Regulators seek to reduce Treasury market reliance on big bank dealers
Reuters
Published Nov 10, 2022 08:06AM ET
Updated Nov 10, 2022 02:04PM ET
(Reuters) -Regulators are looking to broaden trading in U.S. Treasury securities, potentially opening the doors to a power shift from major banks that have dominated the $24 trillion market for decades, according to a federal report released on Thursday.
The report by the Inter-Agency Working Group on Treasury Market Surveillance (IAWG) shows regulators are in support of "all-to-all" trading, a concept in which buyers and sellers would trade Treasury securities directly with each other rather than rely on big banks.
A form of such trading exists across several asset classes, including stocks, options and futures exchanges.
The report also includes a proposal to improve the collection and public release of data on secondary market transactions.
The move comes at a time of heightened volatility in the U.S. bond market due to uncertainty over future rate hikes and worries of a looming recession.
Earlier this month, the U.S. Treasury said it would continue to assess whether or how to implement a program to buy back some of its existing bonds, a move partly aimed at improving liquidity in the Treasuries market.
The Treasury market, which is the world's largest bond market and serves as a global benchmark for a swathe of other asset classes, has seen liquidity deteriorate this year partly due to U.S. Federal Reserve's rapid quantitative tightening.
The central bank, which had bought government bonds during the COVID-19 pandemic to stimulate the economy, is now also reducing the size of its balance sheet by letting its bonds reach maturity without buying more, a move that investors fear could exacerbate price swings.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.