Trading systems that offer the use of non-firm trading interest and provide protocols to bring
summary
The U.S. SEC proposed regulatory changes to extend investor protections under Regulation ATS and Regulation SCI to Communication Protocol Systems and ATSs trading U.S. government securities, closing a regulatory gap but not alleging any fraud or misconduct.
paragraph
The U.S. Securities and Exchange Commission proposed amending Regulation ATS to require ATSs trading U.S. government securities and repurchase agreements to comply with investor protection rules previously exempted, and to redefine 'exchange' to include Communication Protocol Systems, forcing them to register or comply with ATS rules. The proposal also extends Regulation SCI’s systems integrity standards to high-volume ATSs—those with 5% or more of daily trading volume in Treasury or Agency securities—and applies the Fair Access Rule to those with 3%–5% market share. Covered entities must file public disclosures via Form ATS-N, adopt non-discriminatory access standards, and modernize reporting through EDGAR to ensure fair and orderly markets.
narrative
The U.S. Securities and Exchange Commission proposed regulatory reforms to address a longstanding gap in investor protections for Communication Protocol Systems and Alternative Trading Systems (ATSs) that trade U.S. government securities and repurchase agreements. These systems, which function like exchanges but were previously exempt from Regulation ATS, would now be required to register as exchanges or comply with ATS rules, including becoming members of Self-Regulatory Organizations. The proposal also extends Regulation SCI’s systems integrity requirements to ATSs with 5% or more of the daily trading volume in U.S. Treasury or Agency securities, ensuring operational resilience. Additionally, the Fair Access Rule would apply to ATSs with 3%–5% market share, mandating fair, non-discriminatory access standards and transparent justifications for access policies. All covered entities must file public disclosures via a revised Form ATS-N on EDGAR, including details on operations, liquidity providers, and surveillance practices. The SEC aims to level the regulatory playing field across similar trading venues and enhance market fairness without alleging any fraud, misconduct, or enforcement action. The proposal does not involve financial penalties or accused individuals, but rather seeks to modernize oversight to match the evolving structure of securities markets.
Classified unregistered-securities(confidence 100%). EDGAR detection: forms Form D/S-1· recall 41% / precision 30%. detection rule →
Parties
communication protocol systemsextend regulation sci to atss that trade government securitiesgovernment securities atssSecurities and Exchange Commission
Keywords
securitiesgovernment securitiesatsssystemsgovernmentatscommunication protocolprotocol systemsregulationatss tradetrade governmenttradingcommunicationprotocoltrading systems
Extracted insights
Entities 4
- company communication protocol systems
- company extend regulation sci to atss that trade government securities
- person government securities atss
- agency Securities and Exchange Commission
Triples 7
- U.S. Securities And Exchange Commission proposed Expand Regulation ATS for alternative trading systems that trade government securities, NMS stock, and other securities
- U.S. Securities And Exchange Commission proposed Extend Regulation SCI to ATSs that trade government securities
- U.S. Securities And Exchange Commission proposed Amend the SEC rule regarding the definition of an exchange to address a regulatory gap
- Communication Protocol Systems must register as an exchange or operate under the ATS exemption
- Government Securities ATSs must comply with Fair Access Rule if trading three percent or more of average weekly dollar volume for U.S. Treasury Securities
- Government Securities ATSs must comply with Fair Access Rule if trading five percent or more of average daily dollar volume for Agency securities
- Government Securities ATSs must comply with Regulation SCI if trading five percent or more of average daily dollar volume for U.S. Treasury Securities or Agency securities
PDF
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Extracted body text (5,352c)
