Regulatory forced holdings make some government bills anomalously expensive.

Evidence

A particular idiosyncrasy identified by LTCM was that restrictions on many Italian banks meant that they had to hold Italian government short-maturity bills, Buoni Ordinari del Tesoro (BOTs), which were therefore anomalously expensive. LTCM expected this difference to reduce in size and entered into swap trades accordingly. — Donald MacKenzie, An Engine, Not a Camera, 1606

Categorization

• XREF: Connects to the chapter’s core theme of how market structure (here, regulatory forced holding) creates the very price anomalies LTCM traded on. — connects to: Extreme bills are introduced as positioning, not lawmaking — Katherine Stewart, The Power Worshippers: Inside the…, 84