Proposal Approved to Increased Dissemination for Over 4,000 TRACE-Eligible Corpo

On January 31, 2003, the Securities and Exchange Commission (SEC) approved NASD's proposal to increase dissemination of price information and transparency in the corporate debt markets through TRACE. The proposal, when implemented, will increase dissemination and transparency for over 4,000 TRACE-eligible corporate debt securities.

Implementation will occur in two parts, starting with the larger group of Investment Grade bonds rated single-A or better that also have an initial issuance size of $100 million or greater. Dissemination will commence for this group on Monday, March 3, 2003.

The second group to be disseminated consists of 90 triple-B-rated pilot bonds. The dissemination date for these bonds will be announced when the selection process has been completed.

To clarify, the new Phase II dissemination parameters are in addition to the already existing dissemination parameters for Phase I, which provide for the dissemination of all Investment Grade issues having an original issuance size of $1 billion or greater be disseminated, inclusive of the triple-B credits, and 50 designated high-yield bonds.

NASD has created a preliminary list of the bonds that will be turned on for dissemination effective March 3, 2003 in order to give firms and vendors a head start in adjusting their systems. Between now and March 3, NASD will publish updated lists of the new bonds that are added daily to the reportable database that will also become subject to dissemination on March 3. On the morning of March 3 and going forward, the full downloadable list of TRACE-eligible securities will flag all bonds approved for dissemination, inclusive of Phases I and II. Note that although every effort is being made to provide a complete and accurate list prior to implementation date, due to the dynamic nature of the corporate debt market, NASD believes that it is highly likely that the list available at the time of this note will be modified prior to implementation.It is imperative that all vendors monitor the list between now and implementation to be sure that they have the most accurate list on March 3rd.

Thank you for your attention to this matter. For more information on the TRACE system, please refer to the NASD Web Site. For information on the BTDS data feed, please contact NASDAQ Market Data Department at (301) 978-5307, or NASD Market Operations at (866) 776-0800.

TRACE Phase 2 Dissemination - Bond List

Effective Monday, April 14, 2003, NASD's TRACE system will begin dissemination for a group of 120 triple-B-rated corporate bonds. Unlike other phases of TRACE transparency, dissemination will continue for these bonds regardless of any change in rating, including any downgrade to high yield.