The Bond Market Association is planning to finalize guidelines that call for more rapid delivery of securities and greater transparency in repurchasing agreement (repo) trading. The seller in repo trading usually delivers the security by the end of the day, according to Robert Toomey, principal staff advisor of TBMA’s funding division. But the new guidelines are expected to define “prompt delivery” as within 15 minutes of a trade’s execution.
The new standards are also expected to increase transparency because they will call for brokers to reveal their buyers and sellers at the time of the trade. This will increase the efficiency of the repo market because a buyer will know not to go back to a seller who failed to deliver a security, Toomey said.
TBMA first decided to create the guidelines when so-called fails, or failures to deliver, for the May 2013 10-year Treasuries spiked dramatically over the summer.
