Treasury recommends that the SEC allow issuers of less liquid stocks, in consultation with their underwriter and listing exchange, to partially or fully suspend unlisted trading privileges for their securities and select the exchanges and venues on which their securities will trade.
Treasury recommends that the SEC evaluate whether to allow issuers to determine the tick size for trading of their stock across all exchanges and whether to additionally limit potential tick sizes to a small number of standard options to manage complexity.
Regarding Treasury’s concern that maker-taker markets and payment for order flow may create misaligned incentives for broker-dealers:
Regarding market data rules:
Treasury recommends that the SEC consider amending the Order Protection Rule to give protected quote status only to registered national securities exchanges that offer meaningful liquidity and opportunities for price improvement. Treasury recommends that the SEC consider amending the Order Protection Rule to withdraw protected quote status for orders on any exchange that do not meet a minimum liquidity threshold. Treasury recommends that the SEC should consider proposing that any newly registered national securities exchange receive the benefit of protected order status for some period of time.
In order to reduce complexity in equity markets, Treasury recommends that the SEC review whether exchanges and alternative trading systems (ATSs) should harmonize their order types and make recommendations as appropriate.
Treasury recommends that the SEC adopt amendments to Regulation ATS substantially as proposed but revise aspects of the proposal to: (1) eliminate unnecessary public disclosure of confidential information, (2) require disclosure of confidential information only to the SEC and only if it would improve the SEC’s ability to oversee the industry, (3) ensure that disclosures related to conflicts of interest are tailored to provide useful information to market participants, and (4) simplify the disclosures to reduce the compliance burden and to increase their readability and comparability across competing ATSs.
Treasury recommends closing the PTF data granularity gap by requiring trading platforms operated by FINRA member broker-dealers that facilitate transactions in Treasury securities to identify the customers in reports to TRACE of Treasury security transactions.
Treasury supports the Federal Reserve Board’s efforts to collect Treasury transaction data from its bank members.
To further the study and monitoring of the Treasury cash market, Treasury recommends that the CFTC share daily its Treasury futures security transaction data with Treasury.
To better understand clearing and settlement arrangements in the Treasury interdealer broker (IDB) market and the consequences of reform options available in the clearing of Treasury securities, Treasury recommends further study of potential solutions by regulators and market participants.
Treasury reiterates its recommendation from the Banking Report to amend regulation to improve the availability of secured repurchase agreement (repo) financing.
Treasury reiterates its recommendations from the Banking Report to improve secondary market liquidity.