(Reuters) -Regulators are looking to broaden trading in U.S. Treasury securities, potentially opening the doors to a power shift from major banks that have dominated the $24 trillion market for decades, according to a federal report released on Thursday.
The report by the Inter-Agency Working Group on Treasury Market Surveillance (IAWG) shows regulators are in support of "all-to-all" trading, a concept in which buyers and sellers would trade Treasury securities directly with each other rather than rely on big banks.
A form of such trading exists across several asset classes, including stocks, options and futures exchanges.
The report also includes a proposal to improve the collection and public release of data on secondary market transactions.
The move comes at a time of heightened volatility in the U.S. bond market due to uncertainty over future rate hikes and worries of a looming recession.
Earlier this month, the U.S. Treasury said it would continue to assess whether or how to implement a program to buy back some of its existing bonds, a move partly aimed at improving liquidity in the Treasuries market.
The Treasury market, which is the world's largest bond market and serves as a global benchmark for a swathe of other asset classes, has seen liquidity deteriorate this year partly due to U.S. Federal Reserve's rapid quantitative tightening.
The central bank, which had bought government bonds during the COVID-19 pandemic to stimulate the economy, is now also reducing the size of its balance sheet by letting its bonds reach maturity without buying more, a move that investors fear could exacerbate price swings.