We all recognize that electronic trading platforms are the way of the future and, as such, the industry should begin assessing the feasibility of and the potential conflicts that may arise from their use. On the one hand, electronic trading platforms have the potential to improve the transparency and efficiency of the municipal securities market. On the other hand electronic trading embodies an anonymity, lack of personal interaction, potential high-speed transactions, and a finality that may leave investors susceptible to abuse. Developed and efficient markets are only possible when all investors have fair, transparent, and equal access to information. Unfortunately, the current quality, quantity, and accessibility of information about U.S. municipal securities vary significantly by both the type of security and the type of investor.
Strong disclosures lead to a well-informed investor base, which enhances market efficiency.
Technological advances now provide an inexpensive way to ensure that the majority of investors have access to full and accurate financial information. With respect to the proposed MSRB Interpretive Guidance on Dealer Responsibilities , we are greatly concerned with the reduction of investor protections outlined in the Sophisticated Market Professional section. The interpretive guidance incorrectly assumes that institutional investors with considerable research resources have automatic and unencumbered access to financial data. Like retail investors, institutional investors struggle to get the necessary disclosures that allow them to assess competently the viability of an investment and that enable them to comply with their fiduciary obligations to their clients. Such difficulties are particularly relevant for non-rated securities.