WASHINGTON - Pedestal Inc. closed down its online exchange for "to-be-announced" mortgage-backed securities on Monday, according to a company letter obtained by American Banker.
The online exchange, the first to deal with the forward contracts of mortgage-backed securities, began operations in March 2000 and was run by Pedestal Capital Markets, a subsidiary of Pedestal.
The letter, dated Aug. 17 and signed by Stuart A. McFarland, the president of Pedestal, announced to the company's customers that the exchange would shut down on Aug. 20. A Pedestal spokesman confirmed the letter's existence and that the exchange had been shut down on Monday.
In the letter, Mr. McFarland explained that delays in fixing technical problems had cost Pedestal "the first mover advantage." In the meantime, he wrote, "industry-sponsored trading platforms have taken the lead" in the to-be-announced mortgage-backed securities market."
"While we have enjoyed a certain amount of success to date, we now believe there are few opportunities for an independent platform that does not have the deep liquidity offered by multi-dealer support," Mr. McFarland wrote.
A Pedestal spokesman said the company is now focusing on its online exchange for the trading of whole loans, which it started in 1998.