National Securities Clearing Corporation (NSCC) and the Fixed Income Clearing Corporation (FICC) say they will support an interface between their Real Time Trade Matching (RTTM) system and the National Association of Securities Dealers’ (NASD) Trade Reporting and Compliance Engine (TRACE) for the real-time reporting of corporate bond transactions.
The announcement, made by John Fitzgerald, managing director of Fixed Income Clearing Corporation (FICC), was delivered at The Bond Market Association’s (TBMA) 11th Annual Fixed-Income Securities Operations Conference, being held in Orlando, Florida. Both FICC and NSCC are subsidiaries of The Depository Trust & Clearing Corporation (DTCC).
“The TRACE/RTTM interface will provide a uniform vehicle for members to comply with regulatory reporting requirements for both municipal and corporate bonds,” Fitzgerald said. Plans for the real-time reporting of members’ trades in municipal bonds to the Municipal Securities Regulatory Board (MSRB) via the RTTM system were announced last April.
Street-side trades in corporate bonds will be sent to the RTTM system for matching, and then passed onto NSCC for clearance and settlement. An interface between RTTM and TRACE will be used to pass the required street side and customer trade data directly on to NASD for price reporting purposes in real-time.
RTTM for corporate and municipal bonds, as well as Unit Investment Trusts (UITs), will use a common message type that will allow members to submit trades to NSCC for both matching and regulatory reporting to the MSRB and the NASD via a single pipeline. This pipeline would also be used for providing any messages back to members from those regulators.
The decision to support the TRACE/RTTM interface was reached after the results of two surveys conducted independently by the Securities Industry Association (SIA) and TBMA, with support from the Regional Municipal Operations Association (RMOA), indicated widespread industry interest in building and maintaining the interface.
“We were very pleased to discover that the vast majority of industry participants see substantial benefits to the TRACE/RTTM interface,” noted Fitzgerald. “It supports other comments we’ve been hearing that a single platform for all fixed income matching and regulatory reporting will augment processing consistency across the products, increase efficiencies, and preclude the need to support multiple development projects.”
NSCC plans to implement RTTM for corporate and municipal bonds in the first quarter of 2004, with the addition of interactive messaging and regulatory interfaces being supported shortly thereafter. NSCC will issue an Important Notice soon further delineating the service and implementation plans.