October 25, 2022

Firms Wary of Changes to Increased Transparency in Treasuries: SIFMA-Sia Partners Study

Steven Lofchie Commentary by Steven Lofchie

A recent study conducted by Sia Partners, at the request of SIFMA, examines the likely impact of increased post-trade transparency of data in the secondary market for Treasury securities. According to the study, both investors and market makers favor a gradual approach implemented over two to three years on increased post-trade transparency. Such a go-slow approach would allow for regulatory review of each step in a larger transition plan.

The study was conducted in response to a Treasury Request for Information as to whether it should require additional post-trade transparency of data regarding secondary market transactions of Treasury securities (see previous coverage). The study was composed primarily of one-on-one interviews with investors and primary market dealers from the U.S., Canada, UK and APAC. The study assessed how market participants think certain areas of the secondary market would be affected by a fuller reporting regime with reduced time delays between the execution of a trade and its reporting.

Types of Information

Market participants described the types of information they found useful. This includes bid-offer spread, trading volume on any day, the depth of the market for a security and information as to price volatility.

Impact of Transparency on Liquidity

A majority of participants believed that requiring additional post-trade transparency could decrease the ability for participants to take on larger positions, and thus greater risk, in turn damaging liquidity in the market and decreasing intermediaries' willingness to take on large blocks. Most participants believed increased transparency could be especially harmful during periods of high volatility, and may even cause additional disruptions to resiliency.

Transparency by Market Segment

A slight majority of participants agreed that transparency requirements should vary depending on the type of security, rather than having a one-size-fits-all requirement. The majority favored greater transparency for securities that were either on-the-run or had less time remaining to maturity. Those that disagreed with segmentation believed that standardizing the requirements would be more beneficial, particularly in regard to portfolio management and for identifying market trends.

Views on Transparency Requirements and Volume Caps and Delays for Increased Transparency

Nearly all participants supported the implementation of dissemination delays and volume caps in some way. Most participants support implementing a volume cap with time delays, generally favoring a risk-based approach to determining the caps. Participants also favored including large trades in volume data aggregates so that participants can see how large volume trades impact market pricing. Additionally, participants supported shortening the time for the release of reported trades from end of day to within 60 minutes of execution.

Other Issues

Separate from trade reporting, respondents raised other legal changes that could improve market liquidity. The most significant potential change would impact the Supplementary Leverage Ratio.


As the level of U.S. government debt increases relative to the size of the U.S. economy, U.S. regulators ought to be extremely cautious as to regulatory changes that would scare dealers away from taking on large positions. Even a small increase in the risk premium required to incentivize dealers to take on block positions will be expensive for the U.S. government.

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