Law Commons^™

The Failed Regulation Of U.S. Treasury Markets, Yesha Yadav

Vanderbilt Law School Faculty Publications

In trading the preeminent risk-free security, the $21 trillion U.S. Treasury market supports the country's borrowing needs, financial stability, and investor appetite for a safe asset. Straddling the nexus between a securities market and a systemically essential institution, the Treasury market must function at all costs, even if other markets fail.

This Article shows that Treasury market structure is fragile, weakened by a regulatory model poorly suited to match its design. First, public oversight of Treasuries is fragmented, divided between five or more agencies. The rulebook for Treasuries is sparse, lacking basic guardrails common to other markets. Without effective rules …