Regulators are moving forward with proposals to apply the corporate bond transparency system known as TRACE (Transaction Reporting And Compliance Engine) to the entire MBS and ABS markets, Saber Partners said in a press release on Thursday.
But the final timing of dissemination of the information to market participants is not clear.
“Transparency promotes more efficient markets yet whether one supports or opposes transparency efforts often depends on whether one is a buyer or a seller,” said Joseph Fichera, CEO of Saber Partners, who first initiated the proposal for TRACE eligibility of MBS and ABS in 2007. “Regulators need to move forward in a reasoned and responsible way, but they must move forward.”
FINRA began a study about applying TRACE to the MBS and ABS markets in 2007 and initiated a rule making process for full transparency. The proposal to expand TRACE reporting and define all ABS and MBS as TRACE eligible securities was filed with the SEC two years later in October 2009.
The proposal called for collection of transaction information for regulatory purposes and to allow FINRA a chance to study the data prior to proposing dissemination policy. It was approved by the SEC in February 2010.
That process, according to the press release, is now culminating in regulations that will provide real-time pricing transparency to market participants.