June 10 The U.S. Treasury on Tuesday proposed expanding rules that require the reporting of large positions in U.S. government debt to include positions held by foreign central banks and governments, as well as to capture more interest rate derivatives contracts.
The U.S. government began collecting information on large Treasuries positions in 1996 after short squeezes in some notes caused by traders at Salomon Brothers, which later became part of Citigroup, raised concerns that market participants could use large positions to manipulate prices.
Foreign central banks and governments were exempt from the reporting requirements, though China and Japan have since grown to be the largest holders of Treasuries. U.S. Federal Reserve banks have also been exempt when holding bonds for their own accounts.
The Treasury is now proposing to eliminate those exemptions and request the organizations and countries report their large trade positions, saying that more information will help the government monitor supply and demand for U.S. debt.
The Treasury is also proposing to alter the thresholds that require trades be reported, from a minimum holding of $2 billion to 10 percent of an outstanding Treasury security, which in the case of some issues may fall below $2 billion.
It also wants more futures and options that are settled by transferring Treasuries to be made subject to reporting requirements.
Comments on the proposed rule, which was published on Tuesday in the Federal Resister, are due by August 9.
(Reporting by Karen Brettell; Editing by Dan Grebler)