In the hope that better transparency will stimulate the whole market in treasury securities, the SEC has approved a rule change to produce just that. In that respect, this helps the treasuries market catch up with those for corporate, municipal, and mortgage bond markets, where reporting systems including the US Trade Reporting and Compliance Engine have been in place since decades.
The new rules had been proposed by the Financial Industry Regulatory Authority (FINRA), “to provide for the first time public dissemination of U.S. Treasury transactions on a trade-by-trade basis,” according to a statement by the SEC. (For a practical backgrounder on securities-market transparency, check our news post from last summer on “all you need to know about post-trade transparency”, prompted by a relatively accessible EU document on the topic.)
Treasury trade reporting to the Trade Reporting and Compliance Engine (abbreviated TRACE but not to confuse with the OECD-initiated “Treaty Relief and Compliance Enhancement” system) has been required since 2017 – first at end of day, then within 60 minutes of the trade since last year – but only for the eyes of regulatory supervisors. For public dissemination, FINRA has gone from weekly aggregate reports starting 2020, to daily aggregates in 2023. The publication will reveal each trade’s time, price, direction, venue, and volume.
Also, the question of transparency in the bond markets has touchpoints with that of central clearing for US treasury bonds and repo. This report last year discussed that topic, setting it in the context of “a broader set of regulatory efforts meant to address issues of volatility and disruption in financial markets in 2014, 2019 and 2020”.