FINRA to include ABS bonds in TRACE database: Check out the details in the WSJ This move would enable better price disclosure for the entire bond market. Some asset-backed securities trade regularly, which would give all investors better insight into loan credit performance and overall bond-clearing levels. For illiquid issues, market participants will get more transparency into spreads as well as a better understanding of the current market for structured-transactions. Both are benefits to investors. The dealer community won’t be in favor – greater disclosure increases competition and lowers margins. The largest problem with the massive deleveraging that occurred in the ABS market was that when companies and funds were forced to sell assets to meet capital calls, there weren’t any buyers. The illiquidity of the securities they held dealt much more of the price blow than the actual performance of the underlying paper. When you don’t have price discovery and markets are illiquid, spreads become enormous and the only buyers available are those looking for distressed paper at a significant discount. If you have to raise cash to meet an immediate margin call, you don’t have a choice other than to execute at depressed levels. While I’m not suggesting that publishing ABS trading levels on TRACE will solve that problem, any steps towards increased disclosure and liquidity is a step in the right direction.