Corporate Bonds Get New Exposure
WASHINGTON -- Many investors will get a first look today at trading information for some corporate bonds, long viewed as a dim corner of the fixed-income market.</br></br>Detailed information on investment-grade, high-yield -- or junk -- and convertible corporate bonds becomes available with the launch of Trace, a new price-reporting system provided by the National Association of Securities Dealers. The system expands on and supplants the existing FIPS reports for high-yield bonds.</br></br>"Trace fulfills NASD's mission to bring greater transparency to debt markets," said Douglas Shulman, NASD's president of regulatory services and operations. "In today's business climate, it's more important than ever for regulators and investors to have access to more information."</br></br>Unlike in U.S. Treasury and municipal bonds, investors haven't had ready access to comprehensive information on the $3.9 trillion corporate-bond market, prompting former Securities and Exchange Commission Chairman Arthur Levitt to push for a price-reporting system in 1998. Proponents of price-transparency pointed out that corporate bonds account for roughly 20% of the overall market, yet little public information is available on trade volume or pricing.</br></br>The SEC finally approved Trace last January, requiring NASD members to report eligible corporate-bond trades to the self-regulatory organization. The NASD will use the information to assist in market surveillance, and will distribute the information on a real-time and delayed basis.