Large Bank Examination Workshop February 2026

Characteristics of Liquid Securities How easy is it to convert a security into cash? • Fundamental characteristics  Ease and certainty of valuation  Active and sizable market  Price swings (volatility) may make it harder to trade bonds, or it could increase the cost of your trade. • Can use FINRA’s TRACE Market Data Center for real-time and historical transaction prices for corporate and agency bonds, and end-of-day prices for U.S. Treasury Notes/Bonds. • Can also use the Municipal Securities Rulemaking Board’s EMMA, which provides disclosures, trade data and other information related to municipal securities. 79

Less Liquid/Illiquid Asset Sales Risks • Widening bid/offer spread • Counterparty reluctance • Declining mark to market  Corporates,  Better rated Munis,  Whole loan sales – long settlement period even in normal markets  Non-agency CMOs  CMBS  CDOs, CLOs  Structured notes  Lower-rated Munis

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