U.S. Securities & Exchange Commission acting chair directs staff to revisit government securities ATS regulation and consider abandoning expanded exchange definition proposal

In remarks on U.S. Treasury market structure, U.S. Securities & Exchange Commission Acting Chairman Mark T. Uyeda said he has instructed staff to re-engage with the U.S. Department of the Treasury, the Federal Reserve and market participants on whether to move forward with regulatory changes for alternative trading systems that trade government securities, and to develop options to abandon the SEC’s proposed expansion of the definition of an “exchange”. He also pointed to the SEC’s Treasury central clearing mandate and directed staff to review implementation issues raised by industry groups. Uyeda contrasted a 2020 proposal focused on Government Securities ATSs with a 2022 re-proposal that would have broadened the exchange definition to include “communications protocols”, drawing significant negative comment. The 2020 approach would have removed the government-securities-only exemption, required public disclosures on operations and conflicts, and applied the fair access rule and Regulation Systems Compliance and Integrity to platforms meeting a five percent average daily volume threshold in U.S. Treasuries or agency securities as reported to FINRA. On clearing, he cited the December 2023 rule requiring covered clearing agencies to require members to centrally clear eligible U.S. Treasury cash and repo transactions, and noted that implementation deadlines were extended to end-2026 for cash and end-June 2027 for repo; issues flagged for follow-up include clarifying the rule’s extraterritorial scope and coordinating with overseas regulators so global firms can clear these transactions.