Treasury Moderates a Rule On Long-Position Reports
March 29, 2011
The Treasury Department issued a final rule governing bidding for its securities through investment advisers that modifies a proposal that drew protests from bond dealers. The rule, which takes effect May 29, 2011 a compromise on the reporting of net long positions by investment advisers. Bond dealers had complained the earlier proposal would have imposed costly compliance burdens on them and warned it could drive participants from Treasury auctions. Net long positions include holdings in the futures, forward and when-issued markets for Treasury securities being offered. Reporting of these positions is used to enforce the Treasury's policy that no bidder acquire more than 35% of the amount of auctioned Treasury securities awarded to the public. Under the final rule, an investment adviser calculating its net long position may exclude any net long position less than $100 million of any controlled account it doesn't own unless the adviser is placing a bid for the account. The Treasury before allowed an adviser to exclude net long positions less than $500 million for certain controlled accounts that aren't bid in an auction. The Treasury earlier proposed lowering the exclusion amount to $10 million.
