On September 28, the U.S. Securities and Exchange Commission (SEC) proposed rules to apply Regulation ATS and Regulation SCI to systems supporting trading in government securities (the Proposal).1 The SEC also issued a concept release considering enhanced disclosure obligations with respect to alternative trading systems (ATSs) that facilitate trading in other fixed income securities (e.g., corporate bonds and municipal securities) and seeking input from the public (the Concept Release).2 There has been increasing scrutiny in the area of fixed income trading, including an October 2020 SEC report related to the interconnectedness of U.S. credit markets and examination of recent market stress arising during the pandemic.3
This marks the latest SEC initiative to enhance operational transparency with respect to ATSs, following on the heels of the enhanced disclosure regime for ATSs trading national market system (NMS) stock adopted in July 2018.4 If the proposed rules for government securities ATSs are adopted, there will be three separate forms an ATS must file with the SEC depending on the types of securities for which it supports trading: (i) Form ATS-G for government securities, (ii) Form ATS-N for NMS stock, and (iii) Form ATS for all other securities (e.g., restricted securities, fixed income securities).5 Proposed Form ATS-G would be made publicly available, similar to Form ATS-N, while all other ATSs’ disclosures pursuant to Form ATS would remain confidential.
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