NASD to Expand Public Dissemination of Corporate Bond Transaction Data
Washington, D.C. — NASD announced today it will file a rule proposal with the Securities and Exchange Commission (SEC) to require immediate public dissemination of transactions of all publicly traded corporate bonds. The step will complete a three-year process to bring full transparency and real-time reporting to this important segment of the U.S. fixed income markets.
NASD staff will submit a formal proposal for the necessary rule amendments to the SEC by November 1.
Since February 7, NASD's Trade Reporting and Compliance Engine (TRACE) has been disseminating transaction and price data for 99 percent of corporate bond trades on a real-time basis. The remaining one percent of trades, which are being disseminated on a delayed basis, include large transactions of infrequently traded, high-yield bonds that almost exclusively involve dealers and institutional investors rather than retail investors. Under the proposed rule amendments, transaction information on those trades would also be publicly disseminated immediately after they are reported to TRACE.
Registered firms are required to report all corporate bond transactions to TRACE within 15 minutes of execution. In practice, more than 80 percent of trades are reported within five minutes of execution and immediately disseminated publicly.
Because of concerns about the impact of public price dissemination on bond market liquidity, transaction information reporting has been phased in over stages since TRACE was first launched in July 2002. NASD reviewed the impact of public price dissemination on liquidity and found no conclusive evidence that the public dissemination of transaction information has negatively impacted liquidity.
Real-time corporate bond transaction data, along with aggregate end-of-day summary statistics (most active bonds, total volume, advancers and decliners, new highs and lows) are available to retail investors free of charge on NASD's Web site at www.nasdbondinfo.com. TRACE real-time data is also available on the Bond Market Association's Web site at www.investinginbonds.com.
Investors can obtain more information about, and the disciplinary record of, any NASD-registered broker or brokerage firm by using NASD's BrokerCheck. NASD makes BrokerCheck available at no charge to the public. In 2004, members of the public used this service to conduct more than 3.8 million searches for existing brokers or firms and requested almost 190,000 reports in cases where disclosable information existed on a broker or firm. Investors can link directly to BrokerCheck at www.nasdbrokercheck.com. Investors can also access this service by calling (800) 289-9999.
NASD is the leading private-sector provider of financial regulatory services, dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. NASD touches virtually every aspect of the securities business - from registering and educating all industry participants, to examining securities firms, enforcing both NASD rules and the federal securities laws, and administering the largest dispute resolution forum for investors and member firms. For more information, please visit our Web site at www.nasd.com.