More On Legal & Compliancefrom The Advisor's Professional Library
- Using Solicitors to Attract Clients Rule 206(4)-3 under the Investment Advisors Act establishes requirements governing cash payments to solicitors. The rule permits payment of cash referral fees to individuals and companies recommending clients to an RIA, but requires four conditions are first satisfied.
- Proxy Voting RIAs are not required to vote proxies on behalf of their clients. However, when an RIA does assume responsibility for voting proxies, the firm’s policies and procedures should help to ensure that votes are cast in the best interest of clients.
FINRA has significantly increased transparency in the so-called "to-be-announced" (TBA) market for agency pass-through mortgage-backed securities, it announced Monday. The body has begun disseminating transaction information, including the CUSIP, time of transaction, price, size and other related information, for the TBA market, which represents more than $270 billion traded on an average daily basis in 8,400 trades.
In addition to the TBA market, the Securities and Exchange Commission has approved a FINRA proposal to publicly disseminate transaction information in agency pass-through mortgage-backed securities traded "specified." This market represents approximately $19 billion traded on an average daily basis in 3,000 trades. The effective date of this proposal will be announced in a forthcoming FINRA Regulatory Notice.
Together, the market for agency pass-through mortgage-backed securities traded TBA and specified represent more than 93% of par value traded in all asset- and mortgage-backed securities.
FINRA continues to study collateralized mortgage obligations and asset-backed securities, which together represent 7% of par value traded in all asset- and mortgage-backed securities. In a statement, FINRA Vice President Ola Persson said, "As we look to increase transparency in collateralized mortgage obligations and asset-backed securities, we will seek an approach that takes into account their complex nature and different market dynamics."
TRACE was established in July 2002 to create a regulatory database and bring transparency to the corporate bond market. It immediately created the database and was fully phased in by February 2005, offering real-time, public dissemination of transaction and price data for all corporate bond trades–including intraday transaction data and aggregate end-of-day statistics (most active bonds, total volume, advances and declines, and new highs and lows).
Agency debentures were added in March 2010, and are subject to real-time dissemination. FINRA started collecting transaction information in all asset- and mortgage-backed securities in May 2011.
Retail investors have free access to this data at www.finra.org/marketdata. As part of its effort to demystify the bond market and make it truly accessible to retail investors, FINRA has developed a comprehensive online learning center where retail investors can become familiar with the full range of bond types and bond markets. Smart Bond Investing is available at www.finra.org/smartbonds.