Wall St’s bond treasury bond trading elite were summoned to the Federal Reserve on Monday and warned that they had to do more to prevent price manipulation what is “the deepest and most liquid sovereign debt market in the world.”
Compliance officers and the heads of treasury bond trading from 22 primary dealers — those who deal directly with the Fed — were told they had to integrate strong management oversight and compliance into their day-to-day operations.
The move follows mounting criticism of market practices by treasury department officials. UBS is already being investigated over unusual price fluctuations in the treasury bond market and two traders are leaving the Swiss bank. Credit Suisse also parted company with one of its Wall St government bond traders recently.
But the Jens twins, Dean and Steven, at their Dollars and Jens blog, question how easy it is to manipulate prices in what is a $4,000bn market. Greg Newton, at NakedShorts, simply observes that the Swiss are “in deep chocolate.”