Two SEC Moves Point Toward Always-On, On-Chain Markets

The SEC is preparing for 24-hour U.S. equity trading while proposing blockchain-ready transfer-agent rules, signaling a major shift toward always-on and on-chain markets.

Two SEC Moves Point Toward Always-On, On-Chain Markets
Two SEC Moves Point Toward Always-On, On-Chain Markets

The U.S. Securities and Exchange Commission is concurrently focusing on two elements of a more digital securities market, i.e., 24-hour trading and ownership records based on blockchain technology. The SEC separately suggested updating transfer-agent regulations to take blockchain technology into consideration and held a discussion on near-continuous U.S. equity trading on September 17. When taken as a whole, the actions suggest a market infrastructure that may eventually run continuously and on-chain.

SEC Brings 24-Hour Trading Into Focus

On September 17 from 10 a.m. to 4 p.m. ET, the SEC will host its Roundtable on Preparations for 24-Hour Trading at its headquarters in Washington, D.C. At 9 a.m., doors open. The public will be able to watch the event live on SEC.gov, and a recording will be available later. Online viewers are exempt from registration requirements, but participants in person must register and pass security checks.

Jamie Selway, director of the SEC's Division of Trading and Markets, and the SEC Chairman and Commissioners provide introductory remarks to kick off the day. Before the first panel starts at 11 a.m., Dan Mathisson from the Division's Office of Analytics and Research will give a presentation of market statistics at 10:30 a.m.

The first panel, "Preparedness for a 24-Hour Market," will focus on the practical work that should be done before overnight trading contributes significantly to U.S. stocks. Exchange and broker-dealer preparedness, overnight monitoring, closing-price procedures, adjustments to clearance and settlement, investor protection, and projected liquidity conditions are among the subjects covered.

Robinhood's Matt Billings, the NYSE's Josh Burch, BlackRock's Hubert De Jesus, Virtu Financial's JD Del Raso, Cboe's Heidi Fischer, BNY Pershing's Ron Hooey, UBS' Todd Lopez, FINRA's Robert McNamee, and Bruce Markets' Jason Wallach are on the panel. Katie Kolchin of SIFMA and Jon Kroeper of the SEC will moderate.

The SEC Is Looking Beyond Trading Hours

Starting at 1:15 p.m., the second panel moves from market access to resilience. Systems readiness, capacity planning and failover, market-data continuity, shorter maintenance windows, cybersecurity, and staffing for overnight operations are all issues that the SEC wants companies to solve.

From a Web3 standpoint, this is significant since 24-hour markets necessitate infrastructure that can operate continuously instead of around a conventional opening and closing bell. Diwa Cody from Jane Street, Nat Evarts from State Street, Jiyoung Jung from Samsung, Todd Lard from Schwab, Chuck Mack from Nasdaq, Steve Sosnick from Interactive Brokers, Brian Steele from DTCC, David Taylor from Exegy, and Quito Zuba from MEMX are all on the panel. Jim Toes of the Security Traders Association and Partick Norton of the SEC will serve as moderators.

Following a 2:30 p.m. break, Panel Three will look at the projected effects on market participation, capital formation, and liquidity while also taking into account "Day 2" regulatory and market-structure activities. In particular, it will consider the infrastructure required to enable future growth to 24x7 trading.

OTC Markets Group's Cromwell Coulson, BNP Paribas' Brian Fagen, 24X's Dmitri Galinov, Invesco's Will Geyer, Citadel Securities' Michael Harrington, DriveWealth's Naureen Hassan, Blue Ocean's Brian Hyndman, Citi's Michael Masone, and ModernIR's Tim Quast are the panelists. Adrian Griffiths of MEMX and Peggy Sullivan of the SEC will serve as moderators.

Blockchain Moves Into the SEC’s Transfer-Agent Rules

That same day, the SEC proposed revising its rules for registered transfer agents, which was a separate but connected development for tokenized securities.

Transfer agents support transfers and maintain official records of stock ownership. The SEC asserted that the current structure had not been substantially changed since the late 1970s and early 1980s, despite the fact that transfer agents today carry out a greater variety of tasks.

While updating the rules and processes to reflect electronic recordkeeping and communications, the proposed changes would specifically allow for blockchain technology in share transfers and securities offerings. Since the ownership record is a key element of an on-chain security system, this is particularly significant for the tokenization market.

According to SEC Chairman Paul S. Atkins, the plan would simplify the regulations pertaining to transfer agents' present procedures, including blockchain technology. According to Jamie Selway, it is an additional step in modernizing the regulatory framework for the contemporary market.

The plan would add new requirements for registered transfer agents and their operations, change current forms and regulations, and repeal one rule. Additionally, the proposed release will be published in the Federal Register, which will start a 60-day public comment period.

Two SEC Moves Point Toward Always-On, On-Chain Markets

The two developments deal with distinct levels of the same market infrastructure as viewed via a Web3 perspective. The transfer-agent proposal addresses how securities ownership can be documented and transferred in a blockchain-based technological environment, while the 24-hour trading roundtable addresses when markets run and how they maintain resilience.

Future 24x7 trading is also specifically included in the SEC's September 17 agenda, broadening the conversation beyond just extending current market hours. However, rather than viewing blockchain as an external technology, the transfer-agent idea places it into the regulatory discourse surrounding securities records and transfers.

Therefore, exchanges, brokers, banks, market infrastructure providers, and technology companies will all be present at the September 17 event to discuss what is needed for continuous trading. Additionally, the SEC has begun accepting public comments on the 24-hour trading roundtable under File Number 4-913. Comments must be submitted by September 17.

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