Regulators need a clearer view of the trading that takes place in the U.S. Treasury market, the world’s deepest, in order to better understand looming risks and the sources of abrupt changes in prices, an influential financial supervisor said on Monday.
William Dudley, president of the Federal Reserve Bank of New York, which acts as the government’s eyes and ears on Wall Street, said risks remain after the 2014 “flash crash” in Treasuries and after this month’s plunge in the British pound – which happened “seemingly without a major catalyst,” he said.
Information is “not widely available” in Treasury and foreign exchange markets, Dudley said. “It is challenging for the official sector, market participants, and members of the public to effectively analyze these markets, understand the sources and risks of flash events, and evaluate how liquidity is changing.”
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