On Tuesday, the Securities and Exchange Commission said two new adopted rules will adjust the definition of the term “dealer” to ensure more market participants are covered by federal securities laws.
The two rules, the Exchange Act Rules 3a5-4 and 3a44-2, will define the phrase “as a part of a regular business” within the Securities Exchange Act to identify certain activities that will qualify some participants as “dealers” or “government securities dealers.” The change to the definition will make those participants subject to registration requirements, self-regulatory organization membership requirements and federal securities laws and regulation requirements.
“I am pleased to support this adoption because it requires that firms that act like dealers register with the Commission as dealers, thereby protecting investors as well as promoting market integrity, resiliency, and transparency,” said SEC Chair Gary Gensler. “These measures are common sense. Congress did not intend for registration and regulatory requirements to apply to some dealers and not to others. Absent an exemption or exception, if anyone trades in a manner consistent with de facto market making, it must register with us as a dealer – consistent with Congress’s intent.”
The adopting released for the final rules will be published in the Federal Register, the SEC said, and would become effective 60 days after publication of the adopting release. The compliance date for the final rules will be one year after the effective date of the final rules.