CME Group, a derivatives marketplace, announced it will expand its suite of long-term interest rate products to offer a 30-Year Uniform Mortgage-Backed Securities (UMBS) TBA futures contracts on October 3, pending regulatory review.

“Our new 30-Year UMBS TBA futures contracts will provide the mortgage-backed securities market with access to a liquid risk management tool to hedge their risk in a more capital efficient way,” said Agha Mirza, CME Group Global Head of Rates and OTC Products. 

The 30-Year UMBS TBA futures contracts will be fulfilled by delivery of TBAs cleared by the Fixed Income Clearing Corporation’s Mortgage-Backed Securities Division, a subsidiary of The Depository Trust & Clearing Corporation. The contracts will offer mortgage lenders, issuers, servicers and other participants an exchange-traded and centrally cleared tool for price discovery and risk transfer, according to CME Group’s press release. The futures will represent 30-year residential mortgages pooled into UMBS products backed by Fannie Mae and Freddie Mac. For each delivery month, futures will be listed for delivery of a small number of specified active mortgage coupon rates 2.0%, 2.5%, 3%, 3.5%, 4%, 4.5% and 5%. The three nearest calendar months will be listed at any given time, beginning with the November 2022 contract.

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