MFA submitted a comment letter to the U.S. Securities and Exchange Commission in response to its request for comment on a proposal to amend Regulation ATS and the definition of “exchange.” The letter highlights that:
- MFA supports the effective regulation of critical market infrastructure and trading venues.
- MFA supports the Commission’s proposed amendments to increase operational transparency, system integrity, and regulatory oversight of alternative trading systems (“ATSs”) that trade government securities or repurchase and reverse repurchase agreements on government securities (“Government Securities ATSs”) by eliminating the current exemption from Regulation ATS for Government Securities ATSs.
- MFA supports applying the fair access requirements of Regulation ATS to Government Securities ATSs as described in the Proposal and supports requiring Government Securities ATSs exceeding certain volume thresholds to meet the requirements of Regulation SCI. We believe these amendments to Regulation ATS and Regulation SCI will advance investor protection and benefit the market for government securities in numerous ways.
- MFA does not, however, support the proposed changes to Rule 3b-16 (definition of “exchange”). We believe that the Commission’s proposed changes to Rule 3b-16 would, if adopted as proposed, represent a significant reconceptualization of key features of the broader securities market’s structures and could inappropriately capture a number of systems within the definition of “exchange” and subject those systems to significant regulation as “exchanges” or ATSs that is not warranted. Because of the significant impact this aspect of the Proposal could have on market structure, we strongly encourage the Commission to consider the comments it receives and to publish a subsequent proposal to amend Rule 3b-16 before moving forward with changes to the definition of “exchange.”
