{"id":1974906,"date":"2023-07-17T07:38:01","date_gmt":"2023-07-17T11:38:01","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/in-the-market-small-treasury-brokers-seek-reforms-as-ranks-thin\/"},"modified":"2023-07-17T07:40:53","modified_gmt":"2023-07-17T11:40:53","slug":"in-the-market-small-treasury-brokers-seek-reforms-as-ranks-thin","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/in-the-market-small-treasury-brokers-seek-reforms-as-ranks-thin\/","title":{"rendered":"Small Treasury brokers in the market demand reforms as their numbers decline."},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">24<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fin-the-market-small-treasury-brokers-seek-reforms-as-ranks-thin%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1974906&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><div class=\"entry-content\">\n<h2>Running\u2064 Out \u2064of\u2063 Room: The Squeeze\u200c on\u200d Independent \u200dBroker-Dealers in\u2064 the \u2064U.S.\u200b Treasury Market<\/h2>\n<p>By \u2062Paritosh\u2062 Bansal<\/p>\n<p>(Reuters) \u2013\u200c At \u200c$25 \u2062trillion, the U.S.\u2063 Treasury market is massive.\u2062 And\u2063 yet, \u2064small\u200b independent\u2064 broker-dealers say they are \u200drunning out of\u200c room to operate \u200dthere. <\/p>\n<div id=\"div-gpt-ad-1663871513696-art-1\"\u2063 style=\"min-width: \u200d320px; min-height: \u200c50px;\u2064  \u200btext-align:\u2064 center;\"> \u200b \t<script> \u2063 \t\tgoogletag.cmd.push(function() { \u200bgoogletag.display('div-gpt-ad-1663871513696-art-1'); }); \u2063 \u2062\t<\/script>\u2062  \u200d<\/div>\n<div class=\"ad-slot__ad-label\">Advertisement<\/div>\n<p>\u200c \u200c <\/p>\n<p>  \u200b \u200d<\/p>\n<p>Over \u200bthe \u2063past\u2062 decade,\u2062 at \u2063least\u200d eight \u200cindependent broker-dealers\u200c have \u2063been either \u200cbought by bigger firms\u200c or closed shop, a \u2062Reuters tally\u200d shows, \u200ctaking\u200c out intermediation \u2063capacity from a market \u2064that needs \u2064more of it. At \u200dthe same time, academic studies show the\u200b largest\u2063 banks\u2063 have\u200b come to\u200c hold \u200bmore\u200c sway in\u2062 some segments of \u2064the\u2062 market, \u200dsuch as\u2062 parts of\u200d repurchase \u200cagreements\u200d (repo) \u200bfor <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/report-home-prices-are-up-nearly-25-since-this-time-last-year\/\" title=\"Report: Home Prices Are Up Nearly 25% Since This Time Last Year\">short-term loans<\/a>\u200c against\u200d Treasury and other \u2064securities. <\/p>\n<p> \u200c<\/p>\n<p>James\u2063 Tabacchi, CEO of \u2062South Street Securities and \u200bchair \u200cof\u2064 a trade group of \u200bindependent \u2063firms,\u2064 blames\u2063 market \u200cstructure \u200dfor squeezing\u2062 out \u200bmid-market firms. \u2064His\u200b group has \u200bbeen\u2062 lobbying\u2063 regulators \u2064for \u200dreforms, \u200carguing\u2063 that firms \u2064such \u200das \u2064his\u200b bring \u2063diversity and\u2064 resilience\u200d to\u2062 the market. \u200c<\/p>\n<p>\u201cThe \u2064mid-market \u2063players leave the \u2064marketplace \u2062because \u200cthey can\u2019t \u200ccompete,\u201d said Tabacchi, a former Citi \u2063executive.  \u200d <\/p>\n<p>\u2064 <\/p>\n<p>The Treasury market has\u200b grown as\u2064 U.S.