Washington, D.C. — NASD's Board of Governors today approved a measure significantly increasing the pool of corporate bonds that have transaction information disseminated to the public. Under the measure, the amount of information publicly disseminated about investment grade bonds would increase from the top 500 bonds, which are responsible for 50 percent of market volume, to about 4,200 bonds, which are responsible for 75 percent of market volume.
NASD will begin disseminating price and other transaction information for the expanded group through its Trade Reporting and Compliance Engine (TRACE). The Securities and Exchange Commission (SEC) must approve the proposal before it can take effect. This measure was proposed by an NASD fixed-income industry committee supported by the Bond Market Association.
Launched on July 1, 2002, TRACE enables investors - for the first time - to receive accurate information on the actual sale price of U.S. corporate bonds. As with the disclosure of the actual selling price of equities, this capability affords a new level of protection to bond investors who now have access to independent bond transaction data that can be used to confirm that they are paying a fair market price (and competitive markup) for the bonds they purchase. Because TRACE makes public and accessible information that has heretofore been impossible to access, it increases market fairness and integrity.
Currently, TRACE receives transaction reports on approximately 25,000 corporate bonds, and disseminates price information for the largest issues of investment grade bonds-those corporate bonds of an original issue size of $1 billion or more, plus an additional 50 high yield bonds are reported to NASD. This information is available to the public via http://www.nasdbondinfo.com/asp/home.asp.
"By continuing to increase the number of bonds reportable through TRACE and disseminated to the public, we will continue to broaden transparency in the bond market," said Douglas H. Shulman, NASD's President of Regulatory Services and Operations. "We look forward to continuing to increase information available in the bond markets to help investors make informed decisions."
This proposal will increase the current pool to include all investment grade bonds with an original issue size of $100 million or more that are rated at least A3/A-. In addition, NASD proposes to disseminate transaction information on 90 bonds rated "triple-B." The 90 bonds will represent a broad spectrum of "triple-B" rated bonds.
NASD is the leading private-sector provider of financial regulatory services, dedicated to bringing integrity to the markets and confidence to investors 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 www.nasd.com.