Solution for Asset Managers, Hedge Funds, Institutional Investors, Investment and Commercials Banks

Client Profiles

Active vs. Passive Managers - Alpha Financial Software LLC offers a comprehensive MBS clearance & settlement solution for Active Asset Managers, Index Managers, Hedge Funds & Institutional Advisors. Whether actively managing long portfolios of mortgage pools hedged with TBA’s or passively managing against a benchmark and exclusively using TBA’s to gain mortgage exposure, TBA Mortgage Master provides the tools and workflows to support your MBS processing needs.

AUM: Large vs. Small and Middle-Tier Managers - Whether managing 50,000 TBA settlements per month or 10, Alpha Financial Software respects the uniqueness of each client/prospect. We view clients as long-term partners and are therefore willing to work together to come up with a pricing package that makes economic sense.

Products & Services

As stated above, the clients’ investment strategy dictates the products and services that various buy-side clients typically employ:

  • TBA Mortgage Master provides all of the tools and workflows to mitigate the operational risks of mortgage clearance. Process pair-offs, tradelinks, SIFMA/BMA trade assignment, Tradeweb Round Robin, sell optimization, auto and manual pool allocations & pool substitutions.Whether processing in an automated way or manually entering pool allocations TBA Mortgage Master validates minimum BMA guidelines such as number of pools per good million and variance checking. In addition, any trade stipulations will also be validated, such as: min/max WAM, WAC, FICO score; access over 50 of the most common data points through our partnership with eMBS, Inc.

    Usage of the different TBA Mortgage Master features depends on the clients’ profile where for example, the biggest difference between active and passive managers would be, passive managers tend to trade for best-execution and then assign away their book while active managers are spec buying, optimizing inventory and “blowing out” bad pools.

  • The EPN Gateway is a real-time messaging application that connects TBA Mortgage Master to the Fixed Income Clearing Corporations (FICC) Electronic Pool Notification network (EPN) for the purpose of sending and receiving pool allocation messages when clearing TBA trades.

    Any buy-side firm can gain access to EPN without becoming a full member of the FICC; such firms are considered EPN only members. In addition, if FICC membership is not an option, the application can also be configured to email or fax your allocation information.

  • The Alpha Data Feed fulfills the heavy data requirements for processing mortgages. It is a real-time mechanism that supports the unique flows that arise in any clients’ middle or back office. For example, a “new issuance” workflow might be needed when clients are spec-buying new issuances. Quite often a real-time, intra-day security master load is required in downstream systems prior to loading the buy trade. TBA Mortgage Master’s integration capabilities are very accommodating.

  • Alpha Financial Software’s MBS Margining application is available, stand-alone or “plugged in” to TBA Mortgage Master. Following the guidance of FINRA, SIFMA and the Federal Reserve Bank – New York’s Treasury Market Practices Group (TMPG), the application fully supports and processes the daily mark-to-market of all applicable positions. Users know where their biggest mark risks lie by viewing a morning Risk Report. Generate cash or security marks. The Margin Blotter allows users to both filter and aggregate data, so the visual aspects of the system are extremely flexible in creating the exact view to efficiently manage daily margining. Manually or automatically generate and send out your margin calls to counterparty’s. As users close out their processing day, the application stores each day’s mark information for historical look back purposes. Once your mark’s are complete, MBS Margin Manager can provide the mark data in the clients required format and sent downstream to cash and/or security settlement systems.

Broker/Dealer Solutions

Client Profiles

Alpha Financial Software’s TBA Mortgage Master fully supports the two main sell-side client types:

  • Brokers: Buying and selling as dealer middle-men, who “give-up” their trades as part of the TBA Netting cycle.

  • Dealers: A much heavier system user who buys and liquidates positions via optimization and turns anywhere from $2 Billion to perhaps $25 Billion on any given ‘A’ Day. Utilizing both TBA Netting and Pool Netting services of the CCP, dealers gain big efficiencies and risk mitigation on the settlement of their mortgage books.

