Treasury-Market Reform Construct Leaves Much to Decide, Do

In this report, we build on our initial analysis of Monday’s report from the Inter-Agency Working Group on Treasury Market Surveillance (IAWG).  Comprising the Treasury, the Fed, the SEC, the CFTC, and the Federal Reserve Bank of New York, the Working Group’s report narrows the scope of reforms to be discussed at next week’s closed FSOC meeting and then taken up by both the Group and FSOC.  Hints about what staff may think best may be inferred from the report by virtue of where attention is focused and hints about near-term decisions are offered.  From this, we infer that central clearing is a top-priority consideration and that all of the agencies support SEC Chairman Gensler’s announced plans to bring many broker-dealers in the Treasury sector under SEC authority.