FINRA May Report MBS, CDO Transaction Details
The Financial Industry Regulatory Authority (FINRA), an independent regulator for all securities firms that do business in the US, late last week proposed expanding its Trade Reporting and Compliance Engine (TRACE) to include all asset-backed securities (ABS). The expansion would push TRACE transparency beyond the corporate bond sector and into mortgage-backed securities (MBS) and collateralized debt obligations (CDOs). FINRA would collect data on ABS transactions including trade prices, volume and other information. "For regulators, there is a demonstrated need for ABS market information," said chairman and CEO Richard Ketchum in a statement. "Greater disclosure around these securities directly linked to the credit crisis will allow for more effective oversight with a deeper understanding of market dynamics." FINRA indicated it would initially collect ABS transaction data and would not widely distribute such data until detailed market analysis and observation determine dissemination appropriate. FINRA filed the proposed plan as a rule change under the Securities and Exchange Commission (SEC) following approval by the SEC earlier last week that gave TRACE authority as of March 1, 2010 to report on debt issued by federal government agencies, corporations and government-sponsored enterprises (GSEs). Since 2002, TRACE brought transparency to the corporate bond market through the creation of a regulatory database of real-time, public dissemination of transaction and price data. It's the latest in an industry-wide push for greater transparency in the securitization market. The American Securitization Forum (ASF), a trade body representing issuers, investors and servicers in the securitization industry, in late September launched a new standardized universal code that will identify information about mortgage and other loans that are securitized. Write to Diana Golobay.