Today’s amendments requiring national securities association membership for certain broker-dealers that engage in off-exchange trading is part of the Commission’s ongoing efforts to improve oversight of our securities markets, including the Treasury markets. These amendments bring transparency to off-exchange activity and level the playing field for firms that provide liquidity on and off-exchanges. 

The Commission’s actions today address, at least in part, one of the driving forces of the liquidity crisis in Treasury markets that occurred at the start of the COVID-19 pandemic. 

In March 2020, many Treasury bond holders rushed to convert their Treasuries into cash. This “dash-for-cash” triggered a significant drop in Treasury prices and threatened global financial stability. 

Although various factors may have contributed to this liquidity crunch, including balance sheet constraints at primary dealers, today’s adoption addresses increased trading of Treasuries by proprietary trading firms. 

Under current rules, proprietary trading firms that are solely members of an exchange are subject to less rigorous oversight and operate in a less transparent manner than firms that are current FINRA members and that are required to report their Treasury trades.

Today’s amendments remedy this lack of transparency by leveling the playing field between current FINRA members that report their Treasury trades and non-FINRA members that aren’t required to. 

The amendments may also result in a more equitable cost structure for current FINRA members that provide liquidity as compared to non-FINRA members. 

Overall, these reforms promote markets that are fairer, more efficient and transparent, and also more resilient and stable, with lower spreads that benefit retail investors. 

I support the adoption of these amendments to Rule 15b9-1. The Commission’s actions today are the product of a thoughtful approach by the Commission staff. I commend them for their continued pursuit of strong and effective oversight of our capital markets. Through that commitment, they provide a valuable service to the public and to our country.