Four years after introducing its shared software platform for municipal interdealer brokers and their customers, MuniBrokers is expanding its capabilities.

The Jersey City, New Jersey-based firm is adding features to its shared trading platform, such as more data feeds and electronic capabilities, and branching out to the exchange-traded fund and corporate bond markets, Jay Caldas, president of MuniBrokers LLC, told The Bond Buyer in an interview.

“We have been extremely successful in our small sector of the muni market so we plan on taking that same success and driving it into other products,” he said.


Jay Caldas, president of MuniBrokers
Jay Caldas, president of MuniBrokers

"We see an opportunity to leverage the inter-dealer broker’s skills, accessing liquidity in the cash market with the creation/redemption cycle of ETFs," Caldas said. "Before introducing this on MuniBrokers, there was no direct correlation to the ETF’s eligible and current holdings and inventory in the inter-dealer broker market."

About 20% of the corporate bond market has moved to electronic execution, according to Ron Purpora, chairman of Hartfield, Titus, & Donnelly [HTD] LLC, the parent company of MuniBrokers. The firm now hopes to continue to leverage its technology among corporate voice brokers, Purpora said.

"We believe the voice-brokered market in corporates is under-served by the technology that currently exists," Purpora said. "Our plan is to demonstrate that by creating purpose-built technology to support the voice broker process, as we did in munis, we strengthen liquidity, enhance transparency, and improve post trade efficiencies. "

The new software will operate similarly to the existing MuniBrokers' platform.

That technology enables 15 separate, independent municipal interdealer brokers to interact with their customers -- mostly broker dealers -- and subscribers by using state of the art tools and technology to capture and share their aggregated content, including more than 6,000 bid-wanteds and 65,000 offerings -- with 1,000 users daily.

Besides HTD, the other interdealer subscribers are: Avatar Group, Calton, Chapdelaine (TP ICAP), Clayton Group, Dealerweb/JJ Kenny Drake, Eagle Brokers, Lek Securities, LPS Capital, Regional Brokers Inc., RW Smith & Associates LLC., Sentinel Brokers, Stark Municipal Brokers, Tradition Asiel, and Wolfe & Hurst Bond Brokers (BGC).

Brokers' brokers, trading desks, and salespeople, use the proprietary software to process their trades and support their secondary market business through direct connectivity, third-party order management systems, and the firm’s web-based trading system.

Users can customize their search criteria, bid on bonds, write trade tickets, and utilize straight-through processing to confirm a trade with electronic counterparties. They can access support functions, such as trade history and proprietary data on valuations and spreads not available on the Municipal Securities Rulemaking Board's EMMA website or other platforms.

“With tens of thousands of offerings and thousands of bid wanteds backed up by hundreds of individual broker’s brokers specializing in all sectors of the secondary municipal market, users have access to a unique set of data and access to multiple venues for execution,” Caldas said.

The site also offers a full suite of bond reports, as well as links to the EMMA, site; a bond calculator function, Municipal Market Data benchmark curve alerts, integration with the TM3 MMD municipal yield curve scale, connectivity with and a distribution channel to Bloomberg Trade Order Management Solutions [TOMS] subscribers, and access to the Intercontinental Exchange municipal bond benchmark yield curve, among other data.

Branching Out

With MuniBrokers in full swing and expanding, the firm is now putting its effort into its launch of new software for the ETF market and corporate bond brokers.

The ETF software is currently implemented on a limited basis for Hartfield, Titus.

Users can search current inventory or markets listed on MuniBrokers for constituents, or eligible securities for any listed municipal or corporate ETF, according to Caldas.

“It can find securities that match the holdings of an ETF and also determine what is eligible to be invested in the funds -- but not currently held by them,” he said.

A corporate trading model, CorpBrokers, is aimed at enhancing liquidity and is available to both current subscribers of MuniBrokers and corporate dealers. That system supports Hartfield's corporate bond business and operates similarly to MuniBrokers, with access to high-grade and high-yield corporate markets, as well as pre- and post-execution tools, among other features.

“We are working with several other corporate brokers and order management systems who are interested in adopting the system,” Caldas said.

Enhancing Access and Distribution

The MuniBrokers software is unique in its wide access to the aggregated content of the 15 brokers, which is not available on alternative trading systems or anywhere else in the market, according to Caldas.

“We have technology that matches -- and in some cases can be superior to" alternative trading systems, Caldas said. ATS’s are electronic marketplaces where dealers buy and sell municipal bonds.

“We provide our broker customers all the technology needed to operate their business, process trades, connect to their customers, remain compliant with regulations, analyze their business, and compete with the major ATS’s,” he said.

However, Munibrokers is not a counterparty to any transaction; each brokers’ broker is independent and separately executes trades on the system.

Its transparency, wide distribution, and its direct connection linking interdealer brokers to the dealer community are among the biggest advantages, according to James Tarzian, managing director at Dealerweb/JJ Kenny Drake. He has used MuniBrokers for nearly two years.

“The system interacts with the dealer community,” he said. “We can disseminate bid wanteds, and dealers can bid directly and input bids into the system.”

Dealerweb, the inter-dealer division of global web-based electronic trading network Tradeweb, operates a municipal bond brokerage business through J.J. Kenny Drake.

Tarzian said MuniBrokers has more capabilities, advantages, and technologically-driven tools and applications than any system previously available.

“When customers call to show you an offering they can download the offering directly into our system, and you can check the offerings and disseminate them,” he added.

Being able to increase efficiency in a fast-paced market is key, and the constantly evolving technology is a major draw.

“It’s a big time-saving plus,” he said. “Everyday they try to advance and improve it, and are constantly upgrading their system.”

Voice Broker Support

The platform is a hybrid system that supports both voice and electronic trading, and enhances voice brokers by giving them a competitive edge over ATS’s in a technologically-driven market, according to Caldas.

MuniBrokers was originally created as an alternative to “the limited technology available to IDBs to remain compliant with the increasing regulatory requirements and to better compete with the ever growing presence of the ATS’s,” he said.

The MuniBrokers software had been under development since 2000, and the company used Hartfield Titus online to originally bring the platform to life, he said. RW Smith was the first to subscribe.

“It became apparent that for the voice broker to remain relevant in the evolving environment they would require some form of improved technology to manage the processes and level the playing field,” Caldas said.

But MuniBrokers doesn’t replace voice brokers altogether.

“As the market becomes more technologically-driven and has a greater demand for technology- driven solutions, the brokers still have an important place, and we recognize that and continue to support it,” he said.

For instance, the platform helps brokers deal with increased disclosure and securities regulations, as the system is compliant with the MSRB's Rule G-43 on disclosure and fair practices for bid-wanteds and offerings, he said.

“In one spot, a client can reach all those different markets, which could also go a long way to enhancing their best execution obligations,” Caldas added.

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