December 30, 1992
TO: BOARD OF GOVERNORS NO. 95-92
SEC RULES COMMITTEE NO. 95-92
ACCOUNTING/TREASURERS COMMITTEE NO. 49-92
RE: INSTITUTE COMMENT LETTER ON NASD PROPOSED REPORTING SYSTEM
FOR HIGH YIELD BONDS
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The Institute has filed the attached comment letter with
the Securities and Exchange Commission strongly supporting the
proposal of the NASD to establish rules for quotation and
transaction reporting in the high yield bond markets. As we
previously indicated, the proposal would require NASD members to
report transactions in all high yield bonds traded over-the-
counter to the NASD for regulatory purposes and require real time
trade reporting for 30 to 50 of the most liquid high yield bonds,
through a system called the Fixed Income Pricing System ("FIPS").
(See Memorandum to Board of Governors No. 89-92, SEC Rules
Committee No. 93-92 and Accounting/Treasurers Committee No. 46-
92, dated December 15, 1992.)
In its comment letter, the Institute noted several benefits
that the NASD’s proposal should provide to investors in high
yield bonds, such as investment companies. These include
facilitating accurate pricing by open-end investment companies of
the high yield bonds in their portfolios, assisting portfolio
managers in making informed investment decisions and promoting
the integrity of the high yield bond markets. The Institute also
recommended that consideration be given to expanding the number
of high yield bonds to be included in FIPS as soon as possible,
in view of the significant benefits the proposed system is
expected to provide.
We will keep you informed of developments.
Matthew P. Fink
President
Attachment