PHOENIX - The new Securities and Exchange Commission Fixed Income Market Structure Advisory Committee plans to discuss liquidity issues at its first public meeting on Jan. 11.

The SEC announced the meeting Wednesday. It will be held at the SEC’s headquarters in Washington, D.C. The 23-member group, which was formally created Nov. 15, includes significant players in the municipal market such as former SEC commissioner Elisse Walter, Suzanne Shank of Siebert Cisneros Shank, Chicago chief financial officer Carole Brown, and the Municipal Securities Rulemaking Board's chief market structure officer John Bagley.

According the SEC’s meeting notice, the event will “focus on various administrative items and will include a discussion of liquidity in the bond markets.” The SEC is inviting the public to submit written statements to the committee, and those should be received no later than Jan. 8.

The liquidity of municipal bonds, traditionally viewed as "buy and hold" securities, has been a subject of debate. The perceived lack of liquidity in the muni market was one of the justifications federal regulators used for limiting the ability of banks to use municipal debt to help fulfill their legally-mandated liquidity ratios.

The SEC headquarters
Bloomberg News

SEC chairman Jay Clayton first announced the committee, which market participants have dubbed “FIMSAC,” in July, saying he thought the SEC needed to have a review of the “efficiency, transparency, and effectiveness” of the fixed income markets. As more and more members of the Baby Boom generation retire and put their money into fixed income products, Clayton said, he had concerns that many of those investors might not understand the differences between the fixed-income and better-known equities markets, the chairman said.

Commissioners Michael Piwowar and Kara Stein subsequently also said they were looking forward to what the committee might come up with.

FIMSAC is chaired by Michael Heaney, non-executive director at Legal & General Investment Management America, and includes many corporate bond experts in addition to muni figures. Some market participants have speculated that the committee could eventually lead to more efforts to harmonize muni and corporate bond rules.

The meeting will begin at 9:30 a.m eastern time, and will be open to the public, except for a period during lunch when the committee will meet in an administrative work session. The public portions of the meeting will be webcast on the commission’s website.

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