WASHINGTON– The Inter-Agency Working Group on Treasury Market Surveillance (IAWG)—which is comprised of 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—today issued a staff progress report that evaluates 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, the deepest and most liquid government securities market in the world. The report also examines several recent episodes of challenging Treasury liquidity conditions, including the unprecedented financial market volatility associated with the global spread of the COVID-19 pandemic in March 2020. Drawing on these experiences, the report reviews potential reforms to further enhance the resilience of the U.S. Treasury market. Policies considered include those 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.
This progress report, and plans to continue this work, reflect 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. On November 17, the IAWG will convene their seventh annual U.S. Treasury Market Conference to further discuss recent developments and proposals to improve Treasury market resilience.