Who Needs Customers, Anyway? New SEC Rules Turn Traders Into Dealers

In Short

The Situation: The Securities and Exchange Commission (the "SEC" or "Commission") has adopted new rules that further define the phrase "part of a regular business" for purposes of determining whether a person is a "dealer" or "government securities dealer" subject to registration under the Securities Exchange Act.

The Issue: By defining "part of a regular business" through qualitative standards for determining dealer and government securities dealer status, the rules greatly expand the number and types of entities that will be subject to agency oversight, and entities that provide liquidity to the markets under these standards will have to register as dealers within a year of the effective date of the rules.