Generic Share Tuesday, February 22, 2011 4:49:55 PM Re: specutator post# 4654 Tweet Post # of 4897
Since we are getting into the minutia of the regulations, it's possible at a MP decided to no longer participate in quotations for various securities via the OTCBB quotation service, and is now routing only through the pinksheets quotation service; as a result, the securities on today's list lost their 211 automatically.
I looked at a current L2 on one of the stocks on the list, and although it was zero bid at the time, there were quotes on the ask on display. All of them appeared to be via (what used to be called) pinklink, because all the quotes were in lower case letters...
The old trick used to be that OTCBB routed orders showed in ALL CAPS for dually quoted stocks. But I know these rules are changing (did they change already? I am honestly not sure).
If someone really wants to know the real, true answer in this specific circumstance, the answers are probably on the FINRA web site; you could look up all the MP changes from 29-30 days ago and 3-4 days a go and figure it out, but I lack proper motivation for that.
Finally, the sure fire answer is to call FINRA OTC Compliance Unit at (240) 386-5100 and just ask why so many were being dumped today.
My bet is that one MP decided to (or was forced to?) stop playing in the OTCBB sandbox and it impacted a bunch of stocks.
Question #17: Are there any exceptions from the informational requirements of Rule 15c2-11?
Answer: Yes. If a broker/dealer can meet one of the exceptions of Rule 15c2-11, it is not required to maintain or submit to the NASD any documents required by Rule 15c2-11. These exceptions primarily relate to instances where a broker/dealer wishes to quote a security that: is traded on a national securities exchange in the United States; represents unsolicited customer interest; has been the subject of regular and continuous quotations for the past 30 days; or is traded on Nasdaq.
Question #18: When does the Rule 15c2-11(f)(1) "exchange" exception apply?
Answer: The exchange exception applies to securities that are traded on a United States national securities exchange on the same day or the business day prior to the day the application is made to the quotation medium.
Question #19: If the common stock of an issuer trades on the New York Stock Exchange, are the warrants of the same issuer exempt from Rule 15c2-11?
Answer: No. The exception relates only to specific securities and not to the issuer. Each security must independently meet the requirements of the exception.
Question #20: If trading in a security is halted or suspended on Nasdaq or an exchange, but the security has not been officially delisted from Nasdaq or the exchange, can it be listed on the OTC Bulletin Board?
Answer: No. The OTC Bulletin Board is only for non-Nasdaq, non-U.S. exchange-listed securities. Dual listing is not permitted. Until a security is officially delisted from an exchange or Nasdaq, it cannot be entered on the OTC Bulletin Board.
Question #21: If the broker/dealer is claiming the Rule 15c2-11(f)(2) "unsolicited customer interest" exception of Rule 15c2-11, can the broker/dealer publish quotations for the security in a quotation medium for its own account?
Answer: No. If the broker/dealer claims the unsolicited customer interest exception, it can only publish or submit a quotation for that customer account. If the broker/dealer wishes to publish or submit a quotation for its own account or any other accounts, it must comply with Rule 15c2-11. Paragraph (f)(2) of Rule 15c2-11 does not apply to a quotation consisting of both a bid and an offer, each at a specified price, unless the quotation medium specifically identifies the quotation as representing a customer's unsolicited indication of interest.
Question #22: Will the NASD be monitoring the broker/dealer's compliance with the unsolicited customer interest exception?
Answer: Yes. The NASD monitors all aspects of broker/dealer compliance with Rule 15c2-11, including a quotation utilizing the unsolicited customer interest exception. The NASD may require the broker/dealer to produce its trading records and other documents to determine whether the broker/dealer traded for any account other than the indicated customer.
Question #23: What are the requirements of Rule 15c2-11(f)(3), the "piggyback" exception?
Answer: If a broker/dealer is relying on the Rule 15c2-11(f)(3) exception, the security must be quoted in the same interdealer quotation medium as the intended quotation during the past 30 calendar days, and that during those 30 days the security had to be quoted on at least 12 days without more than four consecutive business days without quotations.
Question #24: Do "name only" quotations satisfy the piggyback exception requirement that the security be quoted in the quotation medium?
Answer: Yes. The information requirements of Rule 15c2-11 apply to name only as well as priced quotations. Both types of quotations can be used to satisfy the piggyback exception. It should be noted, however, that each broker/dealer submitting a quotation must satisfy the informational requirements of Rule 15c2-11 until all of the requirements of the piggyback exception, including the 30-day quotation period, have been satisfied.
Question #25: What happens when a security is no longer quoted by a broker/dealer in the quotation medium?
Answer: If a security is not quoted by any broker/dealer for a period of more than 4 business days, the security no longer qualifies for the piggyback exception. A broker/dealer would be required to comply with Rule 15c2-11 before it could initiate or resume quotation of the security.
Question #26: What constitutes a "business day" for purposes of Rule 15c2-11?
Answer: For purposes of Rule 15c2-11, a "business day" is defined by reference to the quotation medium to which a broker/dealer submits the quotation. Any day that the quotation medium accepts and disseminates quotations would constitute a "business day" under Rule 15c2-11.
Question #27: Must a broker/dealer quote a security for an entire "business day" to qualify for the "piggyback" exception contained in paragraph (f)(3)ofRulel5c2-11?
Answer: Under the "piggyback" exception, a security will be deemed to have been quoted on a business day where a broker/dealer has continuously quoted a security for all or a substantial portion of that day. The existence of closing quotations on the OTC Bulletin Board may be used by the NASD to create a rebuttable presumption that the broker/dealer continuously quoted a security for a substantial portion of the business day.
Question #28: If a security qualifies for the piggyback exception in one quotation medium, does it meet the piggyback exception for other quotation mediums? For example, if a security is quoted in the OTC Bulletin Board, can a market maker quote the security in the "pink sheets" without filing a Form 211 application?
Answer: No. The staff of the SEC takes the position that the piggyback exception does not transfer from one quotation medium to another. Thus, quotations for a security in the OTC Bulletin Board may not be used to satisfy the piggyback requirements for the "pink sheets."
Question #29: What are the requirements of Rule 15c2-11(f)(5), the "Nasdaq" exception?
Answer: In order for a broker/dealer to rely on the Nasdaq exception, the security must be authorized for quotation on Nasdaq and the authorization must not be suspended, terminated, or prohibited.
Question #30: Can a broker/dealer publish a quotation on the OTC Bulletin Board for a security that is currently traded on Nasdaq?
Answer: No. The OTC Bulletin Board does not allow quotations for Nasdaq securities.
Question #31: If the common stock and units of an issuer are already quoted on the OTC Bulletin Board, does a Form 211 application need to be submitted for the warrants of the same issuer?
Answer: Yes. Rule 15c2-11 applies to securities, not issuers. Quotations for the common stock and units may be in compliance with Rule 15c2-1 1, but that does not qualify any other securities of the issuer. Accordingly, a completed Form 211 and the Rule 15c2-11 information would have to be submitted for the warrants. However, if the broker/dealer has previously submitted documents relating to the issuer that continue to meet the requirements of Rule 15c2-11, it need not refile identical documents. The broker/dealer need only submit a completed Form 211 alone or with any additional documents needed to comply with Rule 15c2-11.
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