 68178.

(3,081 SEC/Reg. A/Bank Reporting Obligation issuers × 1 minute × 4 responses per year) + (4,413 exempt
foreign private issuers × 1 minute × 4 responses per year) + (2,401 catch-all issuers × 1 minute × 1 response per
year)] / 60 = (12,324 +17,652 + 2,401) / 60 = 540 hours. Given the multiple steps, rounding, and small numbers
involved in calculating this estimate, the Commission will show one response per entity in the Item 12 chart below
to ensure that the result in the “Total Industry Burden” column matches the estimated rounded number.

56

57

80 broker-dealers + 1 qualified IDQS + registered national securities association = 82 respondents.

58

3 hours x 82 respondents = 246 hours.

59

540 hours x 82 respondents = 44,280 hours.

(246 hours in the first year + 44,280 in the first year) + 44,280 hours in the second year + 44,280 hours in
the third year = 133,086 hours.

60

61

133,086 / 3 years = 44,362 hours per year.

21
pursuant to section 12(k) of the Exchange Act until 60 calendar days after the expiration of such
order. The Commission believes that respondents would only create records for securities that
have been the subject of a trading suspension issued by the Commission pursuant to section
12(k). In 2019, the Commission issued a trading suspension for 213 securities.
It is estimated that it would take respondents one minute to create a record regarding
whether a security has been subject to a trading suspension. The Commission believes that
respondents already have systems and personnel in place to create these records, so the initial
burden of putting procedures in place to ensure compliance with the proposed amendments
would be limited to three hours of internal cost, or one annualized hour per respondent, and an
ongoing burden of approximately 4 hours per year per respondent (including the first year), 62
across 82 respondents. 63 As stated in the Adopting Release, the Commission estimates an
industry-wide initial burden of 246 hours 64 in the first year, and an ongoing burden of 291 hours
(including the first year). 65 Over a three year period, the total industry burden is estimated to be
1,119 hours, 66 or 374 hours per year when annualized. 67
e.

ADTV and Asset Test Exception—Rule 15c2–11(f)(5)

Paragraph (f)(5) of the amendments excepts securities with (i) a worldwide average daily
trading volume value of at least $100,000 reported during the 60 calendar days immediately

62

(1/60 hour) x (213 securities) = 4 hours.

63

80 broker-dealers + 1 qualified IDQS + 1 registered national securities association = 82 respondents.

64

3 hours x 82 respondents = 246 hours.

65

82 respondents x (1/60 hour) x 213 securities = 291 hours.

(246 hours in the first year + 291 hours in the first year) + 291 hours in the second year + 291 hours in the
third year = 1,119 hours.

66

67

1,119 hours / 3 years = 374 hours per year.

22
before the publication of the quotation of such security ( “ADTV test”) and (ii) the issuer of such
security has at least $50 million in total assets and $10 million in shareholders’ equity as
reflected in the issuer’s publicly available audited balance sheet issued within six months after
the end of its most recent fiscal year (“asset test” or, collectively with ADTV, the “ADTV and
asset tests”). It is estimated that there are approximately 180 securities that meet the amended
Rule paragraph (f)(5) ADTV and asset tests. It is estimated it would take one minute to create
documentation supporting respondents’ reliance on the asset test prong of the exception and that
broker-dealers would do this once annually per issuer. Accordingly, each respondent would
spend approximately 3 hours 68 on this information collection annually, across 82 respondents. 69
Over a three year period, the total industry burden is estimated to be 246 hours. 70
Additionally, the Commission estimates that it would take one minute for a respondent to
preserve documents and information that demonstrate that the requirements of the ADTV test
have been met, and that each respondent would do this 252 times a year (i.e., each trading day). 71
The Commission believes that respondents already have systems and personnel in place to create
these records, so the initial burden of putting procedures in place to ensure compliance with the
proposed amendments would be limited to three hours of internal cost, or one annualized hour
per respondent, and an ongoing burden of approximately 756 hours per respondent per year

68

180 securities x 1 minute / 60 = 3 hours.

80 broker-dealers + 1 qualified IDQS + 1 registered national securities association = 82 respondents.
Given the multiple steps, rounding, and small numbers involved in calculating this estimate, the Commission will
show one response per entity in the “Summary of Hourly Burdens” chart below to ensure that the result in the “Total
Industry Burden” column matches the estimated rounded number.

