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FINRA increases transparency in TBA market for agency pass-through mortgage-backed securities

The Financial Industry Regulatory Authority (FINRA) has increased transparency in the so-called “To-Be-Announced” (TBA) market for agency pass-through mortgage-backed securities.

This market represents more than USD270bn 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 USD19bn 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 per cent of par value traded in all asset- and mortgage-backed securities.

FINRA continues to study collateralised mortgage obligations and asset-backed securities, which together represents seven per cent of par value traded in all asset- and mortgage-backed securities.

“As we look to increase transparency in collateralised mortgage obligations and asset-backed securities, we will seek an approach that takes into account their complex nature and different market dynamics,” says FINRA vice president Ola Persson.
 

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