For about 300 regulators, industry executives, and academics whospend at least some of their waking hours thinking about thestability of the $13 trillion U.S. Treasury market, the New YorkFed is the place to be this week.

They're gathered to discuss the evolution of trading and, moreimportantly, how to prevent the jarring price swings that frayed nerves on Oct. 15, 2014, fromhappening again. On that day, yields fluctuated in a way that hadonly happened three other times since 1998—and unlike the earlierincidents, there was no obvious catalyst.

Even market participants, such as high-frequency traders thatnow account for a big share of buying and selling, said they areamazed at how opaque the Treasury market is. Regulators willprobably change that, but it might take a while.

Government officials speaking at the two-day conference thatends today dropped strong hints that they plan to tighten oversight of Treasuries, with a number ofpotential rules focusing on the flash boys.

Antonio Weiss, an adviser to Treasury Secretary Jacob J. Lew,said agencies in the coming weeks will publish a so-called requestfor information, a first step toward imposing new rules. Regulatorswant public feedback on how transparent the market should be andwhether the data available to government officials could beimproved, Weiss said.

The Commodity Futures Trading Commission (CFTC) plans to proposea series of measures as early as next month, said Timothy Massad,the agency's chairman.

CFTC rules under consideration include a requirement that thecomputer algorithms used by electronic traders be tested to ensurethey can be shut off during a market emergency. Massad said theagency also is looking at ways to curb incidents in which a singlehigh-speed firm ends up on both sides of a trade, a situation thatoccurred frequently last October. Proposing a new regulation is thestart of what's typically a months-long process of solicitingpublic feedback and then rewriting the rules.

Securities and Exchange Commission (SEC) Chair Mary Jo Whitesaid her agency's efforts to reduce “aggressive, destabilizingtrading” for stocks could be useful for regulators assessing how tolimit Treasury market volatility. Regulators should considerramping up oversight of the platforms where Treasuries are tradedand try to curb orders to buy and sell, which can disrupt marketsthat are already stressed, she said. White also supports therelease of more post-trade data.

Problem One with Reform: SplinteredOversight

Even with the tough talk from regulators, boosting oversight ofthe benchmark for global debt markets is easier said than done.

Regulation of Treasuries is splintered between the SEC, CFTC,Treasury, Federal Reserve and New York Fed. Though the agencieshave been working together in recent months, they don't always getalong. Each has its own interests and turf to protect. Even if theyeventually agree on new rules, the regulators still have to contendwith some industry opposition.

There also isn't a consensus between Washington and Wall Streetover where the biggest issues lie. Finance executives haverepeatedly argued that rules passed after the 2008 financial crisishave sucked up liquidity in debt markets by forcing banks to reducetheir trading and hoard high-quality assets like Treasuries. Lewand Weiss have pushed back, saying regulations passed under theDodd-Frank Act didn't play a significant role in what happened toTreasuries last October.

While officials including White, Weiss, and Fed Governor JeromePowell are giving public remarks at this week's conference,industry executives are speaking on panels that don't allow them tobe quoted or cited by name.

Executives and academics generally supported the idea of makingmore information public. High-speed traders, whom regulators saymay have exacerbated the market swings last October, defended theirrole in providing liquidity. Asset managers at the conferencepushed back against the idea that there's much of a problem, sayingthat although the market has changed, it's still the world'sdeepest and most liquid.

During a question-and-answer session, one conference attendeesaid some industry panelists sounded too confident in their ownabilities and not focused enough on potential risks, just like WallStreet bankers were before 2008. Overall, the consensus is thatdespite all the brain power working on the issue, nothing they dowill stop another Oct. 15 episode from occurring. For now,regulators seem determined to try.

–With assistance from Silla Brush in Washington.

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.