\u200b government borrowing increased,\u200d but intermediation\u2064 capacity \u200bhas not kept up. In 1988, for example, there \u200bwere\u2062 46 brokers that\u200d act as the Federal\u2063 Reserve Bank of\u200c New\u2063 York\u2019s \u200bcounterparties\u200c and \u2064$2.6 \u2064trillion \u2062of debt \u2063outstanding. \u200cDebt \u2063has\u2062 now \u2063swollen more\u2064 than 12-fold, while the\u200d number\u200c of primary dealers\u2064 has\u2064 shrunk to 24. \u2063Primary dealers include \u2062banks\u200c such \u2062as JPMorgan \u200dChase and \u200cBank of America. \u2063<\/p>\n<p>\u2063 <\/p>\n<p>Other \u200bplayers, \u2063such \u2062as\u2063 algorithmic\u200b traders, \u2064have become a\u200c bigger\u2064 presence, \u200bhelping \u2064make \u200cmarkets.\u200d But they\u2062 tend to \u200bwithdraw\u2063 during periods of stress and banks\u200d that\u200b remain \u2062have\u2064 been overwhelmed, \u200ca \u2063dynamic \u200bthat has led to frequent disruptions \u2062in\u200d recent years.\u2064 <\/p>\n<p> \u2062<\/p>\n<p>In \u2062March 2020,\u200c at the height \u200cof\u2063 the pandemic, for \u200bexample, Treasury \u200bmarkets froze amid\u200b a\u200d global dash\u2064 for\u2062 cash, \u2064forcing the Fed to\u200c step\u200d in. \u2063<\/p>\n<p>\u201cIf you \u200bdon\u2019t improve \u2064the \u200dmarket structure, \u200byou\u2019re\u200b taking\u200d a \u200dbigger\u2063 risk\u200d that \u200cthis is going \u2062to happen again and more\u2063 frequently \u200dand more \u2062severely \u200bin future\u200d crises,\u201d said \u2064Darrell Duffie, \u200ca\u2064 Stanford \u2062finance professor who \u2062has studied \u2062the market \u2062in\u2063 depth and\u200d consults with regulators.<\/p>\n<p> \u200d<\/p>\n<h3>Treasury \u200cReforms<\/h3>\n<p>\u200c <\/p>\n<p>Regulators\u2063 have launched\u2064 a\u200d comprehensive \u2063review of \u2063the \u200dmarket to make \u2064it more resilient. \u2064The \u200dU.S. Securities and Exchange Commission, \u200bfor example, is \u200bfinalizing\u2062 rules that would\u2063 force more\u200c trades\u200d to\u200c clear\u2064 centrally.\u200d <\/p>\n<p>The \u2063debate \u2063has focused on \u200cissues such\u200c as \u200ccapital\u200d rules\u200d that limit the \u2062capacity\u2062 of the largest banks to \u200cparticipate \u2064and\u2062 the growing\u2063 role\u200d of \u2063the algorithmic trading firms. \u2062<\/p>\n<p>\u2063 <\/p>\n<p>In\u200b recent weeks,\u2064 Tabacchi\u200d has \u2063been\u2063 making the rounds of Washington,\u200d including the \u2062SEC,\u200c Fed\u2064 and\u2064 Treasury Department,\u2064 hoping to change that. His pitch\u200c to\u2062 regulators: \u201cSpend \u200bsome\u200b of your\u2064 resources to \u200dbring \u200dadditional\u2062 capacity through \u200csmaller players.\u201d<\/p>\n<p>\u2062 <\/p>\n<p>He might have \u200can uphill task. \u200cSome Treasury \u200cmarket experts, \u2064including two sources \u2063close\u2063 to \u2063large banks,\u2063 said the \u200csqueeze \u200don \u2064the smaller firms\u200d is not the \u200dforemost\u200b concern for\u200c the \u200dmarket,\u200b where\u2064 <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/in-the-market-small-treasury-brokers-seek-reforms-as-ranks-thin\/\" title=\"Small Treasury brokers in the market demand reforms as their numbers decline.\">bigger\u200d structural \u200cproblems\u200b exits<\/a>.<\/p>\n<p>In\u200c addition, some \u200bof \u2064these experts\u200c said \u200dchanging \u200bmarket rules to \u200bencourage smaller\u2063 players would\u2064 come with\u200b risks,\u2064 and\u200b consolidation in\u2064 an industry\u200c where \u2063size\u200b is an \u2063advantage\u2064 was not \u200bnecessarily\u200b bad. \u2063<\/p>\n<p>One of \u200cthe\u200d sources close to a\u200b big bank said while\u200d their\u200c institution wanted \u200cdiversification\u200c in\u200b the market, there \u2064should\u2062 be\u2064 \u201csome standards around who participates to \u2062make sure\u2063 that the system\u2063 as a whole\u200d is\u200c safe and\u2064 sound.