The SEC fund cross trading proposal would reopen most fixed-income securities to transactions between registered funds and affiliated accounts. The Securities and Exchange Commission issued the proposal on October 9, 2026, while its Federal Register publication on October 15 started a comment period that runs through December 14.
How SEC fund cross trading works
A cross trade moves a security between a registered fund and an affiliated fund or account without using the open market. The structure can reduce spreads, commissions and market impact, but it also creates a conflict because the same adviser may influence both sides of the transaction.
Rule 17a-7 has allowed qualifying cross trades since 1966. The SEC said its 2020 fund valuation rule effectively removed most fixed-income securities from eligibility because many bonds did not meet the rule’s available-market-quotation requirement.
What the SEC fund cross trading proposal changes
The official proposal page says the amendments would expand eligible securities and update pricing and oversight conditions. The agency expects more verifiable bond pricing to support transactions that were impractical under the current framework.
Registered funds using the exemption would also report aggregated trading and cross-trade activity through Forms N-PORT and N-MFP. The added reporting is intended to give regulators and investors more visibility while preserving potential execution-cost savings.
What investors should watch before December 14
The proposal remains subject to public comment and is not an adopted rule. Investors should watch whether commenters challenge the pricing methods, board responsibilities or scope of eligible bonds before the December 14 deadline.
The review adds to a broad SEC market-structure agenda that includes IPO modernization and crowdfunding, Cboe fee changes and CME clearing procedures. Any final amendments could differ from the proposal after the Commission reviews public feedback.
Elsy kanana
Elsy Kanana is a financial and cryptocurrency journalist at FusionMarketNews, covering digital assets, blockchain technology, financial markets, and emerging fintech trends. Her reporting focuses on market movements, regulatory developments, and on-chain analytics, delivering clear, data-driven insights to readers worldwide.
