Should the standard timeframe for reporting trades in fixed-income securities be narrowed down from 15 minutes to a single minute? Ask US securities industry association Sifma, and the answer is absolutely not.
“The proposed transition to one-minute reporting has neither been adequately examined or justified, nor do we believe that the proposed one-minute reporting rule can be adopted without exposing the broker-dealer community to significant liability and creating risk to the function of some fixed income markets,” snarls the Securities Industry and Financial Markets Association (Sifma) in its response to a request for comment by regulatory authority SEC.
“Fundamentally, subjecting the fixed income market to trade reporting requirements that appear to be inspired by the equities markets is misguided.”
The continuing importance of bilateral negotiation in many fixed income markets – and then remaining reliance on manual processes in elements of trading and post-execution processing, on top – make for an unsuitable environment, the association argues.
“SIFMA believes a robust manual trade exemption, as well as a de minimis exemption to protect smaller dealer members,would be required if the Proposals move forward. The manual trade exemption as proposed, however, is not a panacea, and further, as we note, even one minute reporting for certain fully- electronic trades remains unworkable.”
The main system for trade reporting in the US is the Trade Reporting and Compliance Engine, TRACE, with eligible securities being most dollar- denominated debt securities of corporate issuers, federal agencies, government-sponsored enterprises and the US Treasury, while the Real-Time Transaction Reporting System (RTRS) covers most municipal securities.