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November 30, 2024
FINRA Rule 15c2-11 Updates
Recent Changes to FINRA Rule 15c2-11 Application Requirements
FINRA has implemented significant updates to Rule 15c2-11 application requirements, effective January 1, 2025. These changes impact how market makers evaluate and process applications for OTC securities quotations.
Key Rule Changes
Enhanced Due Diligence Requirements:
- Financial Statement Verification: Independent verification of all financial statements within 90 days
- Management Background Checks: Enhanced background verification for all officers and directors
- Business Operations Review: Detailed analysis of current business operations and revenue sources
- Legal Compliance Assessment: Comprehensive review of regulatory compliance status
Impact on Market Maker Quotations
Increased Rejection Rates
Market makers are rejecting 40% more applications due to enhanced requirements
Longer Processing Times
Average processing time increased from 30 to 60-90 days
Higher Costs
Market maker fees increased 25-50% to cover enhanced due diligence
Stricter Standards
Higher documentation and compliance standards required
New Documentation Requirements
1. Enhanced Financial Package
- Audited financial statements (last 2 years)
- Interim financial statements (within 90 days)
- Management discussion and analysis
- Independent accountant verification letter
2. Management Information
- Detailed biographical information for all officers/directors
- Background check reports (within 60 days)
- Disclosure of any regulatory actions or litigation
- Professional references and qualifications
3. Business Operations Documentation
- Detailed business plan and strategy
- Revenue source analysis and verification
- Customer and supplier information
- Operational compliance procedures
Strategic Recommendations
For Companies Seeking Market Maker Support:
- Start Early: Begin preparation 6 months before needing quotations
- Choose Experienced Market Makers: Work with firms familiar with new requirements
- Prepare Comprehensive Documentation: Ensure all required documents are current and complete
- Consider Professional Assistance: Engage experienced consultants to navigate the process
- Budget Appropriately: Plan for increased costs and longer timelines
Market Maker Selection Criteria
Key Factors to Consider:
Experience & Track Record
- Years of 15c2-11 experience
- Success rate with applications
- Industry specialization
Service Quality
- Response time and communication
- Due diligence thoroughness
- Ongoing support services
Need Help with 15c2-11 Applications?
Our team has extensive experience with FINRA Rule 15c2-11 applications and can help you navigate the new requirements. We work with top-tier market makers and have a 95% success rate with applications.