FINRA Engine Now Reporting Prices on Government Bonds
March 1, 2010
The Financial Industry Regulatory Authority said Monday that its compliance and trade reporting engine had been formally expanded to include pricing and volume data on debt issued by federal government agencies, government corporations and government-sponsored enterprises as well as new corporate debt issues.
Its Trade Reporting and Compliance Engine now provides data to investors on all primary and secondary transactions in non-mortgage related debt instruments issued by federal government agencies such as Fannie Mae, Freddie Mac, the Federal Home Loan Banks and Federal Farm Credit, among others.
Roughly $3 trillion in U.S. agency debt securities were eligible for trade reporting on March 1, compared to over $6 trillion for the corporate debt market. FINRA estimates trading volume in agency debt is estimated to be three to four times higher than the corporate universe, measured by par value traded.
The data is being published on FINRA’s site and on the Investing in Bonds site operated by the Securities Industry and Financial Markets Association.
"Providing trade data for government agency debt and primary market transactions represents a 50 percent increase in the number of debt securities subject to TRACE reporting requirements,’’ said FINRA Chairman and Chief Executive Officer Richard G. Ketchum. “The benefit to investors is an abundance of new information on an important segment of the debt market, while regulators gain new tools for market surveillance. Also, all market participants will benefit from more detailed trading data and increased market efficiency."
Brokers and other market participants also will get more detailed trading data, as a result, he noted.
Prior to this change, the engine only produced real-time pricing and trade volume information on corporate bonds trading in the secondary market.
Collecting agency and primary market transaction data will also enhance FINRA's ability to detect fraud, manipulation, unfair pricing and other misconduct that violate the federal securities laws and FINRA rules. FINRA will also publish end-of-day aggregate information, including total volume and number of securities traded.
The plan was to report trade data on bonds was first announced by FINRA in March 2009.
“We are pleased to add even more information to our investinginbonds.com website, which was created as a free, non-commercial site solely designed to help educate investors,” said Rob Toomey, managing director and associate general counsel at SIFMA. “The addition of government agency prices enriches the content already available on the site, making it an even better resource and a more effective way to promote transparency in the bond markets.”
Agency bonds are issued by two types of entities: 1) Government Sponsored Enterprises (GSEs), usually federally-chartered but privately-owned corporations; and 2) Federal Government agencies which may issue or guarantee these bonds. The proceeds are used to finance activities related to public purposes, such as increasing home ownership or providing agricultural assistance. Agency bonds are issued in a variety of structures, coupon rates and maturities. Each GSE and Federal agency issues its own bonds, with sizes and terms appropriate to the needs and purposes of the financing.
