Treasury Market Structure

The U.S. Treasury market plays a unique and fundamental role in global financial markets and has substantial implications for the U.S. dollar’s status as global reserve currency, U.S. taxpayers, and the safety and soundness of U.S. financial markets. The goal of any changes to regulatory structure should be to maintain the deep liquidity and maximize the resiliency of the U.S. Treasury market while ensuring efficiency, orderly operation and fairness.

Liquidity, transparency, operational robustness and a supportive regulatory framework are essential characteristics of market quality for U.S. Treasuries. SIFMA’s broker-dealer and asset manager members supported the recently implemented reporting of Treasury secondary market transactions to TRACE which will allow increasing  access of market and prudential regulators to U.S. Treasury market transactions so that the official sector can perform its important oversight function.  SIFMA believes that before any public dissemination of the Treasury TRACE data  the benefits and costs should be clearly articulated so as to protect liquidity and ensure that no systemic harm is done. SIFMA believes that there is sufficient information currently available to market participants to allow them to trade and that, absent further clearly articulated benefits, public dissemination is unnecessary. In addition, SIFMA’s dealer members have noted concerns that public reporting of Treasury or repo transactions would inhibit primary dealers’ ability to hedge their positions around Treasury market auctions, which is critical for them to continue serving as liquidity providers for a diverse investor base.

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