: SEC set to advance reforms to head off next crisis in $24 trillion market for U.S. government debt

The Securities and Exchange Commission is taking another step to address concerns over stability in the markets for U.S. government debt, with the agency set to propose new rules Wednesday to encourage central clearing Treasury security trades.

U.S. government debt loads TMUBMUSD10Y, 3.402% have increased rapidly in recent decades, as the federal government combatted the economic effects of the 2008 financial crisis and the COVID-19 pandemic at the same time that an aging population has led to greater spending on healthcare and Social Security.

The market for U.S. Treasuries has grown to more than $24 trillion, expanding nearly ten fold over the past 20 years at the same time that major regulatory changes have blunted the ability of some bank-owned dealers of government debt to increase their purchases.

These dynamics have contributed to a series of liquidity crunches in the market, starting with the 2014 flash rally in Treasuries, followed by pressures in the Treasury repo market in September of 2019 and a liquidity crisis in March of 2020 related to the outbreak of COVID-19.