TBA futures offer a modern, exchange-listed alternative to traditional bilateral TBA trading. These contracts provide access to the same 30-year UMBS exposure, but through a standardized, centrally cleared futures framework that addresses long-standing barriers to entry.
The contracts are physically settled and follow the same forward-settling conventions as traditional TBAs. Trading takes place electronically on Globex via a central limit order book (CLOB), providing price transparency, firm liquidity and anonymous execution. This structure reduces reliance on dealer relationships and manual workflows, and brings the execution experience in line with other listed fixed income products.
All trades are cleared through CME Clearing, which removes bilateral counterparty credit risk and eliminates the need for MSFTA agreements. Investors benefit from a regulated clearinghouse framework, with consistent margining, consolidated risk management ‌ and operational efficiency.
This structure simplifies access for pooled vehicles, UCITS funds, SMA managers and global investors. Futures can be executed centrally and allocated across multiple accounts or portfolios without replicating legal agreements or onboarding processes.
The TBA futures market also supports a growing and active roll market, allowing participants to maintain forward exposure over time without re-entering bilateral contracts. This adds flexibility for long-term mortgage exposure and supports dynamic strategies that rely on rolling positions forward.
TBA futures reduce legal friction, improve execution‌ and scale across institutional portfolios. For many market participants, they offer a practical solution to the limitations of traditional TBA trading.