U.S. Department of the Treasury

 

The Committee convened in a closed session at the Hay Adams Hotel at 11:30 a.m.  All members were present. Counselor to the Secretary Antonio Weiss, Deputy Assistant Secretary for Federal Finance James G. Clark, and Director of the Office of Debt Management Fred Pietrangeli welcomed the Committee.  Other members of Treasury staff present were Chief Risk Officer Ken Phelan, Deputy Director John Dolan, Jared Roscoe, Dave Chung, Michael Puglia, Tom Katzenbach, Chris Cameron, and Tillman Elser.  Federal Reserve Bank of New York staff members Nathaniel Wuerffel and Jonathan Hill were also present.  The meeting was opened with a review of the TBAC charter and Committee guidelines by Treasury counsel.

Deputy Assistant Secretary Clark began the meeting with an overview of the fiscal outlook.  He highlighted that net marketable borrowing is projected to be $774 billion in FY 2016.  He added that this borrowing estimate includes a $151 billion year-over-year increase in the cash balance in order to conform to the new cash management policy announced at the May 2015 quarterly refunding.  Looking ahead, Clark noted that current estimates from the Office of Management and Budget indicate that borrowing from the public will decline to $572 billion in FY 2017.

 

DAS Clark also noted that, since the beginning of April, auction awards have been lower for the Other Dealers and Brokers category, particularly in bills, due in part to the addition of a primary dealer during the period. 

 

Next, the Committee turned to a presentation on cybersecurity in relation to critical financial services IT infrastructure in the industry.  The presenting member began with an overview of recent cybersecurity breaches, acknowledging that cybercrime is estimated to have cost the global economy more than $400 billion in 2014.  Following a review of lessons learned and cybersecurity best practices, the presenting member proceeded to address cybersecurity as it pertains to Treasury’s auction process. 

 

In considering ways for Treasury to mitigate the risks associated with potential cyber incidents, the presenting member discussed the current auction calendar and how lengthening the period of time between auction and settlement could afford Treasury greater flexibility to delay auctions yet maintain the same settlement date.  One Committee member noted the importance of making any auction schedule changes in a consistent manner going forward.

 

The presenting member also recommended that Treasury consider testing its phone-based contingency auction capabilities with small-scale live auctions, rather than simply through the use of mock auctions.  It was noted that conducting live auctions would enable Treasury to more thoroughly test its contingency infrastructure.  Furthermore, the member noted that it would help to familiarize auction participants with the contingency auction process.  The Committee unanimously agreed with the recommendation.

 

The Committee adjourned at 1:00 p.m. for lunch.

 

The Committee reconvened at the Department of the Treasury at 5:00 p.m.  All Committee members were present.  The Chair presented the Committee report to Secretary Lew.

 

A brief discussion followed the Chair’s presentation but did not raise significant questions regarding the report’s content.

The Committee then reviewed the financing for the remainder of the June through September quarter and the October through December quarter (see attached).

 

 

The meeting adjourned at 6:00 p.m.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

_________________________________

 

James G. Clark
Deputy Assistant Secretary for Federal Finance
United States Department of the Treasury
August 2, 2016

 

 

 

Certified by:

 

 

_________________________________

Jason Cummins, Chairman
Treasury Borrowing Advisory Committee
Of The Securities Industry and Financial Markets Association
August 2, 2016

_________________________________

 

Stuart Spodek, Vice Chairman
Treasury Borrowing Advisory Committee
Of The Securities Industry and Financial Markets Association
August 2, 2016

 

 

 

 

 

 

 

Cyber Security:

 

Recent cyber security related incidents have demonstrated that breaches in critical financial services IT infrastructure could have the potential to disrupt domestic and global business practices.  What can Treasury and market participants learn from these incidents?  What measures are market participants taking to counter these threats and what are cyber security best practices for operating critical IT infrastructure in the financial services industry?  Please comment specifically on best practices as they relate to electronic trading, exchange platforms, clearing and settlement systems, and payment systems.  What, if any, actions should Treasury contemplate to mitigate cyber threats specifically?  

 

TBAC Recommended Financing Table Q3 2016 and TBAC Recommended Financing Table Q4 2016