Financial Associations Raise Concerns on Proposal to Increase Transparency in Treasury Securities Market

In a joint Comment Letter responding to Treasury's Request for Information on a proposal to increase public transparency in the Treasury securities market, SIFMA, SIFMA Asset Management Group ("SIFMA AMG"), the Institute of International Bankers and the ABA Securities Association ("the Associations"), raised "core considerations" that were necessary before implementing any new rules.

While expressing support for the "broad policy objective of enhancing the resiliency and capacity of the Treasury market through carefully calibrated reforms that encourage market participation from a diverse group," the Associations asserted that the proposed disclosure requirements were "inappropriately calibrated" and would be contrary to Treasury's goal of financing U.S. debt while minimizing the cost to taxpayers. The Associations also argued that the disclosure requirements may hinder dealers' ability to hedge positions as they would serve to discourage the dealers from taking on large positions in Treasury securities..

The Associations urged that Treasury take into account the following core considerations before implementing greater public transparency rules: (i) conduct case-by-case ("market segment by market segment") cost-benefit analyses to determine if additional disclosure is necessary; (ii) establish appropriately calibrated block reporting caps; (iii) conduct additional analysis to determine if less liquid areas of the market would benefit from post-trade transparency; (iv) minimize potential "negative effects" of additional disclosure through gradual phase-in and pilot programs; and (v) evaluate how new transparency initiatives would "interact" with "the broader range of reforms to the Treasury market" currently being contemplated (i.e., on registration, central clearing and repo transactions).