The initiative, which enhances RTTM's interactive messaging capability, helps customers reduce risk and achieve greater efficiencies for the real-time price reporting of such transactions to the NASD's Trade Reporting and Compliance Engine (TRACE). FICC is a subsidiary of The Depository Trust & Clearing Corporation (DTCC).

The interactive messaging functionality also will help participants meet the new TRACE trade reporting requirements for corporate bonds effective July 1, when the time frame for reporting such trades goes to 15 minutes from the present 30 minutes.

RTTM's new interactive messaging link for corporate bond price reporting uses similar messaging protocols to those being used now for municipal bonds to the Municipal Securities Rulemaking Board (MSRB). That system went into effect January 31, 2005 and requires trade reporting within 15 minutes of execution.

"We expect that industry participants will see substantial benefits from this new enhancement because it provides a single pipeline for trade matching and price reporting submission in one real-time interface," said Jeff Ingber, DTCC's general manager, Fixed Income Clearance and Settlement. "A single platform augments processing consistency, increases efficiencies and precludes the need to support multiple development projects for various processing functions."

The Fixed Income Group worked collaboratively with another DTCC subsidiary, National Securities Clearing Corporation (NSCC), to enhance NSCC's existing trade reporting interface between TRACE and RTTM. NSCC operates the netting and settlement services for municipal and corporate bonds and unit investment trusts (UITs), as well as equities.

The Fixed Income Group has closely coordinated testing over the past four months with NSCC participants and the NASD to prepare for the interactive messaging enhancement to TRACE. Customer feedback on the new functionality has been very receptive.

Charles Lichter, Brokerage Processing Services, vice president of Automatic Data Processing, stated: "We are pleased that FICC and NASD have worked together to improve the NSCC TRACE interface. The real-time link will enable our clients to meet 15-minute reporting, and have a single message that submits corporate bond trade reporting information and satisfies trade-matching requirements. This is a benefit that brings us closer to achieving straight-through processing."

Essentially, the new functionality allows broker/dealers to submit corporate bond trade data to RTTM using a single interactive message that serves two purposes. Upon receipt of corporate bond trade data, DTCC immediately forwards a report of the trade to TRACE, while simultaneously passing the data onward internally for matching and, ultimately, clearance and settlement of corporate bond trades by NSCC. The RTTM service currently matches an average of approximately 5.4 million transactions a year in the over-the-counter corporate bond marketplace with a value of $2.85 trillion.

For clearance and settlement purposes, the RTTM service has been matching corporate bond trades in real time since June 2004, when the service was rolled out for corporate and municipal bonds and UITs. But DTCC did not provide real-time price reporting capabilities via RTTM for corporate bonds until now. Ed Fanning, vice president of Product Management, explained that the previous NSCC-to-TRACE interface for corporate bond trades only provided TRACE Accept/Reject data via batch processing. So NSCC participants using this interface still needed to separately monitor the NASD TRACE web screens to view the trade status for both customer and street side activity, and then input trade corrections directly on the TRACE screen.

"With this enhancement, NSCC participants can now obtain TRACE acknowledgement and reject messages on a real-time basis via RTTM," Fanning said. "They have the option to instantly monitor these output messages for further action through the RTTM service, or they can continue to utilize the TRACE web screens."

The RTTM rollout for corporate and municipal bonds and UITs last year marked the last stage of FICC's multi-year effort to bring RTTM to all fixed income products. The DTCC subsidiary introduced RTTM for U.S. Government securities in 2000, followed by mortgage-backed securities (MBS) in 2002.

Today, about 98% of all U.S. Government securities trades representing an average daily value of some $2.4 trillion, and about 87% of MBS trades representing an average daily value of $274 billion, are submitted daily in real time to RTTM. About 90% of corporate, municipal bonds and UITs are submitted via interactive messaging for matching with an average daily value of $18.6 billion.