Slowly but surely municipal bonds are joining the rest of the securities world, and that's good news for the long-term strength of the muni market. It won't be long before municipal bonds join Treasuries, corporates, and common stocks in making prices of trades readily available to the public.
Common stock prices have been public ever since brokers met under a buttonwood tree on Wall Street in 1792. The stock ticker was introduced in 1867, and corporate and Treasury bond prices were widely disseminated as the capital markets developed after the Civil War. Price information moved into high gear after World War II with the development of computers, electronic word processing, and high-speed data lines. Treasury bond prices became instantly available on Telerate in 1974. Trading went global in the 1980s, and securities markets never closed. Prices shot around the world instantly on an unimaginable web of wires and satellite signals.
Municipal bonds stayed aloof from all this progress, if that's what it is. Muni bond prices remained in the dark, kept secret by dealers who enjoyed exploiting a safe niche.
Muni bond markets were said to be local. There were too many bond issues, too many maturities, two few trades to publish prices tor everyone to read in morning newspapers, and for a long time nobody much cared to change this antiquated comfortable system.
To be fair, there's truth in the justification. There's no doubt that muni bond prices are difficult to gather because issues are many and trades are few. Nevertheless, the Electronic Age is changing the framework of the muni marketplace, and a pilot program of reporting municipal bond prices and trades will begin in January 1995. The Public Securities Association last week gave its support to the program, an effort proposed by the Municipal Securities Rulemaking Board last January and pushed by the Securities and Exchange Commission. To argue against widespread dissemination of price and volume facts is to be an information Luddite.
Bond issuers and investors will benefit as more price information becomes public. Bond trading and investing strategies can be refined. The market will grow larger. As PSA chairman Fenn Putman said, the program is a "significant stride."