NASD Notice to Members 04-65 - September 2004

SEC Approves Amendments to TRACE Rules to Disseminate Transaction Information on All TRACE-Eligible Securities, Modify and Supplement Defined Terms, and Enhance Notification Requirements

Executive Summary

On September 3, 2004, the Securities and Exchange Commission (SEC or Commission) approved amendments to Rule 6250, Rule 6210, and Rule 6260 of the Trade Reporting and Compliance Engine (TRACE) rules, the Rule 6200 Series.1 The most significant amendments, which are set forth in Rule 6250, effect a fundamental change in the corporate bond markets by requiring that information on all transactions in TRACE-eligible securities be disseminated, except those transactions in TRACE-eligible securities that are issued pursuant to Section 4(2) of the Securities Act of 1933 (Securities Act) and purchased or sold pursuant to Rule 144A under the Securities Act (Section 4(2)/Rule 144A TRACE-eligible securities).

 

In addition, NASD, amended two defined terms, "Investment Grade" and "Non-Investment Grade," and added a new defined term, "Split-rated," in Rule 6210; deleted provisions in Rule 6250 regarding market aggregate and last sale data and the treatment of certain transaction reports; and amended the notification provisions in Rule 6260 to require firms to provide information needed to implement various dissemination schedules. Rule 6250, Rule 6210, and Rule 6260, as amended, are set forth in Attachment A.

 

Questions concerning this Notice should be directed to TRACE Feedback; Elliot Levine, Chief Counsel, Market Operations, Markets, Services and Information, at 202-728-8405; or Sharon K. Zackula, Associate General Counsel, Office of General Counsel, Regulatory Policy and Oversight, at 202-728-8985.