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April 19, 2022

SEC Proposal Will Bring More Oversight and Transparency to Dark Pools and Electronic Trading Platforms

WASHINGTON, D.C.—Legal Director and Securities Specialist Stephen Hall issued the following statement on the filing of Better Markets’ Comment Letter to the Securities and Exchange Commission (SEC) in response to the agency’s proposed rule that applies Regulation ATS governing “alternative trading systems” to platforms trading government securities and appropriately regulates Communication Protocol Systems as exchanges:

“There are far too many securities trading platforms in our markets that are functioning as exchanges but without the necessary regulatory oversight. The SEC’s proposed rule will help close this regulatory gap by eliminating the exemption that allows platforms trading Government Securities to avoid compliance with Regulation ATS, the rule that at least imposes basic regulatory requirements on these largely dark venues.  The proposal would also expand the rule governing the definition of an exchange to keep pace with rapidly evolving technology being used in Communication Protocol Systems. The SEC’s proposed rule represents another important enhancement and incremental step towards closing the regulatory gaps among securities trading platforms performing similar functions. These efforts will bring much needed transparency and oversight to better protect investors and bring stability to our financial markets.

“These reforms are fully in line with Congress’s broad definition of an exchange in the Securities Exchange Act of 1934. The government securities markets, in particular the U.S. Treasury markets, and other fixed income markets have seen an explosion in trading on electronic trading venues over the past decade. While the rise in electronic trading in these securities can help better facilitate the purchasing and selling of securities, it also presents more opportunities for market manipulation by bad actors and heightens risks to financial stability, as we saw in the U.S. Treasury markets during the Covid-19 pandemic. That is why we support the SEC’s proposed rule to expand Regulation ATS to Government Securities ATSs and expand the rule governing the definition of an exchange to include Communication Protocol Systems.  However, the SEC could and should make the proposal even better by imposing more disclosure requirements and limitations on ATS conflicts of interest.  In addition, it should extend Regulation ATS to platforms trading all types of securities, including corporate and municipal debt as well as non-NMS equities.”

Read our full comment letter here or click the button below.


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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