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US mortgage bond market liquidity measure approved
By Al Yoon
NEW YORK, Jan 9 (Reuters) - An industry group on Friday said it approved a proposal aimed at boosting trade and prices in parts of the $4.5 trillion market for guaranteed mortgage-backed securities.
The Securities Industry and Financial Markets Association's plan lets dealers re-package a type of structured mortgage bond into a security eligible for a more liquid market, according to a letter to SIFMA members obtained by Reuters.
Dealers will be able to re-package collateralized mortgage obligations, or CMOs, with attributes similar to plain-vanilla mortgage bonds to boost their values, and solve a problem for holders who have found the securities tough to sell as the global financial crisis turned investors away from risk.
(Editing by Chizu Nomiyama)
