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SEC considers letting bond mutual funds use ratings in ads

Federal regulators are reviewing a proposed rule from the National Association of Securities Dealers that would let bond mutual funds publish volatility ratings in their sales literature for an 18-month trial period.

The NASD had been looking into publishing ratings information for several years. Its board approved filing the rule proposal in January and submitted it to the SEC on Feb. 12. This month, the SEC started the review period and is now soliciting public comment on the proposal.

The proposed rule recommends the use of narrative ratings issued by credit-rating companies like McGraw-Hill and Standard & Poor's. The ratings would describe a fund's sensitivity to market changes and interest-rate fluctuations.