Changes To US Treasury Market Structure And Request For Comments

The dramatically changing market for US Treasury securities raises questions and concerns for the public and regulators alike.¹ For example, as with the equities markets, high-frequency trading has entered the US Treasury markets. The Treasury markets are also evolving with respect to new trading technology, increased automated trading, evolving market making roles, reduced risk tolerance among financial institutions, different business models, and shifts in buy and sell-side participation. In addition, as regulatory reforms have increased capital requirements and generally tightened financing requirements, there has been an ongoing debate about whether such reforms enhance or degrade the quality and depth of markets, especially in the fixed income context. These developments take on great urgency with the Treasury markets because these markets finance the US debt and provide the benchmark for the risk-free rate of return on investments.