Trump’s Treasury pick Bessant says America should maintain control of Treasuries.

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NEW YORK (Reuters) – The United States needs to manage potential problems in the U.S. bond market, President-elect Donald Trump’s Treasury Secretary Scott Bessant told Congress on Thursday, as Wall Street billionaire Howard Lutnick plans to clear Treasury futures from a U.K. company.

Lutnick’s BGC Group brokerage launched a futures exchange last year and plans to add U.S. Treasury futures in the first quarter of this year.

That FMX Futures Exchange has partnered with London Stock Exchange Group’s London Clearing House (LCH), raising concerns among some US lawmakers that the United States could lose control and oversight of some Treasury market transactions.

With a value of nearly $28 trillion, the U.S. Treasury market is the world’s largest bond market and is critical to the financing of the U.S. government and global financial stability.

During Bessant’s confirmation hearing Thursday, Senator John Cornyn asked whether “the proposal to clear U.S. Treasury futures at the London Clearing House” could have financial stability consequences.

“Some would argue that the Bank of England should dominate this critical market, heaven forbid, default situation… rather than the US.”

Besant said the resolution authority on the US Treasury market should remain in the country.

“It’s important for the U.S., for U.S. Treasuries, for us to be able to resolve any stress issues in the U.S.,” he said, adding that he plans to investigate the matter.

Besant in the year The bankruptcy of Lehman Brothers in 2008, which sent global markets crashing, was triggered by issues under the UK.

Lutnick is a Trump supporter who lost the Treasury secretaryship to Bessant but was instead tapped to lead Trump’s trade and tariff strategy as head of the Commerce Department.

According to an FMX spokesperson, the FMX futures exchange has been fully approved by the US derivatives regulator, the Commodity Futures Trading Commission (CFTC), to list US Treasury futures contracts.

LCH is registered with the CFCC to clear futures contracts, according to a London-headquartered spokesman.

“LCH holds all future customer guarantees on US shores,” the spokesperson said in an emailed statement.

(Reporting by David Barbuccia in New York; Editing by Nia Williams)

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