All-to-All Trading in the U.S. Treasury Market

Abstract

Although the U.S. Treasury market remains the deepest and most liquid securities market in the world, several episodes of market dysfunction over recent years have brought the market’s resilience into focus. The adoption of all-to-all trading in the Treasury market could be one avenue to strengthening market resilience. Conceptually, all-to-all trading would allow any market participant to trade directly with any other market participant. This could be helpful in times of stress when the capacity of traditional intermediaries may be tested. In this article, we discuss what all-to-all trading would mean for the Treasury market, the benefits it might bring, and what can be learned from the experience of other markets. We also review several trading protocols operating in the Treasury market that widen the field of trading partners and discuss the challenges to the broader use of such protocols or to the adoption of new all-to-all protocols.

Keywords: Treasury market, market structure, all-to-all

JEL Classification: G10, G23, D47