Jan 13 (Reuters) - The U.S. Treasury Department is asking major banks for their opinions on details including the best timing for the public reporting of certain Treasuries trades and whether some changes to the auction schedule would help to improve liquidity in the $24 trillion market.
The Treasury is posing the questions as part of its regular survey of primary dealers before each of its quarterly refunding announcements. It comes as the Treasury and regulators consider changes to the Treasury market to help boost liquidity and reduce volatility.
Nellie Liang, Under Secretary of the Treasury for Domestic Finance, last year proposed publicly releasing transaction data for secondary market trades of so-called “on-the-run” Treasuries at the end of the day, with some cap sizes to minimize the risks to banks of intermediating large trades.
The Treasury is now seeking the input of dealers on this proposal, including whether reporting the trades earlier, such as an hour after execution, would be more or less beneficial. It is also asking about how the trade reporting should work, and appropriate cap sizes. "On-the-run" Treasuries are the most recent and liquid issues.
The government is further querying banks on whether changing the Treasury auction schedule to reduce the number of CUSIPS, which are used identify different bond issues, would “meaningfully improve Treasury market liquidity.”
This might include changing the monthly new issue auction schedule for 2-, 3-, 5- and 7-year notes to instead comprise one new issue and two reopening auctions per quarter, as is the case with the 10-, 20- and 30-year schedules. (Reporting By Karen Brettell)
