Creation of a broad and efficient national market for municipal bonds is moving ahead on four fronts, and we applaud the effort. Within three years, the muni market will meet this goal, and that's not a bad schedule.
The Government Finance Officers Association, the Municipal Securities Rulemaking Board, the American Bankers Association, the Government Accounting Standards Board, and the Securities and Exchange Comission are all working to improve the municipal bond marketplace, and the task is highly complex and difficult. The work involves politics, finance, and technology, and it cannot be hurried.
Progress sometimes seems glacial, but that's perfectly all right. The muni market is diverse, and it will take work to satisfy the interests of small issuers of general obligation bonds, giant authorities selling revenue bonds, managers of bond portfolios, investment bankers, and bond trustees.
The work is going forward. Last Tuesday, GFOA members approved a four-point policy statement on disclosure and regulation, and on Thursday the SEC approved the Municipal Securities Rulemaking Board's electronic library for official statements describing bonds to be sold to investors in the primary market, but it did not accept the board's plan for disseminating secondary-market information. This week, a committee of the American Bankers Association is scheduled to make public a draft -- likely its penultimate draft -- of secondary-market guidelines for bond trustees.
The GFOA's disclosure policy makes the following four points: Information should be collected in a range of forms and disseminated though a range of media; information should be accessible and accurate; costs should be paid by users of information and not subsidized by governments; and, to reduce costs, privately owned information companies should be encouraged to participate and innovate.
Asking for a range of formats and media complicates the work, of course, but the association is right on this score. The SEC had a point in telling the MSRB that the muni world is not yet ready for electronics alone. GFOA members, however, are not so likely to get their wish to pass along all costs to users -- they must pay something for the privilege of participating in a more efficient market.
Much work remains. An accounting standard for long-term debt must be developed, and that is still years off. A new proposal must be developed for nonelectronic collection and dissemination of secondary-market information. Allocation of costs must be worked out. But in a market as complicated as muni bonds, the world is moving ahead with reasonable speed.
