Asset managers, insurers and pension funds are pushing to soften a proposed rule aimed at enhancing U.S. Treasury market stability which could require them to register as broker dealers, subjecting them to tougher rules, industry sources and documents show, Reuters reported. They are hopeful the U.S. Securities and Exchange Commission (SEC) will compromise when finalizing the rule, first proposed in March 2022, following conversations with agency staff in recent months. The rule aims to increase SEC oversight of the $25 trillion Treasury market by requiring firms that trade lots of U.S. government bonds, mainly proprietary traders, to register as broker-dealers, subjecting them to capital, liquidity and other rules. These firms have become critical sources of liquidity, but are currently subject to scant oversight, the SEC said. The SEC flagged that as many as 46 firms could be affected, but investors say the number will be much larger, partly because the rule as drafted inadvertently captures pensions and some other institutional investors.
