jerome h powell : roundtable on “ treasury markets and debt management : evolution of treasury market and its implications ” – opening remarks opening remarks by mr jerome h powell, member of the board of governors of the federal reserve system, at the 2015 roundtable on “ treasury markets and debt management : evolution of treasury market and its implications ”, new york city, 20 november 2015. * * * it ’ s been a month since the new york fed hosted a very successful conference on treasury market structure, and i ’ m eager to continue the conversation started there. i thought i ’ d start by discussing some of the main points i took from the conference. there were certainly different points of view on a variety of issues between broker dealers, proprietary trading firms ( ptfs ), end users and others, but hearing a range of views was exactly the dynamic we were hoping for. there was broad understanding that electronic and automated trading are here to stay. indeed, a wide range of firms are engaged in these trading practices today. participants on the ptf panel viewed their relative speed and efficiency as allowing them to provide tighter spreads and greater liquidity. one expressed the belief that his firm needed to be faster and more sophisticated because, unlike broker - dealers, they have no direct view of customer order flows. for their part, dealers noted that they provide a key service in helping their customers execute larger trades, and defended their internal matching of customer trades as a natural search for trading efficiencies. there were differing views on the significance of what happened in treasury markets on october 15, 2014. many attendees voiced concern, but a number also expressed the view that the market worked as it was supposed to, and even that nothing extraordinary occurred that day. although buy - side participants tended to believe that they were not directly affected given the short duration of the price swings that day, some noted that more frequent episodes of high volatility could lead them to demand larger risk premiums. for my part, i do realize that a single 12 - minute roundtrip episode may not mean that much in the end. but it isn ’ t satisfying to me to say that the market worked as it was intended to. the events of october 15 were unusual both in the size and speed of the moves and in the absence of a fundamental driver. the real question is whether there are dynamics at play here that are likely to produce more episodes of sudden, outsized volatility without any obvious cause. further episodes of this nature could

. banks of all sizes have a shared interest in ensuring that regulation is efficient and appropriately tailored to promote a strong, fair, and competitive market for financial services. likewise, banks have a shared interest in ensuring that regulation overall promotes a strong and stable financial system that keeps credit flowing to households and businesses in the communities you serve. among the truths revealed by the financial crisis, one of the most important was the recognition that the vulnerabilities that had developed in the financial system were global in nature and that the problems our institutions and markets faced in the united states were inextricably connected to conditions and decisions outside our borders. other governments likewise found that problems in the united states spilled over to their financial systems and economies. to cite just one example, it is well known now that the rapid growth of securitization of residential mortgages in the united states was a prominent factor driving up home lending and driving down lending standards. i think it is not as well known that a large share of those securities were being created, traded, and held by entities outside the united states. 1 / 5 bis central bankers'speeches some of the most important steps taken since the crisis to make our financial system more resilient have involved collecting information, identifying and monitoring stresses in the global financial system, and establishing and raising international standards. as i have noted, the improvements the federal reserve is making to financial regulation here in america, including tailoring, will help level the playing field for banks and help ensure you are able to continue to compete and serve your customers. the benefits of this for utah banks are clear. but banks in utah and elsewhere also benefit from a strong and stable global financial system, and as history has demonstrated, this in turn depends on strong international standards that help level the playing field. a strong and stable financial system depends also on transparency that helps both the private sector and regulators detect and deter vulnerabilities that could harm the u. s. economy. so i ’ d also like to talk to you today about one of the important international bodies created since the crisis to promote global financial stability, the financial stability board ( fsb ) and tell you why i believe america ’ s active participation in the fsb is important to our nation, and even, as remote as it might seem, relevant to your businesses. but let me begin with a topic of more immediate interest and offer a brief overview of legislation and regulatory action by the federal reserve that i know is important to you and