SEC Approves Additional Trade Reporting Requirements for Various Types of Asset-Backed Securities (Reg. Notice 14-34) (with Lofchie Comment)

FINRA issued a Regulatory Notice regarding SEC approval of several FINRA amendments including FINRA Rules 6700 series, FINRA Rule 7730 and the TRACE dissemination protocols to disseminate additional transactions in asset-backed securities. In addition, the Notice reflected shortened time periods for reporting.

Specifically, the amendments add new defined terms and revise existing terms to identify the class of securities as to which trading information will be subject to dissemination. The amendments largely serve to divide those securities that are now defined as "Asset-Backed Securities" into two classes: (i) those that continue to fall within that term (as newly narrowed) and (ii) a subset of such securities that are called "Securitized Products." The new term "Securitized Product" will include securities backed by residential or commercial mortgage loans, mortgage-backed securities, or other financial assets derivative of mortgage-backed securities. The existing term "Asset-Backed Securities" will continue to include other securities backed by assets other than the specified mortgage assets.

The new rules impose more substantial trade reporting requirements, including eventually shortening the reporting period to 15 minutes (rather than 45 minutes) from execution.

Lofchie Comment: While public attention has been focused on regulation in the equities markets, regulatory attention has been focused on the fixed income markets, where there is a steady stream of new or tighter requirements. See, e.g.,MSRB Requests SEC Approval to Establish Best-Execution Rule for Municipal Securities Transactions (with Lofchie Comment) (August 20, 2014).

See: FINRA Regulatory Notice 14-34.Related news: FINRA-Proposed Rule to Delay Implementation Date of TRACE Dissemination of Asset-Backed Securities (Fed. Reg.) (May 6, 2014); FINRA Proposes to Delay TRACE Dissemination Requirements for Asset-Backed Securities (April 24, 2014); FINRA Files Amendment No. 1 Regarding Trace Reporting Involving Asset-Backed Securities (February 25, 2014); SEC Announces the Designation of a Longer Period for Commission Action Regarding FINRA-Proposed Rule Change Relating to TRACE Reporting and Asset-Backed Securities (January 13, 2014); FINRA Proposes Rule Relating to TRACE Reporting and the Dissemination of Transactions in Asset-Backed Securities (November 13, 2013).