[{"_1":2,"_111":-5,"_112":-5},"loaderData",{"_3":4,"_26":27},"root",{"_5":6,"_17":10,"_18":19,"_20":21,"_22":10,"_23":-5,"_24":-5,"_25":10},"user",{"_7":8,"_9":10,"_11":10,"_12":-5,"_13":-5,"_14":15,"_16":-5},"roles",[],"isAuthenticated",false,"isPremium","planName","subscriptionStatus","featureFlags",{},"insightsBudget","isDevelopmentHost","userPreferences",{},"recaptchaSiteKey","6LcvOJcUAAAAAHsB-gPGfGktcRlKpH7OTIU_dMTD","isImpersonating","impersonation","affiliateStatus","isFreedomPortal","routes/v2/article/layout",{"_28":29,"_30":31},"notFound",true,"relatedArticles",[32,75,87,99],{"_33":34,"_35":36,"_37":38,"_39":40,"_41":42,"_43":44,"_45":46,"_47":48,"_49":50,"_51":52,"_53":54,"_55":56,"_57":58,"_59":60,"_61":62,"_63":64,"_65":66,"_67":68,"_69":70,"_71":72,"_73":72,"_74":72},"mediaId",6084347,"mediaKeyId","2916723-01d2499896f20ca9c6d6ad4534a6a7c4","parentId",2916723,"title","Panel: Treasury Market Functioning Tied to Fed Balance Sheet, Dealer Capacity and Investor Mix","audioSeconds",600,"startMs",1141000,"endMs",1741000,"viewUrl","/Search/View?dp=1&key=2916723-01d2499896f20ca9c6d6ad4534a6a7c4&start=1141&end=1741","thumbnailUrl","https://assets.pipeline.soar.com/2916723-01d2499896f20ca9c6d6ad4534a6a7c4/thumbnail_1141000.jpg","articleUrl","/articles/6084347/Panel-Treasury-Market-Functioning-Tied-to-Fed-Balance-Sheet-Dealer-Capacity-and-Investor-Mix","mediaUrl","https://secure.pipeline.soar.com/6084347-377438f48f8dca3ece6551851026112a/orig.mp4?Expires=1770794182&Signature=T25mlhGvHaAUUkySw121b7Ee-Nivb5-QADHMzxFjrq8OEs7b~utc6KXrQtPcqKdbNpBXkPAyT4nx76uPKTVauMZI3PLemiS3LIGZEPtgiBQdrwjHsmLalzGrhqdnm4YlBRAHMjc-bW68-pIz~vCbcaGbpQHLW7mbH-i1lxsUveY4pRCGzh9XKp98zE~CjgWB-TOQjhSvmL~-r5ZYhuR~6VmHBHznjomm1s2ilty1sMdqdaWNRbtgYpq3K~Fas0ifiTk5i5fwEZ~88wx9CAfrik69BZQpZJ2Z2~SJRKYQdCj75DgH1DgtwycmiDuCsodTkk4fJ8p4XEo0QLfpOnSDQQ__&Key-Pair-Id=KUT5TJCACFTXG","author","U.S. House Committee on Financial Services","date","2025-04-09T00:00:00Z","article","Speakers described four related pressures on Treasury market functioning: a sharp increase in outstanding Treasury debt, reduced dealer intermediation capacity, shifts in investor composition toward more leveraged and price‑sensitive holders, and the Federal Reserve's large holdings of Treasuries.

Tom Whiff said Treasury issuance has more than doubled over the past decade and noted the Fed currently holds \"more than $4,000,000,000,000 of treasuries on its balance sheet,\" making it the single largest holder of Treasury debt. He and others said the composition of holdings matters because some investors (hedge funds, asset managers) use leverage and derivatives that can amplify stress during rapid price moves.

Dr. Kristin Forbes highlighted four developments: larger issuance and a greater share of short‑term bills that require frequent rollover, constrained broker‑dealer intermediation capacity, changing purchaser mix with more leveraged funds and fewer foreign official holders, and geopolitical shifts that could lower demand for dollars and Treasuries over time. She warned that these trends make the market more vulnerable to shocks and that the Fed may be forced to intervene in ways that could conflict with monetary policy goals.

Former Undersecretary Neli Lang and Dr. Forbes both said regulatory changes should be coordinated: central clearing, SLR adjustments for reserves and careful management of open‑end bond fund liquidity and hedge fund leverage were all recommended to reduce the risk of fire‑sale dynamics.