\u201d \u200c<\/p>\n<p> \u2062<\/p>\n<p>The \u2063SEC, Fed and\u2062 Treasury\u2062 did not respond\u200b to \u200drequests\u2062 for comment. <\/p>\n<p> \u200b<\/p>\n<h3>Market Dynamics<\/h3>\n<p>Tabacchi\u2019s group, the\u2064 Independent Dealers\u2062 and Traders\u2062 Association (IDTA), argues\u200c its\u200d members\u2063 can play \u2062a \u2063significant role, \u2062especially\u200c at times when market capacity \u2062is reduced. \u2063<\/p>\n<p>For example, at \u200dmonth-end\u2062 when\u2064 banks \u2064tend\u200b to\u2063 pull back, such firms have\u2064 at times seen\u200d activity\u200c spike\u2062 by as \u2064much as\u200b 30%\u2062 in\u200c the\u200b reverse\u2063 repo\u2064 market,\u200b where they would stand in as \u200dborrowers of cash and sell \u2064securities, according to \u200da 2019 IDTA\u200d paper, the \u2063latest\u2063 data available.<\/p>\n<p> \u2064<\/p>\n<p>The same paper\u2064 cited \u2063data\u200d that\u2064 showed \u200cits\u2063 members\u2019 trades at\u2063 times \u200baccounted for nearly a fifth of \u200dthe \u2063transaction volume that \u200cwent \u2062into\u2063 the\u2064 calculation\u2064 of the\u2064 benchmark \u200cSecured \u2063Overnight Financing\u2063 Rate (SOFR). <\/p>\n<p> \u200d<\/p>\n<p>In \u2064meetings with\u2064 regulators,\u2064 Tabacchi has been \u200bexplaining how \u2063market structure that\u2063 looks sensible\u2062 on \u2062paper can disadvantage smaller firms.\u2063 <\/p>\n<p>One of his \u2063group\u2019s \u2062asks, \u200dfor\u200b example,\u2063 is \u2063that\u200d regulators \u200cstandardize the reduction \u200bapplied\u2064 to \u200dthe\u2062 value \u200cof\u200d collateral\u2064 in repo trades, called \u2064haircuts.\u2062 Haircuts \u200dreduce risk.\u2063 Larger\u2064 institutions are able to \u2062offer clients trades\u200d with no \u200chaircuts,\u200d something that \u2064smaller firms cannot \u200cafford\u200b to \u200bdo.<\/p>\n<p> \u2063<\/p>\n<p>Another of the \u2062IDTA\u2019s \u200cproposal\u200d is\u200c to have\u200b the \u200bbig banks pay more \u2063for a \u2062buffer that the Fixed Income Clearing Corporation (FICC), \u2062the\u2062 central clearing\u200b entity,\u2064 maintains\u200d to absorb\u200c the\u200b shock from\u200d a default\u2062 by \u2064one \u200dof \u2063its\u2064 members. <\/p>\n<p> \u200c<\/p>\n<p>During \u2063the\u2062 banking crisis \u200bin\u200c March, as \u2062deposits\u200d moved \u200bto \u200cthe \u2062biggest banks, the size\u200c of \u2063their market\u2062 positions increased, \u200bTabacchi said. Increased\u2062 clearing \u200cactivity\u2064 led \u2063the FICC\u2063 to ask for additional funds for \u2062the \u200cfacility. For smaller firms, \u2064it meant they\u2064 could either\u2063 reduce\u200b business\u2064 or\u200c seek more\u2063 financing.<\/p>\n<p>\u200b <\/p>\n<p>Tabacchi \u200bsaid\u200b he was\u2062 not sure\u2064 whether \u200bhis push \u2063for\u2064 reforms would succeed. He \u2063has been\u2063 diversifying\u200b his business \u2063to reduce its\u200d reliance\u2063 on\u200c Treasury\u2064 markets.<\/p>\n<p>\u201cWe \u200bare\u200c all\u200b planning that this might\u200c not work. This\u200b market might not\u2063 be in \u200bour future,\u201d Tabacchi\u2064 said.