ABASA: More securities market transparency could have negative consequences

In a comment letter filed Friday, the ABA Securities Association and two other trade groups raised concerns about a Treasury Department proposal to require additional post-trade data transparency in the Treasury securities market, saying that information could have “significant” potential downsides if it were made publicly available. The groups emphasized that they were broadly supportive of additional non-public data disclosure that could support policymaking and market monitoring, but said that public disclosure could do more harm than good.

The Treasury Department in June began accepting public comment on the pros and cons of going public with more information about Treasury securities market transactions. In their letter, the trade groups said they saw little benefit in making more data public but many possible negative outcomes. “Specifically, additional inappropriately calibrated public disclosures present significant risks to the Treasury’s goal of financing the U.S. debt at the lowest cost to taxpayers over time, the ability of primary dealers to effectively serve their important underwriting and market making function, and the ability of end-users and investors to execute large transactions,” they said.

The associations instead made several suggestions for Treasury to consider before making more data public. These include basing those decisions on a market-by-market basis after weighing the potential negative effects and not pursuing more disclosure until there is increased clarity on how transparency would fit in with a broader range of Treasury market reforms being pursued