SIFMA Submits Comments on Treasury Market Structure

Release Date: April 22, 2016
Contact: Katrina Cavalli, 212.313.1181, [email protected]

SIFMA Submits Comments on Treasury Market Structure

New York, NY, April 22, 2016 – In comment letters filed today in response to the U.S. Treasury Department’s request for information on the evolution of the Treasury market structure, SIFMA together with the American Bankers Association, and separately the Asset Management Group at SIFMA (SIFMA AMG), urges Treasury to recognize the uniqueness, importance and diversity of the Treasury market as it considers proposed rulemaking.   

“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,” said Rob Toomey, SIFMA managing director and associate general counsel. “SIFMA therefore strongly believes the collective goal should be to maintain the deep liquidity and maximize the resiliency of the U.S. Treasury market while ensuring efficiency, orderly operation and fairness.”

“Asset managers rely on access to the U.S. Treasury cash market as a highly liquid, stable source of reliable investment securities, and the securities are vital to any asset manager’s comprehensive strategy,” said Timothy C. Cameron, head of SIFMA’s Asset Management Group.  “We believe it is essential that any changes to market structure be done in a way which ensures there are no unintended consequences for asset managers who regularly transact in and rely on the U.S. Treasury cash market.”

Both letters express support for increasing the access of market and prudential regulators to U.S. Treasury market transactions.  SIFMA and SIFMA AMG strongly believe that the official sector must have access to the data necessary to carry out its various regulatory functions, to develop a more comprehensive understanding of U.S. Treasury market activity and to improve Treasury’s ability to oversee market liquidity, resiliency and efficiency.  The SIFMA AMG letter also urges Treasury to articulate the goals of any public reporting framework, stressing the need to protect liquidity and ensure that no systemic harm is done.

SIFMA’s dealer members express concerns over public reporting of Treasury or repo transactions, because of the possibility that this could 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.

In addition to the comment letters, SIFMA also announced the release of a new Promontory whitepaper that examines the U.S. Treasury market, including emerging issues and possible responses.  The paper highlights and describes the unique role the Treasury market plays in our financial markets by examining the different uses of Treasury securities, and identifies liquidity, transparency, operational robustness and a supportive regulatory framework as essential characteristics of market quality.