Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Monday, March 1, 2010

FINRA TRACE Reporting Extends to Debt of Federal Government Agencies

March 1 marks a major expansion of the FINRA Trade Reporting and Compliance Engine (TRACE) – to include debt issued by federal government agencies, government corporations and government-sponsored enterprises (GSEs), as well as primary market transactions in new corporate debt issues.  With this expansion of TRACE, broker-dealers will report all primary and secondary transactions in non-mortgage related debt instruments issued by federal government agencies such as Fannie Mae, Freddie Mac, Federal Home Loan Banks and Federal Farm Credit, among others. 

Prior to this change, TRACE encompassed real-time pricing and trade volume information only on corporate bonds trading in the secondary market. The additional transaction information will significantly enhance the transparency in the debt markets. 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.

There is approximately $3 trillion outstanding in U.S. agency debt securities that will be eligible for trade reporting on March 1, compared to over $6 trillion for the corporate debt market. The trading volume in agency debt is estimated to be three to four times higher than the corporate universe, measured by par value traded.

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