SEC proposes expansion of securities eligible for cross trading
09 October 2026 US
Image: Zack Frank/stock.adobe.com
The US Securities and Exchange Commission (SEC) proposes amendments to the Investment Company Act cross-trading rule, which under certain conditions permits transactions in securities between a registered fund and its affiliates.
Following the initial adoption of Rule 17a-7 in 1966, registered funds relied on the cross-trading rule to trade both equity and fixed income securities, but the adoption of the fund valuation rule in 2020 effectively restricted cross trading of most fixed income securities.
The proposed amendments would modernise and expand the cross-trading rule, allowing cross trades by registered funds and restore the ability to cross trade most fixed income securities.
The US SEC states the proposal would also require aggregated reporting of trading activity and cross trades to provide additional transparency.
Paul S. Atkins, SEC chairman, expresses this is another step in modernising regulatory frameworks to meet the realities of today’s markets.
In a statement, Atkins says: “When executed appropriately, cross trades allow registered funds to avoid costs associated with open market trades and to then pass those savings on to investors.
“The amendments we are proposing today would modernise and expand the cross-trading rule, helping to deliver additional cost savings to those investors.”
Following the initial adoption of Rule 17a-7 in 1966, registered funds relied on the cross-trading rule to trade both equity and fixed income securities, but the adoption of the fund valuation rule in 2020 effectively restricted cross trading of most fixed income securities.
The proposed amendments would modernise and expand the cross-trading rule, allowing cross trades by registered funds and restore the ability to cross trade most fixed income securities.
The US SEC states the proposal would also require aggregated reporting of trading activity and cross trades to provide additional transparency.
Paul S. Atkins, SEC chairman, expresses this is another step in modernising regulatory frameworks to meet the realities of today’s markets.
In a statement, Atkins says: “When executed appropriately, cross trades allow registered funds to avoid costs associated with open market trades and to then pass those savings on to investors.
“The amendments we are proposing today would modernise and expand the cross-trading rule, helping to deliver additional cost savings to those investors.”
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