Regulators, wary of risks, want more trading data: Fed's Dudley

October 24, 2016 9:02 AM EDT

New York Fed President William Dudley takes part in a panel convened to speak about the health of the U.S. economy in New York, U.S. on November 18, 2015. REUTERS/Lucas Jackson/File Photo


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By Jonathan Spicer

NEW YORK (Reuters) - 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."

Regulators like the Fed, he said, need "improved access to transaction-level data" in order for the Treasury market to keep doing its job as a benchmark for financial assets worldwide, for short-term collateral, U.S. monetary policy, and to financing the government.

Dudley was speaking at a conference at the New York Fed on Treasury market functioning involving top officials from the Securities and Exchange Commission, the Treasury Department, and other agencies, as well as top bank and market executives.

(Reporting by Jonathan Spicer; Editing by Chizu Nomiyama)



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