FINRA Expands TRACE to GSE Debt and Primary Transactions
The SEC has approved FINRA’s expansion of the TRACE system to include debt issued by federal government agencies (aka GSEs) and primary transactions in new issues. Previously, the TRACE system (Trade Reporting and Compliance Engine) only required reporting of private sector bond issues and secondary market transactions. Asset-backed securities issued or guaranteed by GSEs continue to be excluded from the TRACE system. Information reported in the TRACE system includes price, trade size, and market participants.
OUR TAKE: The expansion of TRACE to GSE-sponsored debt and primary transactions will increase the burden on market makers. It will also expand the fees collected by FINRA for TRACE transactions.