No clear gain: banks question SEC’s Treasuries clearing plan

US Treasuries dealers say clearing won’t help post-Covid illiquidity – and could harm it

Trading in US Treasuries – the world’s most liquid bond market – is suffering a major dry spell.

The market has grown by about $7 trillion since the end of 2019. Yet bank dealers have limited market-making capacity – partly due to the stringent regulatory capital requirements imposed by the supplementary leverage ratio (SLR).

In September, the US Securities and Exchange Commission proposed a partial solution in the form of expanded clearing of US Treasury securities and repo transactions

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