69

70

3 hours x 82 respondents = 246 hours.

Given the multiple steps and rounding involved in calculating this estimate, the Commission will show one
response per entity in the “Summary of Hourly Burdens” chart below to ensure that the result in the “Total Industry
Burden” column matches the estimated rounded number.

71

23
(including the first year), 72 across 82 respondents. 73 As stated in the Adopting Release, the
Commission estimates an industry-wide initial burden of 246 hours in the first year, 74 and an
ongoing industry-wide burden of 61,992 hours per year (including the first year). 75 Over a three
year period, the total industry burden is estimated to be 186,222 hours, 76 or 62,074 hours when
annualized. 77
f.

Broker -Dealer That Publishes a Qualified IDQS Review Quotation—
Rule 15c2–11(a)(1)(ii)

Paragraph (a)(1)(ii) of the amended Rule allows broker-dealers to rely on a qualified
IDQS’s publicly available determination that it complied with the information review
requirement. Paragraph (d)(1)(ii) of the amended Rule requires that broker-dealers maintain a
record of the name of the qualified IDQS that made such publicly available determination. The
Commission conservatively estimates that qualified IDQSs would conduct the required review
for five percent of the relevant subset of OTC securities, i.e. certain securities that are less likely
to be targeted for fraudulent activity, and that each broker-dealer would document its reliance on
a qualified IDQS’s compliance with the information review requirement once per year per
issuer. 78 Assuming that the information required to document compliance with the exception

72

(252 trading days per year x 180 securities x 1 minute) / 60 minutes = 756 hours.

73

80 broker-dealers + 1 qualified IDQS + 1 registered national securities association = 82 respondents.

3 hours x 82 respondents = 246 hours. The aggregate initial burden of 246 hours is for the industry to
reprogram systems and capture the record regarding whether the requirements of both the ADTV and asset tests
have been met.

74

75

756 hours x 82 respondents = 61,992 hours.

(246 hours in the first year + 61,992 hours in the first year) + 61,992 hours in the second year + 61,992
hours in the third year = 186,222 hours.

76

77

186,222 hours / 3 years = 62,074 hours per year.

78

See Release at 68182.

24
would be publicly available, the Commission estimates that each respondent would spend
approximately one minute creating each record. The Commission believes that respondents
would already have systems and personnel in place to create these records, so the initial burden
of putting procedures in place to ensure compliance with the amendments would be limited to
three hours of internal cost per respondent, or one annualized hour, and an ongoing burden of
0.22 hours per respondent per year (including the first year), 79 across 80 broker-dealers. As
stated in the Adopting Release, the Commission estimates an industry-wide initial burden of 240
hours, 80 and an ongoing burden of 18 hours (including the first year). 81 Over a three year period,
the total industry burden is estimated to be 294 hours, 82 or 98 hours when annualized. 83
g.

Policies and Procedures for a Qualified IDQSs or Registered National
Securities Association to Make a Publicly Available Determination
—Rule 15c2-11(a)(3)

Under the amended Rule paragraph (a)(3), a qualified IDQS or registered national
securities association must establish, maintain, and enforce reasonably designed written policies
and procedures to make certain publicly available determinations. The Commission estimates
that it would take one qualified IDQS and one registered national securities association subject to
the amended Rule approximately 18 hours of initial burden each to initially prepare these written
policies and procedures, and an ongoing annual burden of 10 hours each (including the first year)
to review and update policies and procedures. Given the sophistication of the qualified IDQS

79

13 issuers × 1 minute = 13 minutes or 0.22 hours.

80

3 hours x 80 broker-dealers = 240 hours.

81

0.22 hours x 80 broker-dealers = 18 hours.

(240 hours in the first year + 18 hours in the first year) + 18 hours in the second year + 18 hours in the third
year = 294 hours.

82

83

294 hours / 3 years = 98 hours per year.

25
and the registered national securities association, the Commission estimates that this burden
would be borne internally. As stated in the Adopting Release, the Commission estimates an
industry-wide initial burden of 36 hours, 84 and an ongoing industry-wide burden of 20 hours
(including the first year). 85 Over a three year period, the total industry burden is 96 hours, 86 or
32 hours when annualized. 87
h.

