The Securities and Exchange Commission (SEC) approved the Financial Industry Regulatory Authority (FINRA) — the U.S. brokerage industry’s main regulator — plans for collecting trading data on ABS and MBS for the Trade Reporting and Compliance Engine (TRACE), according to a Bloomberg report.
FINRA uses TRACE to collect and distribute information on secondary over-the-counter transactions in corporate debt securities.
It plans to expand TRACE to cover agency debentures on March 1. Currently, 30,000 corporate bond CUSIPS are reported and 20,000 agency debentures will be added to that list, according to the Bloomberg report.
FINRA’s proposal for ABS only calls for it to consider disclosing real time data. In its request to the SEC, FINRA said it decided against immediate public price disclosure because of the potential for misleading investors or making trades harder to execute.
According to Bloomberg, FINRA is planning to unveil its formal plan for collecting and reporting data within 60 days. It will also call for the collection of data no later than 270 days after that, with six more months needed to begin disclosure once and if the SEC approves a new proposal.
FINRA’s new initiative would extend coverage to approximately $5.3 trillion of MBS with government-backed guarantees and $3.6 trillion of unguaranteed securitized debt.
The American Securitization Forum and Securities Industry and Financial Markets Association said in a letter regarding FINRA’s proposal that regulatory reporting of trades of securitized products to FINRA through TRACE would provide FINRA’s greater clarity as to the nature of securitization markets and its trading practices. This could also enhance FINRA’s market surveillance efforts.