Jan. 31 (Bloomberg) -- The Federal Reserve Bank of New York said it supports an industry group’s initiative to penalize dealers and investors that fail to complete trades in mortgage-backed securities at agreed-upon times.
The standard, which starts tomorrow, was created by the Treasury Market Practices Group, formed in 2007 with the help of the New York Fed to offer advice on debt markets.
“The New York Fed supports the TMPG’s efforts to reduce settlement fails in the agency debt and agency MBS markets, as it believes that prolonged, elevated settlement fails negatively impact market functioning and increase systemic risk,” Brian Sack, executive vice president and head of the New York Fed’s markets group, said today in an e-mailed statement.
The New York Fed will adopt the practices in its own operations, the central bank said in the statement.
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