SEC Proposes Amendments to Include Significant Treasury Markets Platforms Within Regulation ATS

The Securities and Exchange Commission today proposed rules to better protect investors and enhance cybersecurity by bringing more Alternative Trading Systems (ATS) that trade Treasuries and other government securities under the regulatory umbrella. The proposal builds upon a 2020 proposal and public comments received in response to that proposal. It would extend Regulation ATS to include systems that offer the use of non-firm trading interest and provide protocols to bring together buyers and sellers for trading any type of security. These Communication Protocol Systems would be required to either register as exchanges or register as broker-dealers and comply with Regulation ATS. 

“In 2020, the Commission put out a request for comment on a proposal to enhance transparency and oversight over ATSs that trade government securities,” said SEC Chair Gary Gensler. “Today’s proposal includes the core elements of the 2020 proposal, including registration of certain interdealer brokers (IDBs) in the Treasury markets. It would bring Treasury trading platforms with significant volume under Regulation Systems Compliance Integrity (SCI), a rule that protects for the resiliency of technology infrastructure. It also would require these platforms to comply with the Fair Access Rule, which provides for fair access to platforms and would prohibit platforms from making unfair denials or limitations of access. Beyond that, today’s amendments build upon the 2020 proposal and on feedback from the public.”

With ATSs becoming increasingly important to government securities trading, the proposal would expand the investor protections of Regulation ATS to those that trade government securities or repurchase and reverse repurchase agreements on government securities. Additionally, the proposal would expand Regulation SCI to government securities to help increase investor protections and address technological vulnerabilities while improving the SEC’s oversight of the core technology of key entities in the markets for government securities.  

The proposal will be published in the Federal Register. The public comment period will remain open for 30 days after publication in the Federal Register.