SEC Chair Jay Clayton emphasized the importance of regulatory coordination and access to Treasury market data. In remarks at the Third Annual Conference on the Evolving Structure of the U.S. Treasury Market, he described the mandate of the new SEC Fixed Income Market Structure Advisory Committee.
Chair Clayton asserted that coordination among national, state and international regulators is a key facet of healthy markets. He said that the Treasury market is a particularly important example of the need for coordination, as oversight is shared among the Department of the Treasury, the SEC, FINRA, the CFTC and the National Futures Association. He explained that Treasury securities play a crucial role in fixed-income and derivate markets that are overseen by various regulators, adding to the regulatory complexity and accentuating the need for effective coordination. In addition to the interagency cooperation, Chair Clayton urged regulators to cooperate with various market participants to formulate a better understanding of market conditions. He pointed to the Joint Staff Report on unusual volatility in the Treasury market on October 15, 2014 ( previously mentioned by Federal Reserve Bank of New York President and CEO William Dudley) as a demonstration of cooperation between regulators and market participants.
Chair Clayton asserted that regulators should have full access to Treasury market trading data. Since the Treasury market is the "primary means of financing the federal government," and significantly impacts the global financial system, the SEC and other regulators should have access to data that paints a clear, comprehensive picture of the market. He said that the recent FINRA rule change requiring member broker-dealers to report Treasury securities transactions to the Trade Reporting and Compliance Engine ("TRACE") is a notable step toward providing greater access, but stressed that many firms are not FINRA members or subject to TRACE reporting requirements, so this data does not account for the full scope of Treasury securities transactions.
In addition, Chair Clayton highlighted the recent creation of the Fixed Income Market Structure Advisory Committee, which will focus on analyzing corporate and municipal bond markets to make recommendations on areas that are in need of regulatory improvements. The Committee's focus will include bond market liquidity, pre-trade transparency and the impact of technology on the markets.
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