TBA Mortgage Master (TBA MM), Alpha’s lead product, is a full life-cycle MBS Clearance & Settlement system. It’s highly customizable product that fits various clients’ business needs.
- Full and partial Pair-off. Net-wire report delivery to dealers (via email) and to custodians (via facsimile) for settlement confirmation.
- TBA Rolls, Dollar Rolls Forward.
- Full and partial SIFMA Trade Assignment. Automated delivery of the auto-generated BMA Trade Assignment Agreement.
- Full integration with TradeWeb Round-Robin solution.
- TBA allocation with connectivity to the FICC’s Electronic Pool Notification network (EPN)
- Automated turn of TBA Pool Allocations and Pool Substitutions.
- Manual allocation and Sell Optimization.
- TBA and Pool exposure reporting.
- Real-time TBA allocation event tracking and sending pool allocation and TBA offset integration messages to middle-office.
- Inventory management that allows to retain assessed most valuable pools, while delivering the least valuable pools. It includes position analysis and hold pool rules editor.
- TBA Margining module (FINRA Rule 14-02).
- MBS Data Feed - security master, price and factor updates. Integrated with eMBS and IDC data providers.
- DTCC TBA trade & Pool Allocation confirm/affirm and TBA & Pool Netting workflow support through integration with MBS Master (another Alpha’s product).
- Multi-Manager support. Multiple managers can share MBS responsibilities for one account while the system ensures data processing integrity at the manager level.
- Automate trade assignments with an electronic confirm/affirm workflow that fully automates the SIFMA legal agreement.
MBS Master provides a comprehensive, trade matching, netting and settlement solution that interfaces with the Fixed Income Clearing Corporation’s (FICC) / Central Counter Party (CCP) Real-Time Trade Matching System (RTTM).
It increases the efficiency of MBS trade operations and reduces overall risk for sell-side firms, such as: brokers, dealers, banks, government securities issuers and mortgage originators. All activity is validated and matched in real-time.
- Affirmation/Confirmation: The application auto-submits TBA’s, specified pool trades (SPT’s) and pool allocations/instructs to the FICC’s matching engine as they successfully process into MBS Master where match statuses are automatically reflected on the monitoring screen. Users are provided an intuitive user interface for managing the trade life cycle.
- Multilateral TBA Netting: The system automatically processes the FICC/CCP reports, which reduce each firms open TBA commitments, thereby mitigating or decreasing the overall money amount that is at risk for any given settlement day.
- Pool Netting: The system automatically processes FICC/CCP reports and changes the counterparty to “FICC.” With the CCP as the counterparty on all pool instructs counterparty risk becomes minimal. TBA Mortgage Master auto-processes pool substitutions received from FICC/CCP into and out of TBA MM in a pool-turn scenario. 100% automation on valid pool subs!
- Multifunctional user interface with real time trade status monitoring and reporting features.
TBA Mortgage Master’s support of trade assignments is comprehensive, and then some!
Like other standard application workflows, the user can highlight one or many TBA trades and then auto-generate trade assignments. The application adheres to the 25,000 minimum processing rule.
Once created, there is a massively efficient second step that further mitigates operational risk. The user has the ability to generate one SIFMA Agreement per counterparty that contains many individual assignments. A “grid format” lists out key assignment information for viewing purposes. At any time, users can “double-click” launch / open the physical assignment document, which includes electronic signatures and is 100% complete. The SIFMA Trade Assignment Agreement is our typical client deployment, an industry accepted legal agreement.
In a third step, users can auto-send .pdf agreements via email to all counterparty’s in an ‘ease-of-use’ system workflow.
Users can perform these steps as often as they like, however, by condensing many assignments into one legal agreement offers other efficiencies, as well. Instead of having to instruct on numerous wires users can now have one net money movement per SIFMA’s Assignment Agreement.
The SIFMA Legal Agreement is available for use up until 3:00 PM EST on 72 Hour Day, according to SIFMA rules. After that, clients normally look at having to perform pool allocations across EPN, which brings higher trade costs. Quite often, this 3:00PM deadline forces traders to roll their positions earlier than they might want, and perhaps, at prices that are not considered Best-Execution.
For those scenarios where extra time is needed, TBA Mortgage Master offers the ability to connect, real-time, to TradeWeb Round Robin Functionality. The key here is that this functionality can be tapped until 12PM EST on 48 Hour Day, meaning more opportunity for traders to make money on the roll.
The TradeWeb workflow fits very well into the existing application metaphor; users simply highlight and send off the TBA’s to be offset, and with the TradeWeb Auto-Ex, see offsetting trade executions come back into TBA Mortgage Master, ready for pair-off processing.
AUTOMATED DEALER ACKNOLEDGEMENT
Alpha Financial Software has the ability to allow clients to communicate in an automated way when ‘acknowledging’ receipt and acceptance of a new trade assignment. For example, a dealer client could provide our TBA Mortgage Master “Lite” web application to all of their clients, at their cost, for the communication of trade assignment activity.
Electronic communication of client assignments means both firms will have electronically stored trade assignment agreements that can be recalled at any time for future reference. And along with this document is the audit trail of this assignment and whether the dealer(s) accepted or Dk’d the request.