FINRA Boosts Transparency in TBA Market for Agency Pass-Through Mortgage-Backed Securities
Nov 16, 2012 (Close-Up Media via COMTEX) --
The Financial Industry Regulatory Authority (FINRA), on Monday November 12, significantly increased transparency in the so-called "To-Be-Announced" (TBA) market for agency pass-through mortgage-backed securities.
According to a release, this market represents more than $270 billion traded on an average daily basis in 8,400 trades. Through the Trade Reporting and Compliance Engine (TRACE), FINRA has begun disseminating TBA transaction information, including the CUSIP, time of transaction, price, size and other related information.
In addition to the TBA market, the SEC has approved a FINRA proposal to publicly disseminate transaction information in agency pass-through mortgage-backed securities traded "specified." This market represents approximately $19 billion traded on an average daily basis in 3,000 trades. FINRA will announce the effective date of this proposal in a forthcoming Regulatory Notice. Together, the market for agency pass-through mortgage-backed securities traded TBA and specified represent more than 93 percent of par value traded in all asset- and mortgage-backed securities.
FINRA said it continues to study Collateralized Mortgage Obligations (CMO) and asset-backed securities, which together represents 7 percent of par value traded in all asset- and mortgage-backed securities.
"As we look to increase transparency in Collateralized Mortgage Obligations and asset-backed securities, we will seek an approach that takes into account their complex nature and different market dynamics," said FINRA Vice President Ola Persson.
TRACE was established in July 2002 to create a regulatory database and bring transparency to the corporate bond market. It immediately created the database and was fully phased in by February 2005, offering real-time, public dissemination of transaction and price data for all corporate bond trades - including intra-day transaction data and aggregate end-of-day statistics (most active bonds, total volume, advances and declines, and new highs and lows). Agency Debentures were added in March of 2010 and are subject to real-time dissemination. FINRA started collecting transaction information in all asset- and mortgage-backed securities in May 2011.
Retail investors have free access to this data at finra.org/marketdata. As part of its effort to demystify the bond market and make it truly accessible to retail investors, FINRA added that it has developed a comprehensive online learning center where retail investors can become familiar with the full range of bond types and bond markets. Smart Bond Investing is available at finra.org/smartbonds.
FINRA, the Financial Industry Regulatory Authority, is an independent regulator for all securities firms doing business in the United States.
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