SIFMA criticized the SEC for its decision to extend the applicability of the "Penny Stock Quote" rule, SEA Rule 15c2-11 ("Initiation or resumption of quotations without specific information"), which requires broker-dealers to base public quotations for OTC securities on specified information and to maintain records of that information, to the fixed income markets.

In a Pennsylvania + Wall blog post, SIFMA claimed that this expansive interpretation of the rule would have "significant, deleterious" effects on fixed income markets. SIFMA chastised the SEC for publishing the interpretation without any public comment and on "extraordinarily short notice." SIFMA argued that the SEC's interpretation would "increase costs, decrease liquidity and risks reversing the gains in transparency that the fixed income markets have achieved from recent modernization and electronic quoting and trading." SIFMA also pointed out that applying Rule 15c2-11 to fixed income markets was inconsistent with the stated views of two of the then SEC Commissioners, Hester M. Peirce and former Commissioner Elad Roisman, who said that the rule only applies to OTC equity markets.

SIFMA urged the SEC to conduct a formal rulemaking process with an appropriate public comment period to determine a rule governing public quotations in fixed income markets.

Commentary

SEC Chair Gary Gensler is fond of the mantra "like must be treated as like" as justification for why digital assets should be regulated identically with corporate equities. This relieves the SEC of thinking through the ways the two asset types are different and should be differently regulated.

The Chair has not expressly used that mantra to justify expanding the reach of Rule 15c2-11 from equity to debt, but the same thought process is implicit in the SEC's actions: If the rule serves for equity then it must serve for debt.

Our securities rules do not treat all securities alike for good reason, because like does not mean identical.