On May 4, 2026, the U.S. Securities and Exchange Commission (SEC) Division of Trading and Markets staff (“Staff”) issued a no-action letter (“Relief”) stating that it would not recommend enforcement action under Section 17A(b)(1) of the Securities Exchange Act of 1934 if HQLAx S.à r.l. (“HQLAx”), a Luxembourg-regulated financial sector entity, and Clearstream International S.A. (“Clearstream”), also regulated in Luxembourg, permit limited U.S. participation on the HQLAx settlement platform (the “Platform”).
Section 17A(b)(1) generally requires entities performing clearing agency functions to register with the SEC. The Relief addresses potential clearing agency exposure arising from the operation of the Platform and will enable a narrow set of U.S. participants to access the Platform on a temporary basis without such registration.
The Platform is notable for its use of a private, permissioned distributed ledger (blockchain-based) system to facilitate the settlement of securities financing transactions through digital collateral records (DCRs) that represent book-entry interests in securities held in Clearstream’s custody. The SEC’s position reflects a limited, conditional accommodation of this use of distributed ledger technology (DLT) to facilitate cross-border transactions in a regulated market.
The Staff’s position requires HQLAx and Clearstream to adhere to the following conditions.
The Staff’s no-action position relies explicitly on the following representations.
The Platform facilitates settlement, not execution, of securities financing transactions, and all transactions occur off the Platform. The Platform records transfers via digital DCRs that represent book-entry ownership records, not independent financial instruments or crypto assets. DCRs have no standalone economic value outside the Platform.
Securities are held in custody by Clearstream (or its sub-custodians), and DLT updates correspond to transfers on custodial books and mirror book-entry transfers. Transfers effected via DCR updates constitute valid book-entry transfers under Luxembourg law. In short, this approach allows for the use of a DLT-based overlay while maintaining a traditional custody backbone.
Of note, both HQLAx and Clearstream are regulated in Luxembourg, and subject to prudential, anti-money laundering, and operational resilience requirements. At the time of the request, there were no U.S. participants on the Platform.
The Platform includes strong operational resilience and disaster recovery controls, controlled participation and capped activity, and ongoing regulatory reporting and transparency.
The Relief signals an iterative but pragmatic approach to permitting U.S. access to non-U.S. DLT-based post-trade infrastructure without requiring immediate registration; provided that exposure is regulated and limited. Of note, U.S. participants are required to be highly sophisticated, regulated, financial intermediaries.
The Platform is characterized as a settlement and recordkeeping mechanism, not a trading venue or standalone asset system with DCRs functioning as ledger entries rather than securities or crypto assets. This distinction appears central to avoiding immediate clearing agency registration implications but does signal a step in the SEC’s continued effort to facilitate infrastructure modernization using DLT.
The Relief is limited in time and scope with the Staff requiring hard caps on the number of U.S. participants and volume limits, combined with ongoing monitoring, regulatory reporting, and event-driven notifications. This suggests future relief may depend on similarly robust control frameworks.
The Relief also appears to recognize the interconnected nature of the global financial system and the growing need to address operational friction in cross-border transactions. The Staff implicitly relies on Luxembourg regulation and supervision, while imposing U.S.-specific limits and direct reporting to Staff.