Warning: TT: undefined function: 32 FACT SHEET Investor Protections in Communication Protocol Systems and ATSs U.S. SECURITIES AND EXCHANGE COMMISSION PAGE 1 OF 2 Why This Matters Trading systems that offer the use of non-firm trading interest and provide protocols to bring together buyers and sellers of securities (Communication Protocol Systems) have evolved to function similarly to marketplaces operated by registered exchanges and ATSs and have become important venues for bringing together buyers and sellers for various types of securities. Because Communication Protocol Systems do not fall within the definition of “exchange” and are thus not required to register as exchanges, they are not required to comply with the same federal securities laws and regulations applicable to registered exchanges or ATSs. As a result, market participants who use these systems are not availed to the same investor protection and fair and orderly market principles that apply to today’s registered exchanges and ATSs. This proposal is designed to address this regulatory gap and the current disparities that affect competitive balances among like marketplaces for securities. Despite the critical role of government securities in the U.S. and global economy, Regulation ATS has limited application to ATSs that trade U.S. government securities. This proposal would apply the investor protections and fair and orderly market principles of Regulation ATS to ATSs that trade U.S. government securities or repurchase and reverse repurchase agreements on government securities. The proposal would also apply the systems integrity provisions of Regulation SCI to certain ATSs that trade government securities. How This Rule Applies The proposed amendments would no longer exempt from Regulation ATS those ATSs that limit securities activities to government securities or repurchase agreements or reverse repurchase agreements on government securities and register as broker-dealers or are banks. The proposed amendments also would include Communication Protocol Systems within the definition of “exchange” so that Communication Protocol Systems that choose to operate as ATSs would need to comply with the existing Regulation ATS provisions that protect investors and promote fair and orderly markets. The Securities and Exchange Commission proposed to: ● Expand Regulation ATS for alternative trading systems (ATS) that trade government securities, NMS stock, and other securities; ● Extend Regulation SCI to ATSs that trade government securities; and ● Amend the SEC rule regarding the definition of an “exchange” to address a regulatory gap. FACT SHEET | Investor Protections in Communication Protocol Systems and ATSs U.S. SECURITIES AND EXCHANGE COMMISSION Page 2 of 2 The proposed amendments would apply the Fair Access Rule to Government Securities ATSs that, during at least four of the preceding six calendar months, had: (1) for U.S. Treasury Securities, three percent or more of the average weekly dollar volume traded in the U.S, (2) for Agency securities, five percent or more of the average daily dollar volume traded in the U.S. The proposed amendments would also extend the requirements of Regulation SCI to Government Securities ATSs that during at least four of the preceding six calendar months had five percent or more of the average daily dollar volume traded in the U.S. for either U.S. Treasury Securities or Agency securities. What’s Required For Communication Protocol Systems: Register as an exchange or operate under the ATS exemption, which includes registering as a broker-dealer, including becoming a member of a Self-Regulatory Organization, and complying with Regulation ATS. For Government Securities ATSs: • File a public Form ATS-N through EDGAR that would disclose information about their manner of operations and the ATS-related activities of the registered broker-dealer or government securities broker or dealer that operates the ATS and its affiliates. • For those currently operating pursuant to the exemption for certain government securities ATSs, comply with the other applicable provisions of Regulation ATS. For existing NMS Stock ATSs: • File an amendment to their existing disclosures in accordance with a revised Form ATS-N, which includes questions about the ATS’s interaction with related markets, liquidity providers, and activities the ATS undertakes to surveil and monitor its market. • Report changes to fee disclosures on Form ATS-N no later than the date they make a fee change. For ATSs that trade all types of securities: • Modernize both Form ATS and ATS-R and electronically file them with the SEC through EDGAR. • If subject to the Fair Access Rule, ensure that they meet the minimum requirements for the reasonable written standards for granting, limiting, and denying access to ATS services that must be established, and applied, and among other things, justify why each standard is fair and not unreasonably discriminatory. Additional Information: More information about the proposal and the full text of the proposed rules are available at sec.gov. The proposed rules also will be published in the Federal Register.
