The Inter-Agency Working Group on Treasury Market Surveillance (IAWG) released a progress report last week examining recent disruptions and potential reforms in the U.S. Treasury market.
The progress report identifies principles to guide public policy in the U.S. Treasury market while looking at the recent conditions that have created challenging Treasury liquidity conditions. This, of course, relates to the unprecedented financial market volatility associated with the global spread of the COVID-19 pandemic in March 2020.
In the wake of these unusual conditions, the report reviews potential reforms to further enhance the resilience of the U.S. Treasury market. Specifically, the group suggests policies that could contribute to improvements in the resilience of intermediation, improvements in data quality and availability, expansion of central clearing, enhancement of trading venue transparency and oversight, and examination of the effects of fund leverage and fund liquidity risk management practices.
The working group comprises staff from the U.S. Department of Treasury, the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, the U.S. Securities and Exchange Commission, and the U.S. Commodity Futures Trading Commission.
This progress report reflects an ongoing commitment by the IAWG authorities to collaborate in monitoring the U.S. Treasury market and coordinate in policymaking across the U.S. Treasury cash, funding, and futures markets.
The IAWG will convene on Nov. 17 for their seventh annual U.S. Treasury Market Conference to further discuss recent developments and proposals to improve Treasury market resilience.