The Wall Street Journal
The Financial Industry Regulatory Authority proposed expanding its corporate-bond database to include all asset-backed securities, a move that would make it easier to oversee securities that were at the heart of the credit crisis.
Pending Securities and Exchange Commission approval, Finra would collect ABS transaction data. After detailed analysis and observation of the market, the independent brokerage regulator would decide whether to distribute the data.
The securities, serviced with repayments made on a pool of credit assets, such as mortgages or auto loans, were an important source of mortgage and consumer financing before the collapse of the U.S. subprime mortgage market.
The proposal comes on the heels of the SEC's approval on Monday for the expansion of the Finra database, known as the Trade Compliance and Reporting Engine, to include debt issued by federal agencies, government corporations and government-sponsored enterprises, such as Fannie Mae and Freddie Mac.
That expansion of the database, also known as Trace, caused some concern among compliance professionals, who said it could sap resources at a tough time for their companies.
Trace now reports only real-time pricing and trade volume on corporate bonds in the secondary market. The inclusion of agency debt will double the number of bonds included in Trace reporting. It becomes effective March 1.
Market information reported through Trace includes prices, trade size, the overall size of markets and participants. Finra requires brokerages to report the information within 15 minutes. However, about 90% of transactions are reported in less than five minutes, a Finra spokesman said.
Under the latest proposal, Trace reporting of ABS transactions would provide trade prices, volume and other information. Finra would use the information to detect fraud, manipulation, unfair pricing and other misconduct that violates federal securities laws and Finra's rules.
With approval of the second expansion, 70% of the U.S. debt market would be subject to Finra market surveillance, up from 27% now. Firms would report post-trade data for all publicly traded debt securities except money market instruments and U.S. Treasury securities.
The Financial Industry Regulatory Authority proposed expanding its corporate-bond database to include all asset-backed securities, a move that would make it easier to oversee securities that were at the heart of the credit crisis.
Pending Securities and Exchange Commission approval, Finra would collect ABS transaction data. After detailed analysis and observation of the market, the independent brokerage regulator would decide whether to distribute the data.
The securities, serviced with repayments made on a pool of credit assets, such as mortgages or auto loans, were an important source of mortgage and consumer financing before the collapse of the U.S. subprime mortgage market.
The proposal comes on the heels of the SEC's approval on Monday for the expansion of the Finra database, known as the Trade Compliance and Reporting Engine, to include debt issued by federal agencies, government corporations and government-sponsored enterprises, such as Fannie Mae and Freddie Mac.
That expansion of the database, also known as Trace, caused some concern among compliance professionals, who said it could sap resources at a tough time for their companies.
Trace now reports only real-time pricing and trade volume on corporate bonds in the secondary market. The inclusion of agency debt will double the number of bonds included in Trace reporting. It becomes effective March 1.
Market information reported through Trace includes prices, trade size, the overall size of markets and participants. Finra requires brokerages to report the information within 15 minutes. However, about 90% of transactions are reported in less than five minutes, a Finra spokesman said.
Under the latest proposal, Trace reporting of ABS transactions would provide trade prices, volume and other information. Finra would use the information to detect fraud, manipulation, unfair pricing and other misconduct that violates federal securities laws and Finra's rules.
With approval of the second expansion, 70% of the U.S. debt market would be subject to Finra market surveillance, up from 27% now. Firms would report post-trade data for all publicly traded debt securities except money market instruments and U.S. Treasury securities.
