SIFMA Submits Comments on FINRA's Proposal to Disseminate TRACE Data on Additional Securitized Products

SIFMA submitted a comment letter to FINRA regarding the latter's proposal to expand the dissemination of TRACE data to include additional securitized products. Specifically, these products would include the collateralized mortgage obligations ("CMOs"), commercial mortgage-backed securities ("CMBSs") and collateralized debt obligations ("CDOs") that were outlined in FINRA Regulatory Notice 15-04.

In the letter, SIFMA acknowledged the possible benefits to price discovery of disseminating trade information on securitized products. However, SIFMA asserted, the proposal could impact market liquidity negatively in ways that are similar to those that cause liquidity to shrink in high-yield bonds, to-be-announced securities and specified pool markets. SIFMA stated that market-makers are less willing to take on large trades from their buy-side counterparties when the identity of their position becomes known immediately.

SIFMA requested that (i) the dissemination cap be decreased from $1,000,000 to $100,000; (ii) the transaction threshold for aggregate reports be increased from 5 to 20; (iii) FINRA disseminate only secondary CMO trades; and (iv) FINRA remove last-price and last-trade dates from the aggregate reports. Additionally, SIFMA offered "granular" comments on the proposal.

See: SIFMA Letter.Related news: FINRA Requests Comments on Proposal to Disseminate Additional Securitized Products (FINRA Reg. Notice 15-04) (February 10, 2015).