Behind the Money

A radical change for the US Treasury market

Mar 27, 2024

Exploring the recent crises in the US Treasury market, the significant reform introduced by the SEC, and the potential pitfalls and promise that come with it. Discussing the impact of leverage, the role of clearing houses, and industry preparations for handling new business regulations.

15:40

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Quick takeaways

The US Treasury market faced crises prompting regulators to enact reforms for market stability and integrity.

Market growth poses risks due to increased leverage and shifting participant dynamics, leading to reduced liquidity and price fluctuations.

Deep dives

The Significance of the US Treasuries Market

The US Treasuries market is compared to the vast, influential ocean due to its size and global impact. It is the largest and most liquid market globally, held by various investors worldwide, including foreign central banks and governments. The market plays a crucial role in executing monetary policy and maintaining stability. However, during crises like in March 2020, unexpected events can lead to turbulence affecting not only the bond market but also causing ripple effects in other financial sectors.

Introduction

2min

Navigating Crisis and Change in the US Treasury Market

2min

Risk and Impact of Leverage in the US Treasury Market

2min

The Role of Clearing Houses in the Treasury Market

7min

Preparations for Handling New Business and Market Resilience

4min

The past several years in the US Treasury market have not been what you’d call smooth sailing. Three crises in a decade recently pushed regulators to introduce important changes to the world’s largest and most liquid market. The Securities and Exchange Commission passed the most significant reform a few months ago. The FT’s capital markets correspondent Kate Duguid examines that change — plus the potential pitfalls and promise that come with it.

Clips from CNBC, Bloomberg

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For further reading:

The radical changes coming to the world’s biggest bond market

Has Gensler’s SEC pushed Wall Street too far?

SEC tussles with shadow trades in the US Treasury market

Ransomware attack on ICBC disrupts trades in US Treasury market

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On X, follow Kate Duguid (@kateduguid) and Michela Tindera (@mtindera07), or follow Michela on LinkedIn for updates about the show and more.

Read a transcript of this episode on FT.com

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