By Pia Hecher.
The ongoing United States federal government shutdown is directly impacting US bond market regulation and evolution, leading to the Fixed Income Market Structure Advisory Committee (FIMSAC) cancelling its public meeting due on 28th January and the US Commodity Futures Trading Commission (CFTC) to suspend reporting on its Commitments of Traders (COT) data as a result of the closure.
Beginning on the 22 December 2018, the government shutdown is now the longest in US history. After President Trump vowed to only sign a new budgetary law that included US$5.7 billion in federal funds for a US-Mexico border wall, the US House of Representatives, Senate and Trump have failed to reach an agreement on the law, causing the present closure.
FIMSAC informs the Securities and Exchange Commission (SEC) about the operations and structure of US fixed income markets and advises the SEC on matters related to market structure. It is currently reviewing the regulatory framework for oversight of electronic trading platforms used in the corporate and municipal bond markets and the reporting of block trades in the corporate bond market.
The CFTC has announced that as long as the government closure continues, it will not report the COT, which provides data on large positions supplied by reporting firms including futures commission merchants (FCMs), clearing members, foreign brokers and exchanges. The commission promotes market integrity and polices abuses in the derivative markets, aiming to reduce risks of futures and swaps markets. The absence of government data across all sectors is impacting the investment community.
It is unclear when the ongoing shutdown will end. "We're going to stay out for a long time, if we have to," Trump announced in a conference call with supporters on Tuesday 15 January.
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