News Release

NASD Proposes Increasing Sale Data On Corporate Bonds For Dissemination To Public Through TRACE

Washington, D.C.—NASD today announced that its Board of Governors approved a proposal to increase the public dissemination of transaction information on corporate bonds reported through its Trade Reporting and Compliance Engine (TRACE). The proposal, which will be filed shortly with the Securities and Exchange Commission, would bring investors immediate sale information on 99 percent of all transactions in TRACE-eligible securities that are publicly traded. Information on a limited number of transactions would be disseminated on a delayed basis.

"This proposal to increase access to bond pricing information will enhance investors' ability to make better investment decisions," said Douglas H. Shulman, NASD's President in charge of markets, services and information. "In a very short period of time, TRACE has provided unprecedented transparency to the market, enhancing market fairness and integrity."

The corporate bond market continues to grow in importance for all investors, including individual investors. During the last 10 years, the total amount of outstanding corporate bonds has reached an estimated $4.3 trillion - exceeding U.S. Treasury bonds outstanding by approximately 25 percent. Household assets invested in corporate and foreign bonds have grown considerably over the last 10 years and have exceeded household municipal bond holdings since 1997. In addition, small trades (an indicator of individual investor activity) now represent approximately 71 percent of investment grade and 52 percent of high-yield debt transactions in the OTC secondary market for corporate bonds.

Transactions released on a delayed basis would be limited to bonds that are infrequently traded, large block (over $1 million) transactions, and of lower credit quality. Also released on a delayed basis would be transactions of newly issued bonds of lower credit qualities.

Today's proposal was developed and recommended by a fixed-income industry committee appointed by NASD and the Bond Market Association.

NASD began public dissemination of data through TRACE on July 1, 2002, as part of its program to increase transparency in the corporate bond market. Currently, TRACE is disseminating transaction information on approximately 4,600 bonds representing 68 percent of investment grade market volume. Under the new proposal, TRACE would disseminate data on more than 23,000 individual bonds. TRACE enables investors to access previously inaccessible information on the actual sale price of U.S. corporate bonds, affording them a new level of protection. The availability of independent bond transaction data allows investors to confirm that they are paying a fair market price for the bonds they purchase.

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