Ending: The panel urged a package of reforms (improved market data and surveillance, central clearing where feasible, calibrated capital/margin treatment, and liquidity safeguards for open‑end funds) to strengthen Treasury market resilience rather than relying on any single measure.","mediaType","Video","parentTitle","U.S. Treasury Debt in the Monetary System (EventID=118116)","oneSentenceSummary","Economists and market participants told the task force that the Treasury market's resilience reflects issuance scale, dealer intermediation capacity, the Fed's balance sheet and changes in who holds U.S. debt; they recommended a package of reforms rather than single fixes.","taxTitle","Financial Services: House Committee, Standing Committees - House & Senate, Congressional Hearings Compilation, Legislative, Federal","taxId",1981,"location","","headline","shortSummary",{"_33":76,"_35":36,"_37":38,"_39":77,"_41":78,"_43":79,"_45":80,"_47":81,"_49":82,"_51":83,"_53":84,"_55":56,"_57":58,"_59":85,"_61":62,"_63":64,"_65":86,"_67":68,"_69":70,"_71":72,"_73":72,"_74":72},6084352,"Lawmakers and Economists Warn Tariffs Could Raise Prices, Weaken Treasury Demand",5347,585000,5932000,"/Search/View?dp=1&key=2916723-01d2499896f20ca9c6d6ad4534a6a7c4&start=585&end=5932","https://assets.pipeline.soar.com/2916723-01d2499896f20ca9c6d6ad4534a6a7c4/thumbnail_585000.jpg","/articles/6084352/Lawmakers-and-Economists-Warn-Tariffs-Could-Raise-Prices-Weaken-Treasury-Demand","https://secure.pipeline.soar.com/6084352-1e13550e7bfe47e2944b900406e2c10e/orig.mp4?Expires=1770794182&Signature=H8hwRCUEKxl6vWFTwKpSxI0Riz~Ww2gYDAz7thgKbIDDbA4t~RyCf-V8~4I3HmgAy6iLLYzucTtDMVgttIejEUcgVD04BUKpTNWrK4aXqrpj0PJfgQMqYzqOoFtF-wfUw5zGHsFvVGa2z9kErH5Ka0mBJf1aK8UiY6Es1UsV3YdGghWC6lQJPj-sjZ6hIXgeUzh~cWuN6tzC9m4-SALV5dkUNmf~la2fv8cxtaLQh~EgD3taqKvFYudWF7hJln7wgPPg2roo67-icnyoKKzMk7R0VUiEw1cYmN16tMku8A42XlJiKVRfXESSbhiB7QMSD~ZXSO3uSerC-4pUl96zww__&Key-Pair-Id=KUT5TJCACFTXG","Ranking Member Vargas and other members raised concerns that the Trump administration's tariff actions could reduce investor confidence, increase inflation and complicate Treasury market functioning. Vargas framed tariffs as a major economic threat and asked witnesses how the tariff shock affects markets and households.

Dr. Kristin Forbes said the immediate effect of large tariffs is higher prices and slower demand, which risks a stagflation scenario. \"When people realize they can't buy as much because things are more expensive, they're gonna be buying less,\" Forbes said, adding that tariffs are a supply shock that monetary policy cannot fully offset without harming growth.

Former Undersecretary Neli Lang told the committee the tariffs are a \"massive tax increase\" and warned they could reduce the demand for U.S. dollars and Treasuries over time. \"This could, over time, reduce the demand for U.S. Dollars and treasuries,\" Lang said, citing potential foreign investor concerns about inflation, dollar depreciation or restrictions on holdings.

Witnesses and lawmakers also raised concerns about political pressure on the Federal Reserve. Forbes and Lang said central bank independence is critical: if independence is undermined, inflation expectations and the difficulty of bringing inflation under control rise.

