Fixed Income

08:59 AM
Leslie Kramer
Leslie Kramer
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SIFMA Announces Formation of U.S. Covered Bonds Traders Committee

The Securities Industry and Financial Markets Association (SIFMA) has formed a U.S. Covered Bonds Traders Committee, which comprises participants in the primary and secondary trading markets for covered bonds. Member firms that are part of this committee support the growth of the covered bond market in the United States, and will play an active role in fostering and strengthening this market. SIFMA recognizes that a liquid U.S. covered bond market can provide an additional and complimentary funding alternative for the residential mortgage market.

"We support the U.S. Treasury's efforts to firmly establish this market," said Tim Ryan, president and CEO of SIFMA, in a press release. "Today we welcome the release of Treasury's best practices template for U.S. covered bonds and look forward to working with the industry to develop and promote the efficient functioning of this market," added Ryan.

In a reflection of their support for the further development of a U.S. covered bond market, the current member firms of SIFMA's U.S. Covered Bonds Traders Committee have each committed to: appoint a dedicated U.S. covered bond trader within each firm; provide their respective indicative price information to electronic platforms available to U.S. covered bond investors; facilitate the growth of the market through the provision of liquidity on a "best intentions" basis; devote research and other resources to foster the market and ensure a broader understanding and acceptance of the covered bond product; work jointly to create a SIFMA U.S. Covered Bond Council as a forum for representation and discussion among all market participants, including dealers, issuers and investors; and to promote the ongoing development and efficient functioning of the U.S. covered bond market.

The following firms currently comprise the U.S. Covered Bonds Traders Committee: Banc of America Securities, Barclays Capital, BNP Paribas, Citi, Deutsche Bank Securities, Goldman Sachs & Co., HSBC Securities (USA), JPMorgan, Lehman Brothers, Merrill Lynch & Co., Morgan Stanley, RBS Greenwich Capital and UBS Investment Bank.

The U.S. Treasury best practices template continues efforts to provide guidance for covered bonds, including the Federal Deposit Insurance Corporation's July 2008 Final Covered Bond Policy Statement. The template provides a general framework for market participants in several key areas such as: eligible cover pool collateral, over-collateralization, cover-pool disclosure, asset coverage tests and compliance. SIFMA's member-driven committee intends to continue the dialogue with the wider regulatory community as this market develops.

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