Rule 15c2-11

The closest parallel to the 15c2-11 application process is the registration process itself. In order to submit a 15c2-11 application to FINRA, the Issuer (the public company) works with a Market Maker in cooperation with Rule 15c2-11.

The purpose of the Rule 15c2-11 application is to ensure that the Market Maker possesses sufficient information pertaining to the securities they intend to quote and also that they have completed thorough due diligence on an Issuer before initiating quotation on their securities. Rule 15c2-11 holds Market Makers responsible for making all relevant due diligence information publicly available.

Market Maker

A Market Maker is a FINRA member firm that uses their own capital, research, retail and systems resources to represent a stock and compete with each other to buy and sell the stocks they represent. There are over 500 member firms that act as FINRA Market Makers. Each Market Maker competes for customer order flow by displaying buy and sell quotations for a guaranteed number of shares. Once an order is received, the Market Maker will immediately purchase for or sell from its own inventory, or seek the other side of the trade until it is executed, often in a matter of seconds.

Issuer Works with Market Maker

The Issuer provides disclosure information to a Market Maker who in turns files such information with the FINRA. The 15c2-11 application is then assigned to a specific FINRA representative who then may or may not comment on the information provided by the Market Maker. Once all questions have been answered and FINRA is satisfied that the Market Maker is equipped with adequate disclosure information pertaining to the Issuer, FINRA subsequently clears the 15c2-11 application and the Issuer's securities can be quoted and traded.

The same 15c2-11 application process is used to whether Issuers desire to be quoted on the Pink Sheets or the Bulletin Board (OTCBB). Once FINRA has approved the 15c2-11 application submitted by the Market Maker, the security is considered to be “piggyback qualified,” meaning that other Market Makers may rely upon, and base their quotes on the due diligence on the primary Market Maker who worked with FINRA on the Issuer’s 15c2-11 application.