Large Volume players vs. Middle-Tier Dealers – Alpha Financial Software appreciates the different business economics found between the big volume shops and the middle-tier market where volumes are lower and where MBS processing in general might not be part of most client mandates; more of a “catered service” than a “must have for all clients.”

In an ever changing regulatory environment and with FINRA mandated margining on the horizon, many Chief Risk Officers in the growing middle-tier dealer markets are recommending more automation given the high operational risks found in the unique way that U.S. Agency mortgages clear and settle.

For those firms who need to automate and think that the barriers to entry have been historically too high, think again! Alpha has proven itself as willing to work with firms on the financial side of the equation to make a win, win situation; clients get the required risk mitigation tools while Alpha increases revenues and then grows revenues further as the clients’ business grows.

For the firms that are full MBSD members, Alpha can provide an end-to-end solution from trade capture and execution, to inventory management and reconcilement, to TBA Netting, pool allocations and Pool Netting, to final settlement.

New Market Players – With many different players in the mortgage life cycle there are more firms realizing that the risk is potentially too big to not be more automated and “risk off.” And thus, firms like mortgage originators are moving to become MBSD members with automated software solutions.

Firms are realizing that they need to “cover all of the bases” when it comes to the different ways to transact. For example, normally mortgage originators sell off their new issuances as specified pool trades. But, talk to the Chief Risk Officer and the firm cannot assume that the “pay-up” will always be there for spec pool trading; firms need to support a TBA pool allocations workflow that does not include fax machines.

Products & Services

  • TBA Mortgage Master provides the tools and workflows to mitigate the operational risks of sell-side mortgage clearance. Process pair-offs and tradelinks. Take-on SIFMA/BMA trade assignments from your clients. Use the Sell Optimization tool to build good delivery EPN messages when getting rid of unwanted pools.

    After pool netting, when the CCP becomes the trade counterparty for any subsequent activity, TBA Mortgage Master’s wide-breadth of automation comes on display with fully automated pool substitutions; valid inbound subs can be auto-turned and sent out if the subbed pool was also turned and sold.

    Stay in-synch with trader P&L accounts as they “journal” pools between them.

  • High-Through-Put STP: Over the past 2 years, Alpha worked with a high volume dealer-client, to maximize the breadth of processing through our solutions. Now, for example, in scenarios where the counterparty sends an odd-lot/tail-piece with bad terminator codes, TBA MM can ensure that the pools are valid to the TBA trades tail and then if required, the pools will be turned and sold-off with “good delivery.”

  • The EPN Gateway is a real-time messaging application that connects TBA Mortgage Master to the Fixed Income Clearing Corporations (FICC) Electronic Pool Notification network (EPN) for the purpose of sending and receiving pool allocation messages when clearing TBA trades.

  • The Alpha Data Feed fulfills the heavy data requirements for processing mortgages. It is a real-time mechanism that supports the unique flows that arise for any dealer. For example, a “new issuance” workflow might be needed when clients are spec-buying new issuances from mortgage originators. Quite often a real-time, intra-day security master load is required in downstream systems prior to loading the buy trade. TBA Mortgage Master’s integration capabilities are very accommodating to these kinds of needs.

  • Alpha Financial Software’s MBS Margining application is available, stand-alone or “plugged in” to TBA Mortgage Master. Following the guidance of FINRA, SIFMA and the Federal Reserve Bank – New York’s Treasury Market Practices Group (TMPG), the application fully supports and processes the daily mark-to-market of all applicable positions. Users know where their biggest mark risks lie by viewing a morning Risk Report. Generate cash or security marks. The Margin Blotter allow users to both filter and aggregate data, so the visual aspects of the system are extremely flexible in creating the exact view to efficiently manage daily margining. Manually or automatically generate and send out your margin calls to counterparty’s. As users close out their processing day, the application stores each day’s mark information for historical look back purposes. Once your mark’s are complete, TBA Mortgage Master can provide the mark data in the clients required format and sent downstream to cash and security settlement systems.