Public disclosure of Treasuries trading data should be limited, mutual funds say

31 January 2017 9:54am

15 April 2016. By Anjelica Tan.

The Investment Company Institute, a leading mutual fund group, has asked the US Treasury Department to take a measured approach to public disclosure of cash Treasuries trading data.

The Treasury Department, which has said its plan for regulators to access this data should be ready by year end, should initially restrict any information to government use, the group said in a recent letter.

After regulators have gathered trading data “over a sufficient period of time,” they should then consider several factors before proposing any rules to make the information public, ICI added.

“While we recognize that public transparency might bring certain benefits to the Treasury cash market, we believe that this transparency must be carefully balanced against the risk of it reducing liquidity and impairing market quality to the detriment of the Treasury market and its participants,” the group wrote in a letter last week.

ICI urged the Treasury Department to first consider the goals of the plan, which specific data would be made public, whether such data would apply to all Treasury securities, and whether disclosure could harm the market.

2014 market crash

The Treasury Department is conducting its first comprehensive review of the market in two decades after it took regulators nine months to put together a report on the crash and rebound in yields on Oct. 15, 2014. Regulators have limited access to dealer-to-customer flows in the Treasury cash market.

In January, the government invited market participants to submit their views on changes in the Treasuries market, including the rise of electronic trading.

The fund group raised concerns that the Treasury Department’s consultation did not provide sufficient support for what it said were potential benefits of public disclosure, including investor confidence and sound risk management.

Antonio Weiss, counselor to Treasury Secretary Jacob Lew, told lawmakers this week that the plan for regulators to access Treasury cash market data would be executed “not long after” it is finalized by the end of this year.

Fintech Regulation in 2018