U.S. SEC Withdraws Appeal of Treasury Dealer Rule Overhaul
The U.S. Securities and Exchange Commission (SEC) has withdrawn its appeal of a federal court ruling that overturned a major overhaul of Treasury dealer rules.
Background
In February 2023, under former SEC Chair Gary Gensler, the agency implemented a rule requiring proprietary traders and other firms that trade U.S. government bonds to register as broker-dealers, subjecting them to increased oversight. The rule aimed to address liquidity issues in the Treasury market.
However, in November 2023, a federal judge in Texas vacated the rule, arguing that the SEC had exceeded its authority. The judge's ruling was backed by lawsuits filed by industry groups, including the Crypto Freedom Alliance of Texas and the Blockchain Association.
SEC's Decision
Under SEC Acting Chair Mark Uyeda, the agency has decided to withdraw its appeal of the court ruling. This decision marks a significant shift from the previous administration's stance.
In a statement, the SEC cited concerns that the new rule could reduce liquidity in the Treasury markets, increase volatility, and raise debt costs for taxpayers.
Industry Reaction
The decision to withdraw the appeal has been welcomed by industry groups. The Alternative Investment Management Association (AIMA) and Managed Funds Association (MFA) praised the SEC's move, with MFA CEO Bryan Corbett stating that it aligns with the agency's "historical interpretation of securities laws."
Jack Inglis, CEO of AIMA, added that the decision recognizes that hedge funds are not dealers.