Broker-Dealer Recordkeeping in Reliance on Publicly Available
Determinations by a Qualified IDQS or Registered National Securities
Association—Rule 15c2-11(d)(2)(ii)

Paragraph (d)(2)(ii) of the amended Rule requires broker-dealers that rely on publicly
available determinations described in paragraph (f)(2)(iii)(B) or (f)(3)(ii)(A) to preserve the
name of the qualified IDQS or registered national securities association that made such a
determination. Paragraph (d)(2)(ii) of the amended Rule also requires that broker-dealers that
rely on publicly available determinations described in paragraph (f)(7) of the amended Rule
preserve a record of the exception upon which the broker-dealer is relying and the name of the
qualified IDQS or registered national securities association that determined that the requirements
of that exception are met. The Commission estimates that respondents would create documents
as required by paragraph (d)(2)(ii) each trading day, and that respondents would spend
approximately one second creating such a record. The Commission believes that broker-dealers
would already have administrative systems and procedures, as well as personnel, in place to

84
85

18 hours x (1 qualified IDQS + 1 registered national securities association) = 36 hours.
10 hours x (1 qualified IDQS + 1 registered national securities association) = 20 hours.

(36 hours in the first year + 20 hours in the first year) + 20 hours in the second year + 20 hours in the third
year = 96 hours.

86

87

96 hours / 3 years = 32 hours.

26
create these records, and that the initial burden of putting procedures in place to ensure
compliance with the recordkeeping requirement under paragraph (d)(2)(ii) would be three hours
of internal cost per respondent, and an ongoing burden approximately 808 hours per broker
dealer per year (including the first year), 88 across 80 broker-dealers. As stated in the Adopting
Release, the Commission estimates an industry-wide initial burden of 240 hours 89 for the
industry to reprogram systems and capture the record documenting its reliance the publicly
available determination by a qualified IDQS or registered national securities association, and an
ongoing industry wide burden of 64,635 hours (including the first year). 90 Over a three year
period, the total industry burden is 194,145 hours, 91 or 64,716 hours when annualized. 92

88

(1/3600 (one second)) x (252 trading days per year) x (11,542 securities) = 808 hours.

89

3 hours x 80 broker-dealers = 240 hours.

90

(80 broker-dealers) x (1/3600 (one second)) x (252 trading days per year) x (11,542 securities) = 64,635

hours.

91
(240 hours in the first year + 64,635 hours in the first year) + 64,635 hours in the second year + 64,635
hours in the third year = 194,145 hours.

194,145 hours / 3 years = 64,716 hours per year. All annualized numbers are rounded up to the nearest
whole number based on the Summary of Hourly Burdens Chart above.

92

27
13.

Costs to Respondents

The Commission does not believe that respondents would incur any one-time start-up or
ongoing operation or maintenance costs to comply with the amendments.
14.

Costs to the Federal Government

The Rule does not present a significant cost to the government because the government does
not review the information collected by the respondents.
15.

Changes in Burden

The Commission is revising its estimates for the burden resulting from the amendments
because of differences between the proposed and final amendments and due to an updated
number of respondents. More specifically, as further described in the Summary of Changes in
Burden chart below, the changes in the burden estimates for the final amendments are primarily
due to: increasing the burden for paragraph (f)(3)(i)(A) of the amended Rule permitting brokerdealers to piggyback on one-way price quotations, increasing the burden for the provision in
paragraph (f)(3)(i)(C) of the amended Rule permitting broker-dealers to piggyback quotations of
the securities of certain issuers, increasing the burden for the provision in paragraph (f)(3)(i)(B)
of the amended Rule eliminating piggyback eligibility for quotations for securities of shell
companies that are published or submitted 18 months following the publication or submission of
the initial priced quotation for such issuer’s security in an IDQS and for securities within 60
calendar days following a trading suspension under Section 12(k) of the Exchange Act, as well
as updating the number of broker-dealers affected by the Rule, the estimated number of
Prospectus, Reg. A, or reporting issuers, exempt foreign private issuers, and catch-all issuers
with more recent estimates.

28
For the above reasons, the total estimated number of burden hours was revised from
210,334 hours in the last Supporting Statement to 403,416 in this Supporting Statement.
A chart summarizing the changes in burden is immediately below, and a more detailed
description of the changes is below the chart. NOTE: This OMB No. 3235-0202 currently has
only one IC in inventory, titled Rule 15c2-11, 17 CRF 240.15c2-11 (Publication or
submission of quotations without current information), with 2,724 total burden hours. We
have deleted that IC and replaced it with more detailed ones resulting from the rule
amendments.

