Statement on Government Securities Alternative Trading Systems

Today, the Commission is considering amendments to include significant Treasury markets platforms within Regulation ATS. I support these amendments because, if adopted, they would help promote resiliency and greater access in the Treasury market. We’re also considering modernizing our rules related to the definition of an exchange. Over the decades since Congress put in place the definition of an exchange, there have been many changes to platforms — in particular, that they are increasingly electronified. I think it’s important that we revise the SEC’s rules to reflect those changes.

In 2020, the Commission put out a request for comment on a proposal[1] to enhance transparency and oversight over alternative trading systems (ATSs) that trade government securities.

Today’s release 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 and Integrity, a rule that protects for the resiliency of technology infrastructure.[2] 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. Much of secondary market trading in Treasuries is now facilitated by electronic platforms: IDBs as well as request-for-quote (RFQ) platforms between dealers and customers.

Several commenters suggested we consider bringing both RFQ platforms along with IDBs into the proposal. Additionally, all ATSs subject to the Fair Access Rule would need to have reasonable written standards for granting, limiting, or denying access to their services.

Relatedly, I support the element of this proposal that modernizes the rules related to the definition of an exchange to cover platforms for all kinds of asset classes that bring together buyers and sellers.

Together, I believe that these steps would promote resilience and greater access in the nearly $23 trillion Treasury market, which forms the base for so much of the rest of our capital markets. I’m pleased to support today’s proposal and, subject to Commission approval, look forward to the public’s feedback.

I appreciate my fellow Commissioners’ time and collaboration on this proposal. In particular, former Commissioner Roisman spearheaded these efforts for many years. I’d also like to thank the staffs of our fellow regulatory agencies who consulted on these issues, including the Department of the Treasury, the Board of Governors of the Federal Reserve, the Federal Reserve Bank of New York, the Federal Reserve Bank of Chicago, and the Commodity Futures Trading Commission.

I’d like to extend my gratitude to the members of the SEC staff who worked on this rule, including:

• Haoxiang Zhu, David Saltiel, Tyler Raimo, Roni Bergoffen, Meredith Macvicar, Joshua Nimmo, David Shillman, Heidi Pilpel, Megan Mitchell, Matthew Cursio, David Garcia, Joanne Kim, David Liu, Sara Gillis Hawkins, Joanne Rutkowski, Shauna Sappington, Tom Eady, Steven Gibson, James Blakemore, Jeff Mooney, Ajay Sutaria, Elizabeth Fitzgerald, Katherine Lesker, Amir Katz, Patrick Norton, and An Phan from the Division of Trading and Markets;
• Oliver Richard, Lauren Moore, Amy Edwards, Seung Won Woo, Paul Barton, John Ritter, Julia Reynolds, Chantal Hernandez, Michael Walz, Mike Willis, PJ Hamidi, and Tasaneeya Viratyosin from the Division of Economic and Risk Analysis;
• Dan Berkovitz, Meridith Mitchell, Marie-Louise Huth, Robert Teply, Sean Bennett, and Donna Chambers from the Office of General Counsel; and
• Jane Patterson from the EDGAR Business Office.