SEC’s Hedge Fund Rule Will Impair the Bond Market: Aaron Brown

Never mind the dense 247 pages. Just the title of Securities and Exchange Commission’s new ruleconcerning trading of US Treasuries, deemed the world’s most important market, will make your eyes glaze over: “Further Definition of ‘As a Part of a Regular Business’ in the Definition of Dealer and Government Securities Dealer in Connection with Certain Liquidity Providers.” But regardless of what the SEC calls it, this is a classic example of regulatory creep.

First, a bit of history. The legislation creating the SEC as part of the New Dealgave it responsibility for protecting ordinary investors. The agency exercised ...