Mortgage market players mostly shrugged off the Chicago Board of Trade's (CBOT) announcement last week that it was launching a new mortgage futures market, mainly because previous attempts at creating such a market died from lack of interest and an extremely liquid to-be-announced (TBA) market already exists for mortgages.

"This is not a groundbreaking event for fixed income," said Michael Hoeh, an MBS money manager at Dreyfus Corp. "It is unlikely that a mortgage contract will be as liquid as the TBA market. It looks like the CBOT missed the point, that the MBS market trades on a TBA, which is liquid out for three months...and it is already not a problem to short collateral."

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