The U.S. Treasury Department is reviewing how to standardize data on trading of Treasury securities before it is shared publicly in a bid to offer more transparency and lend more investor confidence, a Treasury official said on Monday.
Public disclosure on Treasury trades has been a goal of financial regulators following the “flash rally” in October 2014, in which prices swung wildly within half an hour without a fundamental reason.
Unlike stocks and many other debt securities, there is not a tremendous amount of public data on Treasury trading, which averages about $600 billion a day.
“There are areas for improvement of the data,” said Craig Phillips, counselor to the secretary in the U.S. Department of Treasury.
Phillips was speaking at a conference on the U.S. Treasury market sponsored by the New York Federal Reserve.
Before the data is to be published to the public, Phillips said, it needs to be standardized. The time stamp on each trade needs to be set so it can be matched across different trading platforms, he said.
Prices also need to be standardized because some of them now include fees, Phillips said.
Critics have said disclosure of this data would hurt liquidity in the Treasury market, which now stands at over $15 trillion, as players would be discouraged to make bets because their positions would be exposed.
But regulators believe some details on how Treasury securities change hands would weed out questionable trading practices without harming the market.
Most market participants seem agreeable to trade data being released with a time delay and a cap on the trade size that will be disclosed, according to Phillips.
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