December 10, 2014 / 5:26 PM / 5 years ago

U.S. to ask foreign governments to report big Treasury holdings

WASHINGTON (Reuters) - The U.S. Treasury Department will begin asking foreign governments and central banks to report large holdings of U.S. federal debt, the Obama administration said on Wednesday.

The policy was announced in a rule published in the Federal Register and takes effect on March 10. It will also require more disclosure from investors in interest rate derivatives contracts, the Treasury said.

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 Inc, raised concerns that market participants could use large positions to manipulate prices.

More recently, analysts have scratched their heads over Treasury data pointing to giant purchases of Treasuries in countries like Belgium, with many suspecting that firms are buying on China’s behalf. China has grown to be a major holder of Treasuries.

The new rule removes the long-standing exemption from the reporting requirements that had been granted to foreign central banks and governments, but in a diplomatic twist, it also says their disclosures will be “voluntary.”

The Treasury said more information from bondholders would help the government monitor supply and demand for U.S. debt.

For details on the rule, click: here

Reporting by Jason Lange; editing by Matthew Lewis

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