The Securities and Exchange Commission (SEC) has decided to increase its oversight of firms that trade U.S. Treasuries frequently, such as hedge funds and high-speed traders.
These firms will now have to register as dealers with the SEC, which means they will face more rules and scrutiny. The SEC says this move will help them monitor the Treasuries market better, as these firms account for a large share of the trading volume. The new regulations will also apply to other securities, such as government bonds and equities.
The SEC, led by Chair Gary Gensler, has been focusing on the Treasuries market and the private-funds industry as areas that need more regulation. The new rules are somewhat softer than the original proposal, but they could still affect many firms that will have to register as dealers. Dealers are firms that buy and sell securities for their own account as part of their regular business. They also must comply with the rules of the Financial Industry Regulatory Authority, an industry-backed watchdog.
The SEC hopes that the new rules will create a level playing field for firms that engage in similar activities, as many of them are already registered as dealers. The new rules will take effect 60 days after they are published in the Federal Register, and firms will have a year to comply with the registration requirements.