OCR text (5,354c · tika · 95% conf)
FACT SHEET Investor Protections in Communication Protocol Systems and ATSs U.S. SECURITIES AND EXCHANGE COMMISSION PAGE 1 OF 2 Why This Matters Trading systems that offer the use of non-firm trading interest and provide protocols to bring together buyers and sellers of securities (Communication Protocol Systems) have evolved to function similarly to marketplaces operated by registered exchanges and ATSs and have become important venues for bringing together buyers and sellers for various types of securities. Because Communication Protocol Systems do not fall within the definition of “exchange” and are thus not required to register as exchanges, they are not required to comply with the same federal securities laws and regulations applicable to registered exchanges or ATSs. As a result, market participants who use these systems are not availed to the same investor protection and fair and orderly market principles that apply to today’s registered exchanges and ATSs. This proposal is designed to address this regulatory gap and the current disparities that affect competitive balances among like marketplaces for securities. Despite the critical role of government securities in the U.S. and global economy, Regulation ATS has limited application to ATSs that trade U.S. government securities. This proposal would apply the investor protections and fair and orderly market principles of Regulation ATS to ATSs that trade U.S. government securities or repurchase and reverse repurchase agreements on government securities. The proposal would also apply the systems integrity provisions of Regulation SCI to certain ATSs that trade government securities. How This Rule Applies The proposed amendments would no longer exempt from Regulation ATS those ATSs that limit securities activities to government securities or repurchase agreements or reverse repurchase agreements on government securities and register as broker-dealers or are banks. The proposed amendments also would include Communication Protocol Systems within the definition of “exchange” so that Communication Protocol Systems that choose to operate as ATSs would need to comply with the existing Regulation ATS provisions that protect investors and promote fair and orderly markets. The Securities and Exchange Commission proposed to: ● Expand Regulation ATS for alternative trading systems (ATS) that trade government securities, NMS stock, and other securities; ● Extend Regulation SCI to ATSs that trade government securities; and ● Amend the SEC rule regarding the definition of an “exchange” to address a regulatory gap. FACT SHEET | Investor Protections in Communication Protocol Systems and ATSs U.S. SECURITIES AND EXCHANGE COMMISSION Page 2 of 2 The proposed amendments would apply the Fair Access Rule to Government Securities ATSs that, during at least four of the preceding six calendar months, had: (1) for U.S. Treasury Securities, three percent or more of the average weekly dollar volume traded in the U.S, (2) for Agency securities, five percent or more of the average daily dollar volume traded in the U.S. The proposed amendments would also extend the requirements of Regulation SCI to Government Securities ATSs that during at least four of the preceding six calendar months had five percent or more of the average daily dollar volume traded in the U.S. for either U.S. Treasury Securities or Agency securities. What’s Required For Communication Protocol Systems: Register as an exchange or operate under the ATS exemption, which includes registering as a broker-dealer, including becoming a member of a Self-Regulatory Organization, and complying with Regulation ATS. For Government Securities ATSs: • File a public Form ATS-N through EDGAR that would disclose information about their manner of operations and the ATS-related activities of the registered broker-dealer or government securities broker or dealer that operates the ATS and its affiliates. • For those currently operating pursuant to the exemption for certain government securities ATSs, comply with the other applicable provisions of Regulation ATS. For existing NMS Stock ATSs: • File an amendment to their existing disclosures in accordance with a revised Form ATS-N, which includes questions about the ATS’s interaction with related markets, liquidity providers, and activities the ATS undertakes to surveil and monitor its market. • Report changes to fee disclosures on Form ATS-N no later than the date they make a fee change. For ATSs that trade all types of securities: • Modernize both Form ATS and ATS-R and electronically file them with the SEC through EDGAR. • If subject to the Fair Access Rule, ensure that they meet the minimum requirements for the reasonable written standards for granting, limiting, and denying access to ATS services that must be established, and applied, and among other things, justify why each standard is fair and not unreasonably discriminatory. Additional Information: More information about the proposal and the full text of the proposed rules are available at sec.gov. The proposed rules also will be published in the Federal Register. Why This Matters How This Rule Applies What’s Required Additional Information: