When hedge funds bailed from the municipal market beginning in late February and sold heavily, it pushed secondary trading volume to one of its highest levels ever. But now as the market continues to deal with the fallout from the credit crisis, trading volume has dropped to its lowest levels in years.

While daily average trading volume hit highs of $29.2 billion in February and $25.8 billion in March, it dropped off slightly in April when it fell to $22 billion. Volume then tumbled to $17 billion in May and $19.3 billion in June, according to Municipal Securities Rulemaking Board data.

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