MNI BRIEF:SEC Backs More Debt Trades Via Central Clearinghouse

The U.S. Securities and Exchange Commission voted unanimously Wednesday for a proposal mandating more secondary transactions be processed through central clearinghouses, seeking to address concerns over stability in the the USD24 trillion market.

SEC commissioners hope this will greatly increase the share of trades that are centrally cleared, which Treasury estimated at 13% of cash transactions in a 2021 report.

SEC Chair Gary Gensler said the rule proposal will be out for public comment for 60 days. The agency has also proposed requiring high-frequency traders to register as dealers of government debt and is also considering more oversight of Treasury trading platforms.

Rapid growth of the Treasury market has outstripped the capacity of dealers to meet liquidity demands during times of market stress, regulators say. Treasury Department Under Secretary Nellie Liang told MNI in May Treasury market reform would ramp up this year.