Best Practices for Treasury, Agency Debt, and Agency MortgageBacked Securities Markets

The Treasury Market Practices Group (TMPG) recognizes the importance of maintaining the integrity and efficiency of the U.S. government securities (Treasury), agency debt, and agency mortgage-backed-securities (MBS) markets. We believe that the public and all market participants benefit from a marketplace that is transparent and efficient. We believe that these characteristics help maintain vigorous competition and liquidity in the Treasury, agency debt, and agency MBS markets. To that end, we recommend that all Treasury, agency debt, and agency MBS market participants incorporate best practices in their operations in order to promote trading integrity and to support an efficient marketplace.

Best practices are meant to serve as guidelines for market participants seeking to organize their operations in a manner that fosters strong controls and reinforces overall market integrity. The best practices in this document are intended not only for dealers, but also for any market participant active in the Treasury, agency debt, and agency MBS markets, including dealers, banks, buy-side firms, investors, investment advisors, market utilities, custodians, and others. We believe that these best practices, if adopted, can strengthen each market participant’s existing controls. In addition, we believe that the implementation of these best practices will help reduce market disruptions—including, but not limited to, episodes of protracted settlement failure—and buttress overall market integrity, resulting in important benefits for Treasury, agency debt, and agency MBS market participants as well as the public. Further information about specific subject matter TMPG recommendations can be found on the TMPG’s website and in the appendix to this document.

These best practices seek to affirm existing notions of good market conduct and are intended as useful operational guideposts rather than binding rules or regulatory guidance. As each market participant makes use of these recommendations, it should take into account its own unique characteristics, such as asset size, transaction volume, and the form of the organization’s participation in the market (for example, market maker, investor, or custodian).

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