NASD plans to expand Trace to cover all trades of public bonds, adding institutional junk transactions

New York, Sept. 27 - The NASD said it plans to expand real-time dissemination of corporate bond trades to cover all transactions of publicly traded bonds.

The expansion - which covers about 1% of all trades, according to the regulator - will bring into the system large transactions of infrequently traded high-yield bonds that almost exclusively involve dealers and institutional investors.

Under the proposed rule amendments, transaction information on those trades would also be publicly disseminated immediately after they are reported to Trace, the NASD's Trade Reporting and Compliance Engine.

The Trace system currently distributes transaction and price data for the other 99% of corporate bond trades in real time.

Registered firms are required to report all corporate bond transactions to Trace within 15 minutes of execution. In practice, the NASD said, more than 80% of trades are reported within five minutes of execution and immediately disseminated publicly.

The NASD said the proposed rule change 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."

The public price dissemination has been phased in since Trace was launched in July 2002 because of concerns about its impact on bond market liquidity.

The NASD said it has found "no conclusive evidence that the public dissemination of transaction information has negatively impacted liquidity."

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