BOSTON — A University of Oregon business professor wonders how completely are closed-end fund trades reported to the Municipal Securities Rulemaking Board.

John Chalmers of the school's Charles H. Lundquist College of Business said up to 20% of trades were missing.

"These are preliminary findings, of course, but we didn't find a substantial number of trades. It's a puzzle," Chalmers said Thursday at a municipal finance conference co-sponsored by The Bond Buyer and Brandeis University's International School of Business. "We printed out the bonds missing and asked the MSRB to tell us what's going on."

Speaking at a panel at the Park Plaza hotel about examination of trading skills and liquidity management, Chalmers said he and colleague Z. Jay Wang  studied closed-end mutual funds' trading of municipal bonds from 2006 through 2010. The period covers both a rapid economic expansion and a recession.

"We extended the window a couple of months each way to make sure we were accurate," he said.

"It thus provides a rich setting to investigate how institutional investors trade illiquid assets and manage liquidity risk in various market conditions," Chalmers and Wang wrote. They studied 170 closed-end funds over five years of data. They represented 2% of municipal bond trading. "That's not huge, but you're looking at $60 billion on average," he said.

The conference features academics and practitioners exchanging ideas on recent developments in the municipal credit markets and the practice of public finance.

Chalmers admitted to variables in the study, including possible errors by his team, tracts not available, and not all trades ending up in the rulemaking board's trade data. But the study, if conclusive, would raise questions about compliance with the MSRB's Rule G-14, which requires that all transactions in municipal securities be reported to the MSRB within certain prescribed time periods.

"If we're right, then we may have an issue there," said Chalmers, recognized as an expert in muni bonds, mutual funds, individual investor behavior and asset pricing.

The conference will end Friday.

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