The Financial Industry Regulatory Authority (FINRA) said Monday it will be using its bond trade reporting system to significantly increase transparency for mortgage-backed securities.
FINRA said that it will use its Trade Reporting and Compliance Engine (TRACE) to begin to disseminate information for mortgage-back securities issued by Fannie Mae, Freddie Mac and Ginnie Mae, as well as in securities backed by loans guaranteed by the Small Business Administration. It notes that these securities represent approximately 3,500 trades, totaling $18 billion in par value, on an average daily basis.
TRACE will disseminate transaction information such as the time of the trade, price and volume. Transactions must be reported to TRACE within two hours of execution, and are disseminated as soon as received, it notes (the reporting timeframe will be reduced to one hour after six months).
Market professionals will have access to the information via major market data vendors, and retail investors will have free access to this data through FINRA’s Market Data Center starting July 29, it said.
“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.