Stockbrokers race to register with NASD in reaction to new SEC rule

The Securities and Exchange Commission’s (SEC) Rule on Trading in Unlisted Securities released on April 2, 2015, has seen some interesting reactions from various participants in the capital market, according to the NASD OTC.

“There has been a significant increase in the interest from the unregistered segment of the stock broking community with many brokers enquiring about registration with NASD, a prerequisite of eligibility to trade on its platform.

“We have also observed a commendable desire by Registrar companies to avert contravention of the rule in their transfer of securities of unlisted public companies and the resultant sanctions from SEC as many of them have sought clarification of the rule and its implications from NASD,” NASD said in a statement.

There has also been renewed interest in the OTC platform from the board and management of some unlisted companies who are anxious to comply with the rule in trading their securities.

“With the above trend, it is reasonable to forecast a spike in both volume and value of the trades to be executed on the OTC market in the months ahead, the NASD said.

The SEC’s rules make it illegal to transfer public securities through dark pools and away from the apex regulators oversight.

It also imposes a restriction on those who can act as transfer agents – the service can now only be legally carried out by qualified stockbrokers (in good standing with the SEC and NASD OTC).  This brings to an end a long standing regime of non-authorised operators (nicknamed ‘jobbers’) brokering unrecorded transactions.

The new set of rules also expands the horizon of publicly tradable securities and opens up a new terrain for the country’s fast gro