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How electronic trading strengthens execution in the muni market

Hardy Manges | August 8, 2017

In preparing the municipal bond market in late 2015 for a new order-handling standard, the Municipal Securities Rulemaking Board took note of an important trend. “As the availability of electronic systems that facilitate trading in municipal securities increases,” the MSRB wrote, “dealers need to determine whether these systems might provide benefits to their customer order flow.”

The MSRB’s guidance underscored a development seen in other markets and asset classes when electronic trading takes hold. As regulators move to raise execution standards, electronic trading comes to play a significantly more important role in the compliance process.

That is especially the case in a market as complex and fragmented as municipal bonds. Though about half the size of the U.S. corporate bond market in value, the muni market features about 20 times the number of securities and about 10 times... To get the full story, subscribe now.