|November 3, 1999
NASD Proposes Launch of a New Bond Trade Reporting and Transaction Dissemination Facility
Washington, D.C.—The National Association of Securities Dealers, Inc. (NASD®), today announced that it has submitted a proposal to the Securities and Exchange Commission (SEC) seeking permission to implement a newly-developed trade reporting and transaction dissemination facility for corporate bonds. The system was created in response to SEC Chairman Arthur Levitt’s call for increased bond market transparency. It was designed to enhance the price transparency and surveillance of the U.S. corporate debt market, and requires final approval from the SEC.
The proposal to increase bond market transparency 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.
If implemented, NASD members will begin reporting in spring of 2000 all over-the-counter transactions involving eligible 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.
Trades will be entered into the Trade Reporting and Comparison Entry Service (TRACESM), a multi-functional service designed to facilitate the reporting and comparison of fixed-income trades. TRACE is a facility of the The Nasdaq Stock Market®, a subsidiary of the NASD. Its technology was derived in part from Nasdaq’s Automated Confirmation Transaction Service (ACTSM). TRACE will operate from 8 a.m to 6:30 p.m., Eastern Time and replace the existing Fixed Income Pricing System (FIPSSM), which collects trade reports on eligible high-yield securities.
"TRACE will help greatly improve transparency in the corporate bond market," said J. Patrick Campbell, Chief Operating Officer and Executive Vice President of The Nasdaq-Amex Market Group, Inc., a subsidiary of the NASD. "Investors will be armed with much more information—fostering new confidence in the corporate debt market."
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:
The following are elements of Phase II, which address the dissemination of trade information:
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 GroupSM, 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 NewsroomSM at www.nasdaq-amexnews.com.