"SIFMA Issues Amended and Restated Money Market Trading Practice Guidelines" says a news release posted by the former Bond Market Association. The trade group states, "The Securities Industry and Financial Markets Association (SIFMA) today released amended and restated money market guidelines. These guidelines have been adopted and approved by SIFMA's Money Market Committee, and supersede and replace the Money Market Trading Practice guidelines originally adopted on Oct. 26, 2007.... The Guidelines are broken out into three primary areas: Promoting an Efficient and Liquid Market, Controls and Procedures, and Settlement and Fails."
Robert Toomey, managing director and associate general counsel for SIFMA's Government and Funding Division, said that these guidelines were designed to further the efficient trading of money market instruments. "Although the Guidelines are non-binding, we recommend that all parties trading in money market instruments abide by these Guidelines. An efficient, liquid market is critical to the smooth functioning of the money markets, and we believe that the revised Guidelines provide needed updates and are reflective of current market good practices."
The new Guidelines, found at http://www.sifma.org/services/stdforms/standard_forms.html#moneymarket, are entitled, "Amended and Restated Money Market Trading Practice Guidelines." They state, "Below are the amended and restated money market guidelines.... The changes herein include deletions of certain 2007 Guidelines that are no longer applicable, modifications of certain 2007 Guidelines and inclusion of new Guidelines. It is important that personnel at your firm, especially those on money market trading desks, be informed of these Guidelines. These Guidelines are designed to further the efficient trading of money market instruments. Therefore, although the Guidelines are non-binding, we recommend that all parties trading in money market instruments abide by these Guidelines."
SIFMA says, "An efficient, liquid market is critical to the smooth functioning of the money markets. All money market participants should attempt to follow best practice guidelines to ensure the best possible liquidity of the money markets: All guidelines which concern trading in money markets apply equally to all market participants ...; Dealers have the responsibility and the obligation to keep their offerings updated at all times ...; Markets may be either primary or secondary and should be clearly labeled as such; Security type or any restrictions as to the resale affecting the secondary market of money market instruments should be stated in the general description of the offering; and, All outside vendor parameters shall apply when using those systems."
It says, under "Controls and Procedures," "Money market participants should have separate reporting lines for settlement/clearing staff and the trading desk; Details on executed trades should be provided as soon as reasonably practicable; CUSIP numbers or standard identifiers for all types of money market instruments, including but not limited to commercial paper and certificates of deposits should be provided promptly after details of executed trades are provided; If applicable, the federal securities law exemption pursuant to which the money market instrument is being offered and/or resold should be clearly indicated [e.g., Rule 144A, Section 4(2), Section 3(a)(3), Section 3(c)(7), etc.)]."
Finally, under "Settlements and Fails," the document says, "All market participants' trades should be entered into trading systems promptly and sent without delay to the operations area to promote timely settlement; Market participants should have internal trading 'cutoff' times that leave sufficient time for settlements via Fedwire, DTC or any other delivery system; All deliveries must comply with minimum denominations as stated in the offering document or dealer agreement; Primary paper issuance may be subject to a minimum size determined by the issuer; Market participants should have internal policies regarding deliveries that are 'non-standard' or that take place after normal cutoff times that reflect appropriate risk management; and, Finance charges or other costs associated with fails should be mutually agreed upon by the parties involved and should reflect current settlement practice."