Ending: Committee members pressed witnesses on immediate household impacts and longer‑term risks to Treasury demand and the dollar; witnesses urged policy coordination and reiterated that tariff‑driven supply shocks pose difficult choices for monetary policy.","Members and witnesses at the task force hearing said large, unexpected tariffs would raise inflation and slow growth, creating difficult tradeoffs for the Fed and potentially affecting demand for Treasuries and dollar reserve status.",{"_33":88,"_35":36,"_37":38,"_39":89,"_41":90,"_43":91,"_45":92,"_47":93,"_49":94,"_51":95,"_53":96,"_55":56,"_57":58,"_59":97,"_61":62,"_63":64,"_65":98,"_67":68,"_69":70,"_71":72,"_73":72,"_74":72},6084357,"Bank Capital Rules and Basel III Endgame Cited as Constraint on Dealer Liquidity",220,1178000,1398000,"/Search/View?dp=1&key=2916723-01d2499896f20ca9c6d6ad4534a6a7c4&start=1178&end=1398","https://assets.pipeline.soar.com/2916723-01d2499896f20ca9c6d6ad4534a6a7c4/thumbnail_1178000.jpg","/articles/6084357/Bank-Capital-Rules-and-Basel-III-Endgame-Cited-as-Constraint-on-Dealer-Liquidity","https://secure.pipeline.soar.com/6084357-05ca046104dea4e5461a9e44b9b9231c/orig.mp4?Expires=1770794182&Signature=e~gR7u-~tFvDMCINTBz-oaosrBcqEyPHjpzlsjhHHfqnoBSqKwsPfkMHommpjeNa8SzfO4Xsl9wdTsmacRXAMws5BpcLqCvdglX1NkLk8jep4uxH-c7etPH3xWb8tg1YjlXdMT7cotSPnBnXhyxOvaSE9NI3YjApz9WUj4gNEqY8Ma5NQqu6N1J~7J02-hvtbAcruRv6j6mLKdYvkJWIaWW~zPJoqoGmmIld3Jdg5OCJ69XV1ay-Bk-R5r1Pnhh2g1z8QlOzFe8ilfDBHZ1~5wogTeCvTi~3PBHARKtP~5gP9aNgve8xgcya2Ia3ywatYttz~Z~kdQ-Rt7rj1UZJyg__&Key-Pair-Id=KUT5TJCACFTXG","Multiple witnesses told the task force that non‑risk‑sensitive capital measures are constraining dealers' ability to intermediate Treasury trades, particularly in stress periods, and that proposed Basel III \"endgame\" changes could exacerbate the problem.

Tom Whiff, who led the Treasury Market Practices Group, and Scott O'Malia of ISDA pointed to the supplementary leverage ratio (SLR) as a principal driver of reduced dealer balance‑sheet capacity. Whiff said, \"The SLR and other leverage requirements are intended to be risk agnostic backstops to risk based capital requirements. However, they can create binding constraints for some large dealer banks reducing their capacity to intermediate the treasury markets.\" O'Malia argued the SLR should be modified so banks have capacity \"to provide intermediation and client clearing services\" and noted the Federal Reserve temporarily excluded Treasuries from the SLR calculation in April 2020 during the pandemic.

Witnesses also criticized aspects of the Basel III endgame and the GSIB surcharge, saying some proposed calibrations would inappropriately raise capital charges for client clearing and trading book exposures. O'Malia cited industry analysis claiming the Basel proposals could increase capital on U.S. GSIB client clearing businesses by more than 80 percent, a change he described as potentially punitive and misaligned with the policy goal of promoting central clearing.

Panelists recommended several policy responses: (1) consider a permanent SLR exclusion or adjustment for central bank reserves (with no net reduction in total bank capital), (2) re‑calibrate the Basel endgame trading book rules and GSIB surcharge to reflect actual risk, and (3) ensure cross‑product netting and margin offsets apply to client clearing to avoid overstating client exposures.

