In New York, trad- ing starts at 7:30 a.m. and continues until 5:30 p.m.8 The most recently auctioned Treasury bill for a particular maturity is referred to as the on-the-run issue. Issues auctioned prior to the on-the- run issue are typically referred to as off-the-run issues. These issues are not as liquid as an on-the-run issue for a particular maturity. This differ- ence in liquidity manifests itself in wider bid-ask spreads and lower size quotes for off-the-run issues relative to an on-the-run issue. While the secondary market for Treasury bills is one of the most liquid segment of the global money market, most of the trading activity occurs dur- ing New York trading hours. In a 1997 study, Michael J. Fleming finds that while bills represent approximately 27% of trading volume of on-the-run Treasury trading volume in New York, bills comprise only about 1% of the trading volume in London and Tokyo. In fact, on many trading days, not a single bill trade is brokered during overseas hours.9One possible explana- tion for this result is put forward in a study by Michael J. Fleming and Jose A. Lopez. They suggest that a disproportionate share of speculative trading in Treasury securities occurs overseas. Accordingly, longer-term coupon Treasuries (as opposed to bills) are suitable vehicles for this type of trading.10   Treasury Dealers and Interdealer Brokers Any firm can deal in government securities, but when the Federal Reserve engages in trades of Treasuries in order to implement monetary policy, the New York Feds Open Market Desk will deal directly only with dealers that it designates as primary or recognized dealers. The primary dealer system was established in 1960 and is designed to ensure that firms requesting status as primary dealers have adequate capital relative to positions assumed in Treasury securities and that their trading volume in Treasury securities is at a reasonable level. The Federal Reserve requires primary dealers to participate in both open market operations and Trea- sury auctions. In addition, primary dealers provide market information and analysis which may be useful to the Open Market Desk in the imple- mentation of monetary policy. Exhibit 3.5 lists the primary dealers as of October 31, 2001. Primary dealers include diversified and specialized firms, money center banks, and foreign-owned financial entities.   8Michael J. Fleming, "The Round-the-Clock Market for U.S. Treasury Securities," Economic Policy Review, Federal Reserve Bank of New York, July 1997, pp. 9-32. 9Fleming,"TheRound-the-ClockMarketforU.S. Treasuries." 10Michael J. Fleming and Jose A. Lopez, "Heat Waves, Meteor Showers and Trad- ing: An Analysis of Volatility Spillovers in the U.S. Treasury Market," July 1999, working paper.