By Davide Barbuscia
NEW YORK (Reuters) – A recently launched U.S. Treasuries buyback program should improve liquidity in the U.S. government bond market while other initiatives will boost transparency on prices and visibility on the use of leverage, a Treasury official said on Wednesday.
The Treasury launched a buyback program last month to provide market participants a regular opportunity to sell back to Treasury off-the-run securities, which are older and less liquid, across the yield curve. The last time it executed regular buyback operations was in 2000 for about two years.
Buybacks are expected to encourage dealers to make markets for off-the-run securities, “as they will have Treasury as a regular and predictable buyer,” said Assistant Secretary for Financial Markets Joshua Frost in prepared remarks for the ISDA/SIFMA Treasury Forum in New York.
They are also expected to prompt more trading and allow bond dealers to free up…
