The SEC is taking steps on two fronts that could bring major changes to U.S. market infrastructure, with one initiative examining 24-hour trading and another updating transfer-agent regulations for blockchain-based securities.
The U.S. Securities and Exchange Commission announced Tuesday that it has set the agenda and selected participants for its Sept. 17 roundtable on continuous trading. The discussion will be held at the SEC’s Washington headquarters and include representatives from NYSE, Nasdaq, State Street, Citadel Securities, Cboe and DTCC, as well as newer market participants such as Robinhood.
A move to 24-hour trading would mark a significant departure from the operating model of traditional securities markets, which close each day. Crypto markets, by comparison, already trade continuously, meaning the SEC’s decisions could have direct consequences for digital-asset broker-dealers and other crypto businesses operating within the U.S. financial system.
The roundtable will explore the challenges of keeping markets open around the clock, including overnight surveillance, closing-price calculations, clearing and settlement, and the technical and maintenance requirements of continuously operating market infrastructure.
SEC Proposes Blockchain-Friendly Transfer-Agent Framework
The regulator separately unveiled a proposal to modernize rules governing transfer agents, taking into account blockchain technology and other developments in financial-market infrastructure.
Transfer agents are responsible for maintaining records of securities ownership. Blockchain-based transactions are challenging some of the assumptions behind that traditional system because ownership can be transferred and recorded onchain in a transparent and near-instantaneous manner. The issue is becoming increasingly important as tokenized securities gain adoption.
The proposed rule would revise a framework that was last significantly updated decades ago. SEC Chairman Paul Atkins said the changes would recognize technologies such as electronic communications and blockchain in securities offerings and share transfers.
The proposal would also permit blockchain records to serve as official records of securities transactions. At the same time, transfer agents would be subject to additional operational safeguards, including cybersecurity requirements. The public will have 60 days to submit comments on the proposal.
SEC Commissioner Hester Peirce pointed to another issue that could be particularly important for digital assets: whether transfer agents should remain obligated to collect investors’ names and physical addresses or be permitted to use digital identifiers such as email addresses and wallet addresses.
The SEC’s move comes as crypto companies increasingly expand into traditional financial infrastructure. Bullish, which owns CoinDesk, recently agreed to purchase transfer agent Equiniti for $4.2 billion.
