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Federal Register / Vol. 86, No. 7 / Tuesday, January 12, 2021 / Proposed Rules
A. Permitted Recipients of Quotations Published or Submitted on the Expert Market The Commission is proposing to limit the universe of market participants to whom real-time and delayed quotations published or submitted on the Expert Market are distributed. Accordingly, with one exception discussed below, real-time or delayed quotations published or submitted on the Expert Market may not be distributed, whether directly or indirectly from another source,27 to any person that is not a Qualified Expert. The Commission preliminarily believes that the inability of the general public to view real-time and delayed quotations published or submitted on the Expert Market should help protect investors from incidents of fraud and manipulation in OTC
securities for which no or limited publicly available information about the issuers exists to help counteract misinformation, while also allowing Subscribers to maintain a market in certain securities for certain qualified investors to interact.28
The Commission preliminarily believes that including in the list of Qualified Experts 1 any qualified institutional buyer, as defined in Rule 144Aa1 under the Securities Act, and 2 any accredited investor, as defined in Rule 501a of Regulation D, would appropriately capture the types of investors who have, among other
things, demonstrated the ability to assess an investment opportunity including the ability to analyze risks and rewards, or the ability to gain access to information about an issuer or about an investment opportunity.29
Such persons should be able to view quotations published or submitted on the Expert Market because they may not need the same investor protections that are afforded, in part, by current and publicly available issuer information in the same way that the general public may need it to analyze an investment opportunity or to counteract misinformation. In addition, the Commission preliminarily believes that it is appropriate to include qualified purchasers, as defined in Section 2a51A of the Investment Company Act and the rules thereunder, in the list of Qualified Experts because qualified purchasers are investors that have a high degree of financial sophistication who are in a position to appreciate the risks associated with investing in securities that would be quoted on the Expert Market without the protections afforded by the Amended Rule.
Notably, this list of Qualified Experts would exclude customers of brokerdealers and investment advisers that do not fit into any of the three categories of Qualified Experts because this market is not available to the general public.30
In addition, as an exception to the Qualified Expert requirement, the Commission preliminarily believes that it is appropriate for an issuer to be able to view quotations published or submitted on the Expert Market for its own security, if the issuer agrees not to distribute such quotations, directly or indirectly, to any person that is not a current officer, director, or employee of the issuer, as described above. This is because such information could inform the issuer about the liquidity and market price of the security and allow the issuer to make informed decisions regarding future offerings to raise capital. In order for an issuer to view these quotations, the issuer would need to contractually agree not to distribute such quotations, directly or indirectly, to any person that is not a current officer, director, or employee of the issuer.

27 As discussed above in Part I.B, quotations published or submitted on the Expert Market would be accessible to market data distributors, including Subscribers, that have contractually agreed to not distribute quotations published or submitted on the Expert Market to persons who are ineligible to access such information i.e., non-Qualified Experts, including to the general public.
28 See, e.g., Adopting Release at 68145.

29 See, e.g., Amending the Accredited Investor Definition, Securities Act Release No. 10824 Aug.
26, 2020, 85 FR 64234 Oct. 9, 2020 Accredited Investor Release.
30 Any Subscriber that distributes quotations published or submitted on the Expert Market to any person that is not a Qualified Expert would not be eligible for the relief proposed herein and may violate Rule 15c211.

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quotations for securities of certain issuers should be transferred to the Expert Market because they may present more risk to certain retail investors.
The proposed conditional exemptive relief would allow the Expert Market to serve as a centralized location for published quotations in certain securitiesthat otherwise would migrate to the grey market following the Compliance Dateto be viewed exclusively by specified categories of sophisticated or professional investors.
Such relief, therefore, could help to advance opportunities for more efficient pricing in such securities, enhance liquidity for sophisticated or professional investors in such securities, and promote capital formation for companies seeking growth opportunities that might prefer to be quoted in a market limited to such persons.

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B. Expert Market Securities The Commission preliminarily believes that it is appropriate for the following categories of securities to be eligible to be the subject of Subscribers proprietary quotations on the Expert Market.
The first category is securities that lose eligibility to be quoted in reliance on the piggyback exceptioneither 1
upon the Compliance Date due to a lack of current and publicly available information about an issuer, or 2
following the Compliance Date due to i a lack of current and publicly available information about the issuer, ii the issuers status as a shell company, or iii a failure to meet the frequency-ofquotation requirementso long as quotations on the Expert Market commence within four business days of such loss of eligibility.31 As stated in the Adopting Release, the Commission recognizes that holders of such securities may incur costs related to a loss of liquidity when broker-dealers cannot rely on the piggyback exception.32 The ability of brokerdealers i.e., Subscribers to publish or submit proprietary quotations for those securities on the Expert Market could help to facilitate liquidity for such securities because the availability of quotations could reduce trading costs and facilitate pricing efficiency. This is because investors that are Qualified Experts would be able to view those quotations and use such information in the mix of information e.g., in addition to their own due diligence or issuer disclosures that might not be publicly available but to which they otherwise have access that they take into account as part of a meaningful investment analysis when making investment decisions.33 Without the proposed exemption, as discussed above, these securities may migrate to the grey market, to which retail investors and the general public have access, without access to information embedded in prices published in a quotation medium. The ability of Subscribers to publish or submit quotations in a quotation medium for such securities could help protect retail investors and 31 This four-business-day window mirrors the time frame provided in the piggyback exception that quotations occur with no more than four business days in succession without a priced quotation. See Amended Rule 15c211f3i. As an example, if eligibility to be quoted in reliance on the piggyback exception were lost on Monday, January 4, 2021, a Subscribers quotations on the Expert Market must commence no later than Friday, January 8, 2021 to be eligible for this proposed exemption.
32 Adopting Release at 68141.
33 See, e.g., Accredited Investor Release at 64269
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