Ending: Committee members and witnesses agreed capital and margin rules should be reviewed in a coordinated manner across agencies to prevent regulatory mismatches that could weaken market liquidity when dealer intermediation is most needed.","Witnesses warned that the supplemental leverage ratio and proposed Basel III changes, including the GSIB surcharge and trading‑book reforms, could reduce primary dealers' capacity to intermediate Treasury markets and urged regulatory adjustments.",{"_33":100,"_35":36,"_37":38,"_39":101,"_41":102,"_43":103,"_45":104,"_47":105,"_49":106,"_51":107,"_53":108,"_55":56,"_57":58,"_59":109,"_61":62,"_63":64,"_65":110,"_67":68,"_69":70,"_71":72,"_73":72,"_74":72},6084362,"Industry Urges Technical fixes, Time and Coordination for SEC Treasury‑clearing Mandate",311,1217000,1528000,"/Search/View?dp=1&key=2916723-01d2499896f20ca9c6d6ad4534a6a7c4&start=1217&end=1528","https://assets.pipeline.soar.com/2916723-01d2499896f20ca9c6d6ad4534a6a7c4/thumbnail_1217000.jpg","/articles/6084362/Industry-Urges-Technical-fixes-Time-and-Coordination-for-SEC-Treasuryclearing-Mandate","https://secure.pipeline.soar.com/6084362-6c8884e1aaff8a607db7ed1fefd65542/orig.mp4?Expires=1770794182&Signature=mYiVlLmWzf6thAIGIc23iH9ckgpekaSqbTmGp92XkbVsJx3Q1CEAlxbNHMPA8mZ2imoHeScDypZ3gdM~DB6et1R0YS6Iqx3k7mu1by7BfYTRB26O7vv4iocydxrzyjRW13QSFS-qlnLn7SyIsKeZFGP8B8jPv3X-ByuLUGtDC5XcxDvAwpXHgWkJCCnavd5poLk9491jwCggNzpTKBwMpJ5IE2XgwgZRxxg2oFdcMZiTI7yU4TzzDPNITaZ0OBLB3IWKUQqEWyKvhOeVuprsx29htUh-NpQ~4nNkhutzCIvywHbH-Fj7Zn1inIAJq~oueafFTEnMbbREbwXrfyWSyw__&Key-Pair-Id=KUT5TJCACFTXG","Chairman Lucas opened the House task force hearing on US Treasury market resilience by noting the SEC has finalized a rule requiring more central clearing of Treasury cash and repo transactions, and witnesses urged technical fixes and careful implementation to avoid market disruption.

Witnesses representing banks, market infrastructure and trade groups said the SEC clearing mandate is a potentially important resilience enhancer but highlighted unresolved operational, legal and accounting questions. Tom Whiff, managing director at UBS and former chair of the Treasury Market Practices Group, told the panel, \"The SEC finalized a rule in December of 2023 on the clearing of US Treasury securities, which will require most market participants to centrally clear eligible cash and repo transaction.\" He said industry groups are working to standardize documentation and operational policies to support the transition.

Scott O'Malia, chief executive officer of the International Swaps and Derivatives Association, recommended regulators adjust capital and margin rules so banks and clearing members are not discouraged from providing client clearing or intermediation. \"This should be modified to ensure banks have the balance sheet capacity to provide intermediation and client clearing services in the US Treasury market, including during periods of stress,\" O'Malia said.

Both Whiff and O'Malia noted the SEC acting chairman extended the implementation date by one year to allow industry preparations; they urged the SEC to complete outstanding approvals of clearinghouse rulebooks for competing clearers such as DTCC, CME and ICE and to resolve accounting and inter‑affiliate issues.

The witnesses described three practical priorities: (1) operational readiness across clearinghouses and custodians, (2) legal and documentation work to onboard thousands of counterparties, and (3) regulatory alignments on margin, capital and cross‑product netting to avoid unintended increases in capital costs for client clearing. Whiff said industry coordination has produced standardized documentation efforts and urged limited technical fixes to the rule to facilitate cost‑effective clearing.

The task force pressed witnesses on timelines and sequencing. O'Malia and Whiff said more time enabled better testing and approval of clearinghouse rulebooks, but also warned against indefinite delays: they described the extension as necessary for safe implementation while urging regulators and market infrastructure providers to avoid further slippage.

Ending: Witnesses concluded that central clearing can materially reduce operational and counterparty risk in Treasury markets if implementation is sequenced with complementary fixes to capital and margin rules and if regulators approve clearinghouse rulebooks and related legal frameworks in a coordinated way.","Industry witnesses told the House task force that the SEC\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000\u0000 clearing rule needs technical adjustments and close regulator‑industry coordination to avoid operational disruption when central clearing of eligible cash and repo transactions takes effect.","actionData","errors"]

Article not found

Panel: Treasury Market Functioning Tied to Fed Balance Sheet, Dealer Capacity and Investor Mix

Lawmakers and Economists Warn Tariffs Could Raise Prices, Weaken Treasury Demand

Bank Capital Rules and Basel III Endgame Cited as Constraint on Dealer Liquidity

Industry Urges Technical fixes, Time and Coordination for SEC Treasury‑clearing Mandate