29

Summary of Changes in Burden

Name of Information
Collection

Recordkeeping Associated with
the initial publication or
submission of a Quotation in a
Quotation Medium

Recordkeeping when relying on
an exception under paragraph
(f), that paragraph (b)
information is current and
publicly available

Estimated
Industry Burden
at Adopting
Stage

24,421

44,308

Annual Industry
Burden Previously
Reviewed at
Proposing Stage

30,411

52,902

Change in
Burden

Reason for Change

-5,990

This estimate is based on the number
of Forms 211 submitted to FINRA
annually. The previously reviewed
estimate used the number of Forms
211 submitted in 2018 (538),
whereas the current estimate uses the
number of Forms 211 submitted in
2019 (384)

-8,594

This estimate is based on the number
of issuers for which the review is
required. The previously reviewed
estimate was that broker-dealers
would spend 581 hours on this task
annually in 2018, whereas it was
estimated that broker-dealers would
spend 540 hours on this task in 2019,
due to a decrease in the number of
SEC/Reg. A/Bank Reporting
Obligation issuers, as well as
reducing the estimated responses for
catch-all issuers from biannually to
annually

30

Recordkeeping obligations
under unsolicited quotation
exception under paragraph (f)(2)

96,452

50,810

45,642

This estimate is based on the number
of unsolicited quotations published
annually. The previously reviewed
estimate used the number of
unsolicited quotations submitted in
2018 (3,043,214), whereas the
current estimate uses the number of
unsolicited quotations published in
2019 (5,782,286)

Recordkeeping obligations
regarding the frequency
of a priced bid or offer
quotation, pursuant to
paragraph (f)(3)(i)(A)

66,333

0

66,333

New requirement

Recordkeeping obligations
concerning determining shell
status under the proviso in
paragraph (f)(3)(i)(B)

44,362

61,771

-17,409

This estimate is based on the number
of issuers of quoted OTC securities
annually. The previously reviewed
estimate used the number of quoted
OTC securities in 2018 (10,167),
whereas the current estimate uses the
number of issuers of quoted OTC
securities in 2019 (9,895)

Recordkeeping obligations
concerning trading suspensions
under paragraph (f)(3)(i)(B)

374

0

374

New requirement

99

This estimate is based on the number
of securities that meet the Asset Test.
The previously reviewed estimate
was that 37 securities would meet the
Asset Test in 2018, whereas it was

Recordkeeping obligations for
the exceptions under paragraph
(f)(5) – Asset Test

246

147

31
estimated that 180 securities would
meet the Asset Test in 2019

Recordkeeping obligations for
the exceptions under paragraph
(f)(5) – ADTV Test

62,074

14,142

47,932

This estimate is based on the number
of securities that meet the ADTV
Test. The previously reviewed
estimate was that 37 securities would
meet the ADTV Test in 2018,
whereas it was estimated that 180
securities would meet the ADTV
Test in 2019

Recordkeeping obligations of
broker-dealers relying on a
qualified IDQS complying with
information review requirement
pursuant to paragraph (a)(1)(ii)

98

119

-21

This estimate is based on the number
of issuers that a qualified IDQS
reviews. The previously reviewed
estimate was for 20 issuers in 2018,
and 13 issuers in 2019.

Recordkeeping obligations
related to the creation of
reasonable written policies and
procedures under paragraph
(a)(3)

32

32

0

No change

Recordkeeping obligations of
broker-dealers relying on
publicly available
determinations by qualified
IDQSs or registered national
securities associations under
paragraph (d)(2)(ii)

64,716

0

64,716

New Requirement

TOTAL

403,416

210,334

193,082

32

16.

Information Collection Planned for Statistical Purposes

Not applicable. There is no intention to publish the information for any purpose.
17.

Approval to Omit OMB Expiration Date

The Commission is not seeking approval to omit the expiration date.
18.

Exceptions to Certification for Paperwork Reduction Act Submissions

This collection complies with the requirements in 5 CFR 1320.9.
B.

COLLECTION OF INFORMATION EMPLOYING STATISTICAL METHODS
This collection does not involve statistical methods.