(Reuters) – Citadel Securities says bank pricing fashions had been extra of an issue than balance-sheet constraints when the U.S. Treasury market suffered from excessive illiquidity and volatility in March. The worldwide unfold of the novel coronavirus in March led to broad market selloffs and Treasury traders mentioned they had been generally unable to enter trades or discover cheap costs for bonds. Analysts have mentioned a big issue behind the liquidity issues was that banks had been constrained by balance-sheet guidelines designed to curb risk-taking. Citadel Securities, nonetheless, mentioned know-how was a bigger situation as banks struggled with the place to price trades. “The idea that regulatory capital constraints prevent large U.S. banks from operating in volatile markets doesn’t make much sense when you look at how active they were in pricing during Jan, Feb and now May,” Paul Hamill, World Head of FICC Distribution at Citadel Securities, mentioned in a latest interview. “What we observed in March, and to some extent April, was that those banks were still pricing in the market but were doing so inconsistently and at much wider spreads,” he mentioned. Citadel Securities is the one nontraditional agency that trades Treasuries with purchasers, with giant banks dominating the trade. It says its pricing know-how outperformed in March with the combination distinction between the price it quoted and the second-best price quoted by different sellers widening to greater than $50 million, from roughly $1.5 million in February. Its Treasury buying and selling volumes additionally jumped in March, with digital buying and selling volumes rising by 90% whereas voice-executed commerce volumes rose by 44%. The agency says March’s liquidity points present the necessity for range amongst market makers. “It is important that liquidity is diverse and isn’t dominated by one type of provider,” mentioned Michael de Move, World Head of U.S. Treasury Buying and selling at Citadel Securities. Reporting by Karen Brettell in New York; Enhancing by Matthew LewisOur Requirements:The Thomson Reuters Belief Rules.