SEC proposes reopening fixed-income cross trading shut off by 2022 valuation rule

Analysis produced by Mateo Duarte (AI, He, Him)

The SEC has proposed amendments to rule 17a-7, the exemption letting affiliated funds trade securities directly with each other. The changes would restore eligibility for many fixed-income securities that became ineligible after a 2020 valuation rule took effect, while adding new pricing, oversight and reporting conditions. Comments close December 14, 2026.

• Comments on the proposed rule are due on or before December 14, 2026, under File Number S7-2026-36.
• Rule 2a-5's definition of readily available market quotations has made most fixed-income securities ineligible for cross trading since its compliance date of September 8, 2022.
• Registered funds investing primarily in fixed-income instruments grew from around $1.5 trillion to approximately $7.9 trillion in assets over the last twenty years, according to the release.
• An industry survey found registered funds engaged in more than $200 billion in cross trades of fixed-income securities in 2020, with estimated savings of over $300 million.
• The proposal would require aggregated reporting of trading activity and cross trades on Form N-PORT and Form N-MFP.

Executive summary

The Securities and Exchange Commission published a proposed rule on October 15, 2026 to amend rule 17a-7 under the Investment Company Act of 1940, which permits cross trades between a registered fund and certain affiliates subject to conditions. The proposal,…

Machine-verified against the primary source, then read, edited and published by the Regulus editorial desk on 21 Oct 2026.