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Statement on Measures to Enhance the Fixed Income Markets

Sept. 28, 2020

Today, the Commission took steps toward optimizing the oversight of our fixed income markets by proposing to broaden the application of Regulation ATS and Regulation SCI to alternative trading systems that trade U.S. government securities (“Government Securities ATSs”).  In addition, the Commission issued an important concept release seeking feedback on the regulatory approach to electronic trading platforms for corporate bonds and municipal securities. 

I commend Chairman Clayton for his commitment to devoting more Commission resources to our fixed income markets.  This focus on fixed income was long overdue.  Thank you to Director Brett Redfearn and the team in the Division of Trading and Markets, led by Tyler Raimo, for your thoughtful work on these initiatives.  Thank you as well to the Division of Economic and Risk Analysis, the Office of the General Counsel, the Office of Compliance Inspections and Examinations, and the Office of Municipal Securities for your invaluable contributions.

Proposal to Apply Regulation ATS and Regulation SCI to Government Securities ATSs

I have previously shared my belief that the Commission should consider applying Regulation ATS and Regulation SCI to Government Securities ATSs.[1]  The stressed conditions observed in the government securities markets this past March only served to reinforce my conviction.

In recent years, ATSs have become critical to the structure of the government securities markets as the majority of trading has transitioned from voice to being concentrated on electronic platforms.  It is important that the regulatory regime for markets as interconnected as the government securities markets keeps pace with this evolution.  I believe it is worth considering whether applying the requirements of Regulation ATS and Regulation SCI to Government Securities ATSs will strengthen the public market for government securities.

Among other things, the proposal would require these trading venues to publicly disclose key information regarding the activities of the Government Securities ATS operator and the manner of the ATS’s operations.  The transparency provided by the proposed disclosures can serve as a key resiliency measure to afford regulators and market participants with a better understanding of how these markets operate. 

In addition, the Commission proposed to require large Government Securities ATSs to comply with Regulation SCI.  Over the last five years, Regulation SCI has strengthened the infrastructure of our equity and options markets.  In active, automated markets, like those for government securities, system capacity, security, and resiliency are critically important.  Applying Regulation SCI to Government Securities ATSs that execute a greater amount of trading activity should help enhance the integrity and resiliency of these vital markets.

In determining the proposed thresholds for the application of Regulation SCI, as well as for Regulation ATS’s fair access rule, the proposed rules contemplate using the transaction data reported to FINRA’s TRACE system.  I want to thank FINRA and the Department of the Treasury for their coordination on this effort and for their commitment to enhancing the data available on government securities trading activity.  

Concept Release on Electronic Trading Platforms for Corporate Bonds and Municipal Securities

Additionally, in light of a recommendation from the Fixed Income Market Structure Advisory Committee (“FIMSAC”) to review the oversight framework for fixed income electronic trading platforms, we issued a concept release soliciting public feedback on electronic trading in the corporate bond and municipal securities markets.[2]  Similar to the government securities markets, in recent years electronic trading has become much more prevalent in the markets for corporate bonds and municipal securities.  However, as the FIMSAC highlighted, there currently is not a unifying regulatory framework for all types of the electronic trading platforms used in these markets.  As such, the FIMSAC believed that this could complicate efforts to improve the efficiency and resiliency of these markets and could lead to further fragmentation and unfair competition.

The concept release should help us better understand how our rules currently apply to the variety of electronic trading platforms that exist in today’s fixed income marketplace.  This will hopefully allow the Commission to consider whether the current regulatory framework is adequately promoting the growth of fair, orderly, and efficient corporate bond and municipal securities markets.  I hope interested market participants take the time to review the concept release and provide comments in response to the many questions it poses. 

I want to express my thanks to the FIMSAC members for raising this issue and for their willingness to devote so much of their time to sharing their insights with us.  I hope the concept release serves as the beginning of a fruitful conversation about our fixed income regulatory framework. 

I support the measures the Commission took today and I look forward to receiving feedback on both the rule proposal and the concept release.    

[1] See Commissioner Elad L. Roisman, Remarks at the U.S. Treasury Market Conference (Sept. 23, 2019) available at

[2] See Recommendation to Review the Oversight Framework for Electronic Trading Platforms (Jul. 16, 2018) available at

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