The National Association of Securities Dealers Inc. is having to postpone the implementation of its Trade Reporting and Compliance Engine (TRACE) system in the wake of the September 11 attacks.

The NASD says that the delay will allow firms adequate time to put reporting systems and mechanisms in place. TRACE is a regulatory system that will capture the reporting and dissemination of eligible corporate bond transactions.

On January 23, the Securities and Exchange Commission approved proposed rules that will require NASD members to report over-the-counter secondary market transactions in eligible fixed income securities to the NASD and also subject certain transaction reports to dissemination. TRACE is the NASD-developed vehicle that facilitates this mandatory reporting.

The scheduled milestones for the bond transparency initiative were to have begun with NASD member firms contacting NASD by November 1 to schedule testing, with the testing window opening in December and running through January, and actual implementation of regulatory reporting beginning on February 4, 2002. The exact startup date will be announced in the near future.