By Sheila Mullan
NEW YORK (MNI) – The New York Federal Reserve Bank Tuesday said
that it supported the implementation of the Treasury Market Practices
Group Fails Charge Trading Practice, which takes effect in Agency Debt
and Agency MBS on February 1 as recommended by the Treasury Market
Practices Group.
“The Federal Reserve Bank of New York fully endorses the trading
practice, which recommends that a party who fails to deliver securities
in a timely manner incur a charge,” it said. “The New York Fed will
adopt these practices in its own operations in these markets and
strongly encourages all market participants to incorporate them into
their trading operations.”
The New York Fed’s Market Group head Brian Sack said the Fed
supported the TMPG effort to reduce settlement fails in Agencies, Agency
MBS as it “believes that prolonged, elevated settlement fails negatively
impact market functioning and increase systemic risk.”
The Treasuries market adopted its TMPG-recommended fails charge in
May 2009, which can go to a maximum of 3.0%.
“As was the case with the implementation of a TMPG-recommended
fails charge in the Treasury market in May 2009, the implementation of
agency debt and agency MBS fails charges should reduce the level of
settlement fails and support the functioning of these vital markets,”
Sack said.
Additional information can be found on the Treasury Market Practices
Group website, which is here at this listed link, which also includes
related history; http://newyorkfed.org/tmpg/
–smullan@marketnews.com, 212-669-6432
** Market News International New York Newsroom: 212-669-6430 **
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