SEC Proposes New Rules Defining “Dealer” Status: Proposal Seeks to Clarify When Unregistered Firms Engaged in Market-Making and Liquidity-Providing Activities May Need to Register as Dealers
- Bruce Newman, Stephanie Nicolas, Andre Owens, Tiffany Smith, Kyle Swan
- 4.6.2022
On March 28, 2022, the Securities and Exchange Commission (SEC) proposed new Rules 3a5-4 and 3a44-2 under the Securities Exchange Act of 1934 (Exchange Act) (collectively, the Proposed Rules). The Proposed Rules seek to clarify certain aspects of the definitions of “dealer” and “government securities dealer.” In particular, the SEC seeks to further define the phrases “as a part of a regular business” and “own account,” as used in the statutory definitions of “dealer” and “government securities dealer.” As further explained in this client alert, the definitions of these phrases have been key for certain market participants in determining that registration as a “dealer” was not required.
