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Contact: Aleis Stokes, Chief External Relations Officer



Washington, D.C. -- The Municipal Securities Rulemaking Board (MSRB) today published a new research report on pre-trade market activity in the municipal securities market based on an in-depth analysis of pre-trade data from two prominent alternative trading systems (ATS). The report, which reviewed new pre-trade data from 2021 and 2022, is a follow-up to a 2020 report based on pre-trade data from the same two ATS platforms from 2018.

“There has been a significant increase in the number of live quotes and trades on the two ATS platforms since 2018, as well as measurable improvement in trade prices relative to best quotes for both customer buy and sell trades,” said MSRB Chief Economist Simon Z. Wu. “This trade price improvement may be the result of increased quote provision and increased quote price competition informing execution prices on the ATS platforms.”

MSRB’s analysis reveals that requests for quotes (RFQs), responses to RFQs, live quotes and trades on the two ATS platforms all nearly or more than doubled from 2018 to 2022, with increases of 92-125%, compared with an increase of only 37% in trades in the broader municipal securities market. Additionally, the average difference between customer buy trade prices and best offer quotes decreased from 38 basis points in 2018 to 22 basis points in 2022. Moreover, customer sell trades received increasingly negative markdowns between 2018 and 2022, suggesting price improvement for the selling customers, as well.

When comparing the high-volume, high-volatility year of 2022 to the low-volume, low-volatility year of 2021, responses to RFQs declined from a median of seven responses in 2021 to five responses in 2022. The average difference between customer buy trade prices and best offer quotes increased by 17 basis points from a low of 5 basis points reached in 2021. With the exception of these numbers, the statistics for 2022 were mostly superior to the comparable statistics for 2018.

“While there was some decline in market quality between 2021 and 2022, that decline was not unexpected, considering the markedly different market conditions in 2021 and 2022,” Wu said. “It’s clear that pre-trade data continued to demonstrate its relevance and usefulness for the market.”

Read the report.

The Municipal Securities Rulemaking Board (MSRB) protects and strengthens the municipal bond market, enabling access to capital, economic growth, and societal progress in tens of thousands of communities across the country. The MSRB fulfills this mission by creating trust in our market through informed regulation of dealers and municipal advisors that protects investors, issuers and the public interest; building technology systems that power our market and provide transparency for issuers, institutions, and the investing public; and serving as the steward of market data that empowers better decisions and fuels innovation for the future. The MSRB is a self-regulatory organization governed by a board of directors that has a majority of public members, in addition to representatives of regulated entities. The MSRB is overseen by the Securities and Exchange Commission and Congress.