FIA PTG responds to SEC Dealer Definition Proposal

27 May 2022

In a letter filed with the Securities and Exchange Commission (SEC) today, the FIA Principal Traders Group strongly opposed the SEC's Further Definition of “As a Part of a Regular Business” in the Definition of Dealer and Government Securities Dealer proposal and urged the SEC not to move forward with finalizing it.  

FIA PTG said they appreciate the importance of the stated goals of the Proposal to prevent market disruptions and support market transparency, integrity, resiliency, and investor protection.  However, they are concerned the Proposal’s approach and focus on adding additional regulation and regulatory burdens to traders trading for their own accounts and principal trading firms (“PTFs”) do not further these goals.  

FIA PTG stated they fundamentally disagree with the inaccurate characterization of the activity in which traders engage.  Principal traders and PTFs are not dealers.  As the courts and the SEC have noted, a hallmark of the business of dealers is their relationships with customers.  PTFs do not trade with each other or have their own clients, let alone provide “dealer services” to any “clients.” 

They added that they do not believe that the Proposal’s registration requirements for these market participants will affect, let alone prevent, market disruption, nor the type of extreme volatility upon which the Proposal anecdotally relies.  They cautioned that they believe the opposite to be true – creating regulatory disincentives to participate in the market as well as unnecessary capital inefficiencies will exacerbate potential liquidity issues during periods of high market volatility.  

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