Operating Policy
Statement Supporting Implementation of TMPG Fails Charge Trading Practice
January 31, 2012

The Agency Debt and Agency Mortgage-Backed Securities (MBS) Fails Charge Trading Practice recommended by the Treasury Market Practices Group (TMPG) goes into effect on February 1, 2012. The Federal Reserve Bank of New York fully endorses the trading practice, which recommends that a party who fails to deliver securities in a timely manner incur a charge. The New York Fed will adopt these practices in its own operations in these markets and strongly encourages all market participants to incorporate them into their trading operations.

"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," said Brian Sack, executive vice president and head of the New York Fed’s Markets Group. "As was the case with the implementation of a TMPG-recommended fails charge in the Treasury market in May 2009, the implementation of agency debt and agency MBS fails charges should reduce the level of settlement fails and support the functioning of these vital markets."

Additional information can be found on the Treasury Market Practices Group website. offsite

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