Municipal market still stuck in the 70s


Retail investors are likely to see about twice as much in "leakage" when buying and selling municipal bonds as they do for corporate paper, according to the WSJ, and regulators - who bypassed the municipal market while helping reshape how Wall Street works - have this asset class in its their sights.

"We spend an awful lot of time on the equities side of the market where spreads are counted in pennies - and in the muni market, spreads are counted in dollars," says SEC Commissioner Michael Piwowar.

For their part, brokerages say munis cost more because they trade in lower volume and for smaller amounts than other securities.

"You think of how the retail industry has gone from the local grocery store to Wal-Mart to Amazon," says a municipal bond wealth manager. "In municipal bonds, we're still shopping at the local grocery store."

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Comments (2)
  • Tschurin
    , contributor
    Comments (381) | Send Message
     
    Good article...hope the SEC does something.
    11 Mar 2014, 11:18 AM Reply Like
  • rob1221
    , contributor
    Comments (41) | Send Message
     
    I hold a Vanguard High Yield Muni Fund my costs are very low. I think in high yield and long duration a good low cost no load mutual fund is the best way to manage costs and default risks.
    11 Mar 2014, 01:09 PM Reply Like
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