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| Overnight financing of mortgage assets has moved from the telephone to the Internet.
Thomson TradeWeb announced it offers the first ever electronic trading platform for the tri-party repurchase agreement market, a submarket of the $5 trillion repurchase agreement, or repo, market. TradeWeb “has taken what has been transacted over the phone and brought it online,” TradeWeb spokesman Jack Mahoney said. In a repo agreement, lenders sell mortgage-backed securities or other mortgage assets for cash from a dealer, then buys them back the next day for that amount plus overnight interest. Under a tri-party repo agreement, two parties agree that the cash will be transferred even though the securities will not physically transfer, the spokesman explained. Through the online platform, institutional investors may view live commingled dealer repo rates, electronically execute trades, and electronically process and allocate trades. Additionally, a position-tracking monitor allows users to not only view their outstanding repo positions in real-time, but also easily roll them at maturity. The initial phase of TradeWeb Repo’s rollout allows electronic trading, position tracking, and processing for tri-party repo that is collateralized by U.S. Treasuries. In the second phase later this summer, investors will be allowed to electronically execute and process repurchase agreements for additional asset classes, including mortgage-backed securities. “The repo market for fixed income is a natural candidate for electronic trading,” said Jim Toffey, TradeWeb CEO in the announcement. “It is a technically-complex market with high volumes that requires very efficient trading processing and counter party management tools. With this launch, TradeWeb brings to the repo market its proven capability of building efficient online markets that enhance dealer-to- customer trading flows.” JPMorgan, Deutsche Bank, UBS Investment Bank, and Morgan Stanley are the founding dealers for TradeWeb’s new service. Active on TradeWeb are virtually 10 of the top 10 mortgage originators, the spokesman said, and large mortgage hedge funds, large mortgage investment advisors and banks. |
Coco Salazar is an assistant editor and staff writer for MortgageDaily.com. email: [email protected]
