On Tuesday, the Treasury Market Practices Group (TMPG) issued best practices for treasury, agency debt, and agency market-backed securities (MBS) markets. The best practices are not binding rules or regulatory guidance but rather “are meant to serve as guidelines for market participants seeking to organize their operations in a manner that fosters strong controls and reinforces overall market integrity.” The guidelines are intended not just for dealers, but for all participants in related markets, including brokers, buy-side firms, investors, and custodians.
TMPG’s guidance focused on the topics of Promoting Market Making and Liquidity, Maintaining a Robust Control Environment, Managing Large Positions with Care, and Promoting Efficient Market Clearing. Among their recommendations, the group advised that all market participants should promote market liquidity, ensure robust review and oversight of their trading and settlement operations, empower those individuals responsible for internal control functions to bring concerns to the attention of senior management, avoid any strategies that create or exacerbate settlement fails, and adopt policies and implement systems that ensure that trades are entered into trading systems promptly in order to promote efficient settlement.
The Securities Industry and Financial Markets Association’s (SIFMA) president, Tim Ryan, expressed his support of the best practices providing, in a statement released on Tuesday, “SIFMA shares this focus on ensuring disciplined, orderly markets that promote liquidity, and the best practices issued today complement SIFMA's existing market standards and practices in these markets.