In an effort to boost resiliency in the U.S. Treasury market, federal regulators are studying the pros and cons of widespread all-to-all trading, which would allow any market participant to trade directly with any other market participant, according to a report released Thursday.

The report from the Inter-Agency Working Group on Treasury Market Surveillance, or IWAG, which is composed of staff from the Department of the Treasury, the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, the Securities and Exchange Commission and the Commodity Futures Trading Commission, said that regulators are exploring how Treasury market structure influences intermediation capacity, with an initial focus on the potential benefits and costs of more widespread all-to-all trading.

“In theory, all-to-all trading may improve market liquidity by increasing the number and diversity of potential counterparties to a trade or reshaping the competition among them,” the report says. “All-to-all trading may also offer increased transparency of executable and executed prices, which could increase the bargaining power of liquidity consumers (market participants that seek to execute specific trades) or lower the barriers to entry for new liquidity providers.”

The IWAG report cited a separate report from the New York Fed that was published in October and explored all-to-all trading.

Among the challenges that remain for all-to-all trading’s broader adoption, the New York Fed report said, “Most trading protocols in the U.S. Treasury market that offer access to a broader range of trading partners are limited to trading of on-the-run or near on-the-run notes and bonds, while less liquid parts of the market may have a greater need for the benefits all-to-all could provide.”

Additionally, “We found that most Treasury market trading platforms that offer these trading protocols are legal counterparties to the trades executed over their platforms, which can create unclear and complex clearing and settlement risks with the platform itself and contribute to broader financial stability risks in the market,” New York Fed report said.

Looking ahead, the IWAG report said staffs may also research all-to-all trading in the market for repurchase agreements, or repos; the use of firms with committed market-making responsibilities in other markets; the role of the Treasury futures market in overall Treasury market structure; and the influence of public policy on the private sector’s development of different market structures.

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