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. 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
FINRA 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
Obligaions 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 www.finra.org/marketdata.
As part of its effort to demystify the bond market and make it truly
accessible to retail investors, FINRA 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 www.finra.org/smartbonds.
FINRA, the Financial Industry Regulatory Authority, is the largest
independent regulator for all securities firms doing business in the
United States. FINRA is dedicated to investor protection and market
integrity through effective and efficient regulation and complementary
compliance and technology-based services. FINRA touches virtually every
aspect of the securities business - from registering and educating all
industry participants to examining securities firms, writing rules,
enforcing those rules and the federal securities laws, informing and
educating the investing public, providing trade reporting and other
industry utilities, and administering the largest dispute resolution
forum for investors and firms. For more information, please visit www.finra.org.
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