NASD Drafts Corporate Bond Transparency Plan

Arthur Levitt's quest to introduce the corporate bond market to the concept of price transparency moved forward today with the National Association of Securities Dealers' filing of a plan to build a system that would gather and disseminate corporate bond transaction data.

Basically, the SEC chairman wants the bond market to work more like the stock market -- where investors can make buy and sell decisions based in part on the price at which the most recent trade took place. Except in the Treasury market, the most liquid of the bond markets, last-trade information is difficult (if not impossible) to come by. As a result, unsophisticated investors can fall prey to dealers who would sell bonds for more than they are worth.

In a September 1998 speech, Levitt called upon the NASD "to develop systems to receive and redistribute [corporate bond] transaction prices on an immediate basis." ...