The Bond Dealers of America (BDA)1 is writing to request additional guidance with respect to the ability of dealers to qualify under certain circumstances as “market makers” in the debt markets. Similar issues were most recently touched upon by the Securities and Exchange Commission (“SEC”) in Release No. 34-55638 (April 16, 2007) (the “Release”). In the Release, the SEC approved an interpretation proposed by the National Association of Securities Dealers, Inc. (“NASD”), also referred to as an Additional Mark-Up Policy for Transactions in Debt Securities, Except Municipal Securities (File No. SR-NASD-2003-141). However, in the more than three years since the date of the Release, fixed-income dealers have struggled continually with the uncertainty that stems from the currently available guidance, such as the announcement by the SEC in the Release that “merely because the dealer takes risk positions or devotes substantial capital to provide liquidity,” it is not necessarily a market maker.
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