June 13, 2023

Via E-Mail: [email protected]

Vanessa Countryman
Secretary
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington DC 20549

Re: File No. S7-02-22; Supplemental Information and Reopening of Comment Period for Amendments to Exchange Act Rule 3b-16 Regarding the Definition of “Exchange”

Dear Ms. Countryman:

The Securities Industry and Financial Markets Association (“SIFMA”)1 respectfully submits this letter to the U.S. Securities and Exchange Commission (“Commission” or “SEC”) to comment on the above referenced release (the “DeFi Release”)2 that provides supplemental information and reopens the comment period for the Commission’s January 2022 proposal to amend Rule 3b-16 and Regulation ATS (the “Proposal”).3 SIFMA appreciates the opportunity to provide further comment on the Proposal as supplemented by the DeFi Release, which seeks to amend Rule 3b-16 under the Securities Exchange Act of 1934 (“Exchange Act”) by expanding the definition of “exchange” and to apply such definition to, among other systems, certain decentralized finance or “DeFi” systems.

As stated in SIFMA’s initial comment letter submitted on April 18, 2022 (“SIFMA Letter I”) and its subsequent comment letter submitted on June 13, 2022 (“SIFMA Letter II”), while SIFMA supports certain discrete components of the Proposal, SIFMA opposes the proposed expansion of the definition of “exchange” under Exchange Act Rule 3b-16, including with respect to the proposed change of “orders” to “trading interest” and the inclusion of “communication protocol systems.”4 SIFMA broadly supports the policy goal of ensuring that rules governing trading venues keep pace with technological and market developments but continues to believe that the Proposal, as supplemented by the DeFi Release, is not appropriately tailored to these ends. Both the scope of proposed Rule 3b-16 and the Commission’s reasons for expanding the Commission’s interpretation of an “exchange” remain unclear.

1 SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s nearly one million employees, we advocate for legislation, regulation and business policy, affecting retail and institutional invests, equity and fixed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org.

2 Securities Exchange Act Release No. 97309 (Apr. 14, 2023), 88 Fed. Reg. 29448 (May 5, 2023).

3 Securities Exchange Act Release No. 94062 (Jan. 26, 2022), 87 Fed. Reg. 15496 (Mar. 18, 2022).

4 See Letter from Securities Industry and Financial Markets Association to Vanessa Countryman, Secretary, SEC, dated Apr. 18, 2022, available at https://www.sec.gov/comments/s7-02-22/s70222-20123991- 80133.pdf; Letter from Securities Industry and Financial Markets Association to Vanessa Countryman, Secretary, SEC, dated June 13, 2022, available at https://www.sec.gov/comments/s7-02-22/s70222-20131150-301347.pdf. SIFMA also submitted a comment letter requesting an extension of the comment period of the Proposal. See Letter from Securities Industry and Financial Markets Association to Vanessa Countryman, Secretary, SEC, dated Feb. 11, 2022, available at https://www.sec.gov/comments/s7-02-22/s70222-20115547-267557.pdf.