NASD Wants Major Expansion of Public Bond Cost Release

November 21, 2002 ( - Plan sponsors who monitor their fixed income investments may have an easier time because of a significant broadening of the public distribution of bond pricing data for 4,200 high-quality bonds.

Reuters reported that the plan by the NASD’s Board of Governors for additional disclosures would represent an increase of more than eightfold from the current 500 bonds whose price is publicly distributed currently.

Reuters said the NASD plans to dispense the data through its Trade Reporting and Compliance Engine, known as TRACE, which it launched in July. The expansion requires the approval of the US Securities and Exchange Commission (SEC).

Reuters said that improving price disclosure in the now $4 trillion US corporate bond market was a key goal of former SEC Chairman Arthur Levitt.

TRACE, which is available to individual investors at the NASD’s Web site already contains real-time price data on bonds from many well-known investment-grade issuers, such as Ford Motor Co.’s and General Electric Co.’s finance arms, Reuters said.

Its 500 bonds, comprising issues of $1 billion or larger, account for about half of US investment-grade corporate bond trading volume, the NASD said, The additional 3,700 would boost that percentage to 75%, it said. TRACE also carries data on 50 high-yield, or “junk,” bonds.

According to Reuters, the NASD said the new bonds would include US investment-grade bond issues originally totaling $100 million or more, and rated at least in the “single-A” category, a medium investment grade. The NASD said it also wants to distribute data on 90 bonds rated in the “triple-B” category.

John Heine, an SEC spokesman, said the commission has 35 days to consider expanding TRACE after the NASD publishes its proposal in the Federal Register and that the review period may be extended.