US Treasury Clearing Shifts Ahead of Schedule, Says New York Fed Chief

The shift to central clearing for US Treasuries and Treasury-collateralised repurchase agreements is progressing ahead of schedule, according to Federal Reserve Bank of New York president John Williams.

In a recent statement, Williams noted that the industry has already begun expanding infrastructure for cleared repo and cash trading, with activity shifting from uncleared to cleared markets faster than expected. The process requires eligible secondary-market transactions in US Treasuries, repo and reverse repo agreements to be cleared through a central counterparty.

Williams also reiterated his view that the Federal Reserve's current framework of holding an 'ample' level of bank reserves has proven effective at keeping market rates within the Fed's benchmark fed funds target range. He emphasized the Fed's commitment to an elastic supply of bank reserves, adjusting supply as demand shifts due to changes in regulation or other factors.