FINRA Expands Transparency of Mortgage-backed Securities Market
By Hal M. Bundrick
NEW YORK (MainStreet)--Enhanced trade information on mortgage-backed securities is being rolled out by FINRA, the largest regulator of U.S. securities firms. The TRACE (Trade Reporting and Compliance Engine) system, established in 2002 as a database of the corporate bond market, will begin offering data on specified pool transactions in agency pass-through mortgage-backed securities and SBA-backed securities. That's an average daily market of some 3,500 trades, totaling $18 billion in par value, according to the regulator.
Last year FINRA began offering transaction data for agency pass-through mortgage-backed securities traded "to-be-announced" (TBA). By adding specified trades the system will now cover 90% of the par value traded in all asset- and mortgage-backed securities.
"With today's announcement, TRACE has brought historic transparency to the mortgage-backed market, and we will shortly file with the SEC to bring transparency also to asset-backed securities, including those backed by auto loans, credit card receivables and student loans," said FINRA Vice President Ola Persson.Within two hours of execution, TRACE will provide time of trade data as well as price and volume on securities issued by Fannie Mae, Freddie Mac and Ginnie Mae, as well as in securities backed by loans guaranteed through the Small Business Administration. The regulator says the reporting timeframe will be reduced to one hour after six months. Market Data Center starting Monday, July 29. FINRA also recently announced that it is seeking rule amendments with the SEC to offer transactional data on additional types of asset-backed securities, including those backed by credit card receivables, automobile and student loans, and a number of other credits.
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