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House task force weighs central clearing, leverage rules to expand primary dealer capacity
Summary
Witnesses and members at a House Financial Services task force hearing debated whether central clearing, changes to leverage requirements and market-structure reforms can expand primary-dealer capacity as Treasury issuance grows; witnesses said clearing and transparency will help but urged broader fixes and noted unresolved limits.
WASHINGTON — Lawmakers and industry witnesses on the House Financial Services task force examined whether central clearing, capital-rule adjustments and other market-structure changes can give primary dealers more capacity to intermediate rising U.S. Treasury issuance.
James Tabakki, who identified himself as chairman of the Independent Dealers and Traders Association and CEO of South Street Securities, told the panel that financing — particularly access to repo financing — is the principal constraint on dealers’ ability to intermediate Treasury securities. “I will tell you that unless we use every solution in the drawing board right now, we do not have the capacity for $50,000,000,000,000,” Tabakki said during his testimony.
Witnesses broadly endorsed the SEC’s program to expand mandatory Treasury clearing and described gains from central clearing, while cautioning it is not a single cure. Laura…
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