Treasury and SEC Collaborate on Tracking of Cash Market Transactions

The U.S. Department of the Treasury (“Treasury”) and the SEC announced a joint collaboration to build an efficient and effective structure that will track transactions in the Treasury cash market. As part of this effort, the agencies “requested that [FINRA] consider a proposal” to require member firms to report Treasury cash market transactions to a centralized repository.

Treasury asserted that public responses to previous requests for information on the most effective means for obtaining official sector access to cash market data demonstrated “broad support” for more comprehensive reporting to regulators.

Lofchie Comment: Assuming that FINRA “considers a proposal,” one wonders whether the Treasury and SEC will be able to make use of the information collected. After all, it is increasingly evident that part of the reason for increased volatility in the market is not the result of “bad” behavior, but rather from diminished liquidity resulting in part from increased regulatory and capital costs. Anyone attempting to argue that the costs exceed the benefits of such a central information collecting scheme should understand the intellectual bias at the regulatory agencies against concluding that increased regulation may have negative results.

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