SEC Approves NASD Corporate Bond Facility Proposal

Washington, DC, February 14, 2001 - The Securities and Exchange Commission has issued an order approving the National Association of Securities Dealers, Inc.'s new rules to establish a corporate bond trade reporting and transaction dissemination facility and to eliminate Nasdaq's Fixed Income Pricing System (FIPS). The NASD's proposal was originally issued in 1999 and subsequently amended in 2000 in response to public comments. The Commission's order approving the amended proposal also approves, on an accelerated basis, certain technical and clarifying amendments described in the order. Implementation of the new rules will occur 180 days after the date the NASD provides its members with technical specifications.

Transaction Reporting and Dissemination
The new rules require NASD members to report all secondary transactions in specified U.S. corporate bonds to the NASD's Trade Reporting and Comparison Entry Service (TRACE) within one hour of trade execution. The Commission's order adopts several of the amended proposal's recommendations in this area, including the requirement that trade reports submitted to TRACE include yield information, as calculated in accordance with Rule 10b-10 under the Securities Exchange Act of 1934.

The Commission's order also adopts the amended proposal's modified phase-in schedule.

TRACE Ownership and Operation
In response to public concerns, the amended proposal made several modifications, which were adopted by the Commission. First, the adopting release confirms that the NASD, and not Nasdaq, will own and operate TRACE, including the day-to-day administration and information collection process. Second, the adopting release confirms the NASD's intention to create a new committee, the Bond Transaction Reporting Committee (BTRC). The BTRC will advise the NASD Board of Governors on issues related to the operation of TRACE, including future NASD proposals to phase in dissemination and the setting of fees for dissemination of real-time TRACE data to the public. The adopting release states that the NASD has determined not to register as an exclusive securities information processor under Section 11A of the Exchange Act.