Institute Comments on NASD Proposal Concerning Corporate Bond Facility

Washington, DC, December 22, 2000 - The Institute has filed a comment letter with the Securities and Exchange Commission in connection with the NASD's amendments to its proposal to create a corporate bond trade reporting and transaction dissemination facility (TRACE). The comment letter supports the NASD's proposed amendments, but urges the NASD to reconsider several issues raised in previous comment letters.

The letter discusses the NASD's proposal to create a new committee, the Bond Transaction Reporting Committee, that would monitor TRACE operations and advise the NASD Board of Governors on TRACE-related issues, including, among other things, the setting of fees for, and the effects on liquidity associated with, disseminating real-time TRACE data to the public. The letter supports this initiative but expresses concern that the proposed eight-member Committee, which would consist of four persons recommended by the NASD staff and four recommended by The Bond Market Association, would likely result in eight "sell-side" members.

The letter therefore urges the NASD to modify its proposal to include equal "buy-side" representation, and emphasizes the importance of having the views of both sets of market constituents considered and reflected in all significant TRACE-related developments. The letter points out that the composition of the Committee could be modeled after the Nasdaq Quality Markets Committee, which focuses on equity market structure issues and whose members reflect equal buy-side and sell-side representation.