The U.S. Financial Industry Regulatory Authority’s bond transparency system has expanded to include debt issued by federal government agencies, government corporations and government-sponsored enterprises, as well as primary market transactions in new corporate debt issues.

The expansion of the system, known as the Trade Reporting and Compliance Engine (TRACE), means 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. There is approximately US$3 trillion outstanding in U.S. agency debt securities that will be eligible for trade reporting on March 1, compared to over US$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.

The regulator says that the additional transaction information “will significantly enhance the transparency in the debt markets”, and that it will enhance FINRA’s ability to detect fraud, manipulation, unfair pricing and other misconduct.

“March 1 is an important day for the U.S. fixed income markets,” said FINRA chairman and CEO, Richard Ketchum. “Providing trade data for government agency debt and primary market transactions represents a 50% increase in the number of debt securities subject to TRACE reporting requirements. 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.”

IE