Trade

Bullet trades settle on a single date with a fixed price and delivery, commonly used for smaller or highly specific pools. Participants use platforms like Bloomberg or Tradeweb to submit offers and execute against live order flow. Pricing is quoted in points or basis points over par, reflecting coupon differentials and expected prepayment speeds. Trade confirmations reference the underlying pool number, issue date, and custodian ID to avoid misallocation errors during settlement.

Block trades involve larger volumes, often over $10 million, and are negotiated directly between institutional counterparties. These trades typically occur off-exchange and use ISDA master agreements to govern terms beyond standard MBS conventions. Pricing reflects liquidity premiums and market positioning—especially for CMO tranches where subordination and cash flow sequencing matter. Settlement usually occurs T+1 or T+2, with fail fees applied for late delivery.

Broker pools aggregate trades across multiple investors through a designated broker who matches buyers and sellers in real time. This format is common for Ginnie Mae pools due to high demand and standardized features. Brokers ensure anonymity until trade finalization and often use RFQ workflows to gauge market depth. Post-trade, the broker issues allocation instructions to custodians, who verify eligibility and process transfers per DTC procedures.