https://www.forbes.com/sites/investor/2024/05/06/ai-and-the-municipal-bond-market/?sh=ea78c9a6965e
"Amid all this sits the $4 trillion municipal market—fragmented, opaque, inefficient, and stale—redolent with time-honored (and increasingly anachronistic) traditions, embedded biases, dated processes.
The frustration of market participants with bond pricing and valuation services is legion. It stems from what is genteelly referred to as the market’s “structural problem”: barely 2% of the market’s outstanding bonds actively trade, and those that do vary in block sizes from the millions to only a few thousand, with no up-to-the minute posting for prices or yield curves. All of that make it nearly the perfect problem for eager AI engineers to tackle. Which they are. With vigor. " by Bartnet Sherman, Part-Time Professor at Boston University
Definitely read this Forbes article by Barnet Sherman; link is above
Takeaways concerning Watkinson Capital:
1) We have been utilizing ATS (Alternative Trading Systems) such as ICE TMC since we opened our doors in 2009; this allows us to show our client's bonds to Hundreds of dealers and leading to better pricing.
2) MuniBond dealers such as Piper Sandler, JP Morgan, and Piper Sandlers plus 10 others send us their inventory of MuniBonds on a daily basis. The sheer amount of emails which numbers in the hundreds per diem required us to set up a separate email for "MuniBond offerings. It is a monthly task to delete thousands of emails in this email. Plus it is highly inefficient to sift through these emails to find the proper structure of MuniBonds we wish to purchase for our clients.
Using a new aggregator such as BondNav Insperex, we are able to build curated lists of bonds we wish to purchase and then we receive notifications when these MuniBonds are "out for the bid." I can doing a myriad of other task and still be able to quickly respond to a bid wanted pop up alert. This plaforms enables us to multi-task but not miss valuable "Bid Wanted" notifications.
3) Building these curated lists of "Bonds to Buy" on the BondNav platform is an semi-example of using algorithms to execute bids to buy the right bond. The proper definition of utilizing algorithms is automatic bids or lifting an offer without clicking a button. We still click the button to place our bids on MuniBonds
It is fascinating to be in the middle of this transformation.
Best,
Jeff
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