WASHINGTON - The Municipal Securities Rulemaking Board, which collects vast amounts of municipal securities trade and disclosure data, plans to study what the data means for the market with an eye toward positioning itself as a resource to retail investors and other market participants.
To that end, the board has hired Marcelo Vieira, who began his first day yesterday as the MSRB's director of research. Vieira will serve as a source of information for federal lawmakers and regulators who regularly seek muni market information and may also provide periodic reports on market trends and statistics, he said in an interview yesterday, stressing that the specifics of his job are still evolving,
"The exciting thing about this position is that there is no blueprint right now," he said. "We're going to work with the muni market community, and with individual investors, to figure out what is needed."
Vieira comes to the board by way of the Securities Industry and Financial Markets Association, where he worked as vice president of industry research and focused on quantitative analysis in fixed-income markets, including the muni market.
"Marcelo will provide the leadership and focus necessary to develop a significant research function at the MSRB," said MSRB chairman Frank Chin, managing director and manager of the public finance department at Citi. "Since the disclosure documents and trade data are reported into the MSRB, we have the complete library of source data for the municipal market. The board wanted to make this data more widely available to the entire market, with a special focus on retail investors."
The MSRB collects official statements and advance refunding documents through its Municipal Securities Information Library. It collects trade data through its Real Time Transaction Reporting System.
Vieira joins the board as it is developing a number of big-ticket projects that are geared toward boosting muni-market transparency. They include a free, centralized repository for municipal securities disclosures, called EMMA, or Electronic Municipal Market Access, which is currently in a pilot format.
In addition, the board is collaborating on a new trade data reporting system for new muni issues called NIIDS, or New Issue Information Dissemination System, which it is developing in conjunction with the Depository Trust & Clearing Corp. and which is to be implemented by the end of September.
MSRB executive director Lynnette Hotchkiss, who participated in the interview, said that Vieira's role in providing the board with enhanced research capabilities will compliment those two long term projects, particularly EMMA, which the board may use to distribute Vieira's future work.
"It's really part of moving the MSRB beyond just being thought of as a rulemaking organization into one that also provides a lot of data and information and transparency services," Hotchkiss said. "With an enhanced research function, the MSRB will continue to fulfill its mandate of promoting a fair and efficient municipal securities market. And making this information available on EMMA will best serve the interests of the retail investor."
"It's sort of like putting all the pieces of a puzzle together," Vieira said. "You've got EMMA and myself joining the MSRB, and hopefully we'll have a pretty good product that will provide transparency and efficiency in the municipal market."
Still, Vieira may encounter limitations to his job, at least when it comes to some of the more opaque segments of the market. For instance, interest rate swaps, which are considered contracts and are not regulated as securities by either the MSRB or the Securities and Exchange Commission, will not be a part of Vieira's research.
It also is unclear if he will be able to shed additional light on the ongoing turmoil in the auction-rate securities market, which was estimated last year to be about $330 billion in size but has been decimated by the credit crunch. Though the board has data on new issuance levels, it does not have precise figures for auction-rate trading volume or how many bonds have been redeemed since issuers began switching to different issuance modes in February.
"I'm not sure you can ever pinpoint the exact amount outstanding [of auction-rate securities]," Hotchkiss said. "There were very good estimates, but we weren't able to press a button and say, 'This is the amount of auction rates outstanding,' and I'm not sure we're going to be able to do that even with a new research function because of the way the market works. There's a lot of moving pieces there."
But Vieira said there are always "hot topics," and the market will benefit from any additional research the board provides.
"Right now it's the auction-rate securities," he said. "But a year down the road, it may be something else. So there's never going to be a shortage of things to do, and different issues to report on."
Meanwhile, market sources yesterday welcome Vieira's hiring.
"Marcelo is a very talented and capable guy who has a lot of experience," said Michael Decker, co-chief executive officer of the Regional Bond Dealers Association, and a former colleague of Vieira's at SIFMA and one of its predecessor organizations, The Bond Market Association. "He's a great hire for the MSRB, which is generally sitting on a lot of market data, and it would be helpful for the market for them to analyze and publish that data in aggregate form."