One of the largest segments of the fixed-income market, U.S. Agency mortgages, continues to witness sustained growth, and so does its administrative intensity. Despite the massive evolution in the front office, most asset managers rely on decades-old manual processes for trade operations, making the process incredibly tedious and complex. Without current technology, buy-side firms often grapple with MBS Ops processing due to high-pressure manual environments. This, coupled with ever-evolving regulatory requirements and the growing skills gap in the mortgage industry, has made it crucial to automate trade operations.

A company at the helm of automating TBA trading operations is Alpha Financial Software (AFS), an trade clearance and settlement automation software company.

AFS is a virtual Fintech leader that offers straight-through-processing automation of U.S. Agency TBA trading to buy-side and sell-side financial firms. A brainchild of veteran fixed-income experts who combine years of practical experience with advanced technologies, it’s ideally positioned to provide full lifecycle MBS clearance and settlement solutions to automate clients’ middle and back-office operations. TBA Mortgage Master proactively manages and processes pair-offs, trade assignments, round robins, and EPN allocations, allowing institutional investors to keep transaction costs low and mitigate operational risks.

“Our solution brings asset managers 100% MBS Ops automation with the proven tools, workflows, dealer and custodian reporting to meet any firms’ needs,” says Joseph Kohanik, managing partner. “Our low cost business model removes the old-technology financial barriers so that small-to-medium sized asset managers can implement our solution and completely automate their operations with tremendous scale.”

TBA Mortgage Master is designed to automate the end-to-end clearance and settlement process. When a manager “rolls” trades with the same dealer, the settlement process is very neat. However, things become complex when a manager “rolls” with a different dealer. Based on processing cut-off times the manager might opt to use an assignment of trade (AOT)—a five-page legal document that has always been a manual processing nightmare for asset managers. TBA Mortgage Master automatically spins an AOT and emails it to the dealer within in seconds of offsetting the trades.

“We’re the only software vendor that can fully automate the process of preparing and sending AOT in real-time,” states Kohanik.

TBA Mortgage Master exhibits the same level of excellence in the two other methodologies. Tradeweb round robins are real-time and “no touch”. Thusly, removing all manual entry found in vendor competitors. As an approved-EPN vendor with the Fixed Income Clearing Corporation (FICC), the solution offers a much higher degree of sophistication than legacy systems when moving pools. The system automatically validates SIFMA guidelines and trade stipulations against the universe of agency pool data for both original notifications and pool substitutions, making for high through-put and scale.
AFS clients span from large scale, passive exchange-traded funds (ETF) providers and active managers to primary and regional dealers. Aspiring to be its clients’ trusted partner and a responsible player in the industry, this year, AFS accomplished ISO27001 Certification with regard to data center security and resiliency.

ISO27001 is a big win for the continued growth of AFS’s MBS Ops Network solution; a secure ecosystem that provides a “one-stop-shop” for comprehensive trade life cycle processing. The solution brings together real-time agency pool data, a published API and proven integration with all major OMS/EMS systems, comprehensive “learn at your own pace” library of training videos and additional industry knowledge documents to help clients address any skills gap. And, with 2022 client volumes surpassing $4.5 Trillion, there is a lot of room for growth, in 2023, with AFS only at 5% of the market.