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Thursday, July 29, 1999 Wayne Lee (202) 728-8067

NASD Board Approves a Bond Trade Reporting and Transaction Dissemination Facility

Washington, D.C.—The National Association of Securities Dealers, Inc. (NASD®), today announced that its Board has approved the establishment of a trade reporting and transaction dissemination facility for corporate bonds. The proposal was developed in response to Securities and Exchange Commission (SEC) Chairman Arthur Levitt’s call for increased bond market transparency. It is designed to enhance the price transparency and surveillance of the U.S. corporate debt market and will be submitted to the SEC for final approval.

If implemented, NASD members will begin reporting in spring of 2000 all transactions involving specified U.S. corporate bonds. Initially, transactions will be sent to a reporting system within one hour of execution. Six months after the facility is introduced, the time frame will be compressed and the NASD will commence dissemination of the transactions to the public.

"We believe the proposal will greatly enhance the transparency of the market," said J. Patrick Campbell, Chief Operating Officer and Executive Vice President of The Nasdaq-Amex Market Group, Inc., a subsidiary of the NASD. "Full implementation will ensure that investors and other participants will have the information that will increase confidence in the corporate bond market."

The proposal is the result of a collaborative effort by the NASD and the Bond Market Transparency Committee, a blue ribbon panel of bond industry experts that included institutional investors, retail and institutional broker/dealers, inter-dealer brokers, an academic and industry representatives from the Bond Market Association, the American Association of Individual Investors and the Securities Industry Association.

The plan will be implemented in two phases. The following are highlights of Phase I, which address regulatory reporting and surveillance requirements for debt securities:

• Implementation date: Spring of the year 2000 (after completion of the Y2K initiative).
• Securities subject to reporting : U.S. dollar denominated investment grade debt securities, high-yield and convertible debt securities that are issued by U.S. and foreign private corporations. Also included will be Rule 144A debt securities (which will not be disseminated).
• Who must report: The NASD member on the sell side and the NASD member on the buy or sell side (in a trade with a customer or a non-member broker/dealer).
• Elements of the trade report: Buy/sell, CUSIP or NASD symbol, quantity, price, contra-party’s NASD symbol, date and time of trade execution and trade capacity.
• Phase-in plan for securities and timing of reporting:
  First month: High-yield and convertible debt securities, with one-hour reporting and no dissemination, with the exception of trade data on 50 liquid high-yield bonds (current FIPS 50 bonds);
  Second and third months: Alphabetical phase-in of reporting for remaining securities, with one-hour reporting and no dissemination;
  Fourth, fifth, and sixth months: One-hour reporting and no dissemination. Ensure data integrity and assess the ability of member firms to report.
• Methods of trade reporting: Utilization of a system similar to the Automated Confirmation Transaction Service (ACTSM) will allow vendors and service bureaus to provide data on behalf of their clients via a Nasdaq® computer-to-computer-interface. Additionally, a browser-based workstation will allow members to enter information manually via the Internet or other private network.
  The following are elements of Phase II, which address the dissemination of trade information:
• Elements of information to be disseminated: Bond description, quantity (limited by a cap), price, date and time of execution.
• Method of dissemination: Web site query capability and dissemination to vendors.
• Plan for initiation of dissemination:
  Seventh, eighth, and ninth months: 15-minute reporting of all reportable debt securities, with dissemination of trade report data and assessment of impact on market liquidity.

The National Association of Securities Dealers, Inc. (NASD), is the largest securities-industry, self-regulatory organization in the United States. It is the parent organization of The Nasdaq-Amex Market Group, Inc., and NASD Regulation, Inc. Through The Nasdaq-Amex Market Group ^SM, the NASD operates The Nasdaq Stock Market® and the American Stock Exchange®. Through its regulatory subsidiary, the NASD develops rules and regulations, provides a dispute resolution forum, and conducts regulatory reviews of member activities for the protection and benefit of investors. The NASD oversees the nation’s 5,600 brokerage firms and more than 600,000 registered brokers. For more information about the NASD and its subsidiaries, please visit the following Web sites: www.nasd.com; www.nasdaq-amex.com; or the Nasdaq-Amex Newsroom^SM at www.nasdaq-amexnews.com.