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WASHINGTON, Nov 17 (Businesshala) – Calling for improved transparency in the world’s largest bond market, the chairman of the US Securities and Exchange Commission (SEC) has asked employees for new rules to ensure that major trading firms (PTF) are properly registered as dealers.
Speaking at the New York Federal Reserve, Gary Gensler said the rules would mandate PTFs, also known as high-frequency trading firms, to report their trades to FINRA’s Trade Reporting and Compliance Engine (Trace). .
The SEC, as the regulator of the US markets, must comply with capital and record-keeping regulations of such trading firms and be subject to periodic examinations like the equity and corporate bond markets, he said.
Regulators have long argued that high-frequency trading, a computerized strategy that can move billions of dollars in a fraction of a second, carries risks in the U.S. government bond market that, along with the market’s ability to function— At the same time, it also jeopardizes the ability of investors. for the fair value of the property.
Critics say high-frequency trading could lead to extreme price volatility in the bond market, which has suffered from a drop in liquidity.
“It is time for us to close the regulatory gap and ensure that we have regulatory oversight on PTFs and others engaged in the regular business of buying and selling in this market,” Gensler said.
Gensler said registering these trading platforms could help promote flexibility and greater access to the Treasury market.
Agency rules will also consider “whether all members of any registered clearing agency on this market should be required to bring in all their trades – cash and both sides of the repurchase agreement; how do we comply with the Commission’s clearing agency rules”. enhance or strengthen; and whether we can enable broader reach for clearing, possibly through the responsible use of sponsored and correspondence clearing.” (Reporting by Katanga Johnson and Chris Prentiss in Washington and John McCrank in New York; Editing by Howard Golar)