The Federal Reserve Bank of New York endorses the Fails Charge Trading Practice published today by the Treasury Market Practices Group (TMPG) and strongly encourages its adoption by all market participants. The Fails Charge Trading Practice provides a feasible method for market participants to implement the TMPG's previously announced recommendations for addressing widespread settlement fails in the U.S. Treasury market. The New York Fed is convinced that universal adoption of the trading practice is a crucial step in alleviating the chronic fails problem that currently threatens to constrain Treasury market liquidity and function. The New York Fed will adopt this new trading practice in its own market operations.
“We applaud the efforts of the TMPG in leading an industry-wide search for a remedy for the chronic fails problem in the Treasury market and commend the market participants who have contributed to this significant undertaking,” said William Dudley, executive vice president and head of the New York Fed’s Markets Group. “Every market participant should seize this important opportunity to promote the future health of the Treasury market by adopting the trading practice.”