Ex-regulators urge tougher rules for non-banks in UST markets

Mandatory clearing and standing repo facility fees could cut risk of liquidity stress

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Principal trading firms that make markets in US Treasuries should face tougher regulation to strengthen market resilience, according to three former governors of the Federal Reserve. They also urged more regulatory focus on the role of buy-side firms in the UST market.

“We’ve had this evolution of market-making away from the broker-dealers and towards the PTFs. Some of that is natural evolution, because the world wants to be capital efficient, but some of it has been due to an unlevel

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