The Bond Market Association (TBMA) announced last week it sent in its comment letter on proposed industry regulations to the Securities and Exchange Commission. The comment letter, dated June 16, comes just a short time after SEC representatives addressed the market at the American Securitization Forum's recent conference, asking for substantive commentary.
Addressed to Jonathan G. Katz, the SEC's secretary, The Bond Market Association addressed the Straight Through Processing (STP) concept. It called for an adoption of industry best practices standards pertaining to automated clearance and settlement transactions performed by institutions.
It recommends that fixed income securities be confirmed or matched on the same day at the block level (the initial stage of a transaction, wholesale, before it's allocated out in parcels). TBMA stated association members believe block level trades should be confirmed electronically on the trade day in order to reduce the chance of mistakes or disagreements and it believes that a set of best practices by the securities industry would achieve this goal. It felt that mandatory reduction in the current settlement cycle was unnecessary.
Finally, the association states in the letter that it favors a paperless securities certificate environment - as paperless transactions have already made the transfer of ownership less complicated - and noted its "strong support" for the development of messaging standards.
A copy of the association's comment letter to the SEC can be found on the association's Web site at www.bondmarkets.com
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