<\/p>\n<p>\u200d <\/p>\n<p> \u200c(Reporting by\u200c Paritosh Bansal; \u200dediting \u2064by \u200bAnna Driver)<\/p>\n<p><a\u200b href=\"https:\/\/www.oann.com\/uncategorized\/in-the-market-small\/attachment\/file-photo-the-united-states-department-of-the-treasury-is\/\"><\/a><\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>Matt\u2063 Capelouto, \u2064President \u200bof DrugInducedHomicide.org, discusses\u2062 how his personal \u200btragedy led\u2062 to his \u200cquest \u200cto\u200c fight for \u200ba safer\u2064 future \u2062for\u2063 young \u200cAmericans.<\/p>\n<p> \u200d\t\t\t\t\t\t\t\t\t<\/p><\/div>\n<div class=\"entry-content\">  \u2062\t\t\t\t\t\t\t\t\t\t<\/p>\n<p>Matt Capelouto, President \u2064of\u2064 DrugInducedHomicide.org,\u200d discusses \u2062how his \u200cpersonal\u200d tragedy \u2064led \u2063to\u2064 his \u200cquest \u200dto\u200d fight \u200cfor \u200ba\u2062 safer future \u200cfor young\u200d Americans.<\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\u200b  \t\t\t\t\t\t\t\t\t\t<\/p>\n<p>Alex Newman, CEO of Liberty\u200c Sentinel\u200c Media,\u200c discusses the importance of \u2064knowing\u2063 who is\u2063 in \u2062our \u2064country and securing the\u2063 border.<\/p>\n<\/p><\/div>\n<div\u200c class=\"entry-content\">\u2063  \u200b\t\t\t\t\t\t\t\t\t\t<\/p>\n<p>Chad \u200dPrather, Baste Records Artist, \u2062discusses\u2064 how the \u200d65,000 \u2063actors represented by\u2062 SAG-AFTRA have joined thousands of \u2064writers \u2062to STRIKE!<\/p>\n<p> \u200d\t\t\t\t\t\t\t\t\t<\/p><\/div>\n<div \u2064class=\"entry-content\"> \u200d \u200b\t\t\t\t\t\t\t\t\t\t<\/p>\n<p>By\u2063 Huw\u200c Jones LONDON\u200d (Reuters) \u2013 Globally \u2062agreed \u2063rules\u2062 leave crypto\u2063 firms\u200d with \u2064no\u200d option\u2064 but\u200d to \u2064introduce \u200cbasic \u2062safeguards to prevent\u2026\u200d <\/p>\n<\/p><\/div>\n<div class=\"entry-content\">  \u200b\t\t\t\t\t\t\t\t\t\t<\/p>\n<p>OSLO\u200d (Reuters) \u2063\u2013 Facebook and Instagram \u2063owner Meta\u2063 Platforms\u2062 will be\u200c fined\u2062 one\u200c million crowns ($100,000) per\u2064 day \u2064over\u200d privacy\u2064 breaches unless\u2026 <\/p>\n<\/p><\/div>\n<div\u200d class=\"entry-content\">\n<p>LONDON (Reuters) \u2013 \u2063The United\u2062 Nations Security Council \u2064will hold \u2063its\u2064 first \u2064formal \u200bdiscussion on\u2063 artificial\u2063 intelligence\u2063 (AI)\u2063 this week in New\u2026\u2063 <\/p>\n<p> \u2063\t\t\t\t\t\t\t\t\t<\/p><\/div>\n<div \u2063class=\"entry-content\"> \u2063 \t\t\t\t\t\t\t\t\t\t<\/p>\n<p>BEIJING\u200c (Reuters) \u2013 \u200dChinese President\u2063 Xi\u2062 Jinping\u2064 said China \u200cmust \u200cbuild\u200d a \u200c\u201csolid\u201d \u200dsecurity barrier\u200c around its \u200dinternet under \u2063the supervision\u2064 of\u2026 <\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>At $25 trillion, the U.S. Treasury market is vast. However, small independent broker-dealers claim they are struggling to find space to operate. In the last ten years, at least eight independent broker-dealers have either been acquired by larger firms or shut down, according to Reuters.<\/p>\n","protected":false},"author":66,"featured_media":1974907,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[542],"tags":[],"class_list":["post-1974906","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-oann"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1974906","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/66"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1974906"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1974906\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1974907"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1974906"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1974906"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1974906"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}