Investors will now have access to information on transactions in the asset-backed securities market, thanks to the Financial Industry Regulatory Authority’s Trade Reporting and Compliance Engine.
FINRA announced on Monday that it will now provide investors with post-trade price information for asset-backed securities, including those backed by auto loans, credit card receivables and student loans. This also includes transactions in asset-backed securities that are considered private placements and can only be purchased by an institutional investor (aka effected by Securities Act Rule 144A).
Transactions in the asset-backed securities market represent approximately 400 trades, totaling $3.5 billion in original principal balance, on an average daily basis.
“The dissemination of transaction information in asset-backed securities is another milestone in making the debt markets more transparent, ensuring the integrity of markets and investor protection,” said FINRA Vice President Ola Persson in a statement. “Like with other products, we have adjusted the dissemination protocol to reflect the characteristics of these securities, and we will continue on this path with other more complex products in the near future.”
Through the Trade Reporting and Compliance Engine (TRACE), FINRA will distribute transaction information to the public such as the CUSIP, time of the trade, price and volume.
Asset-backed security transactions will now be available to the public no later than 45 minutes after the trade is executed until Dec. 4, 2015. After that date, the trades will will be available to the public no later than 15 minutes after execution.
Retail investors have free access to this data through FINRA’s Market Data Center. Market professionals can access the trades via major market data vendors.
In addition to increasing the transparency in asset-backed securities, FINRA is currently reviewing comments received on a proposal to expand dissemination of TRACE data to include additional securitized products — specifically, collateralized mortgage obligations (CMOs), commercial mortgage-backed securities (CMBSs) and collateralized debt obligations (CDOs).
FINRA developed TRACE in July 2002 to create a regulatory database and bring transparency to the corporate bond market. By January 2006, FINRA was offering real-time, public dissemination of transaction and price data for all publicly traded corporate bonds – including intraday transaction data and aggregate end-of-day statistics.
On Nov. 12, 2012, FINRA began disseminating transaction information for agency pass-through mortgage-backed securities traded “to-be-announced.” FINRA also began distributing information for so-called specified pool transactions in agency pass-through mortgage-backed securities and securities backed by loans from the Small Business Administration in July 2013.
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