SEC Chair Reconsiders ATS Proposal; Questions Clearing Mandate Timeline and Scope

SEC Acting Chair Mark T. Uyeda directed staff to (i) reconsider whether to move forward on regulatory changes for Government Securities Alternative Trading Systems, and (ii) provide "options on abandoning [the proposed redefinition of exchange]" with respect to crypto. He also explained the reasoning behind the deadline extension on implementing the clearing mandate for US Treasury securities.

In remarks to the Annual Washington Conference of the Institute of International Bankers, Mr. Uyeda said he asked staff to reconsider a 2020 "carefully crafted proposed rule" to enhance "transparency, fair and orderly markets, investor protections, and system integrity rules that apply to ATSs generally," and for options to abandon the 2022 version of the rule "that would redefine the regulatory definition of an 'exchange.'" The new definition, he said, "expand[ed] the list of affected entities well beyond the realm of Government Securities ATSs," including crypto assets. He said that was a "mistake."

Mr. Uyeda also addressed the evolving clearance and settlement process for US Treasury securities, emphasizing the shift toward central clearing to enhance market resiliency. Mr. Uyeda defended "the policy changes in the rule [as] sound, [but said] the original timeline has turned out to be sub-optimal." He said: "new rules must be implemented properly, and any operational issues must be addressed." As a result, he said, last month the Commission extended the deadlines to 2026 for cash transactions and 2027 for repo transactions. Additionally, Mr. Uyeda pointed out concerns over the rule's "extraterritorial scope," and encouraged the audience of international bankers "to engage with the appropriate bodies here and in the country of your parent companies to ensure issues are identified and resolved."