Transcription:
Lynne Funk (
All right. Hi everyone. welcome to the Bond Buyer's Tech Update Panel for the Muni Industry. and it's interesting because our our panelists all are quite diverse backgrounds in technology and the different aspects that they work in the muni industry. So it's it's a general it's a general title for the panel for a reason. cuz you're gonna hear a lot of different viewpoints. So I will introduce the panel now. I'm Lynn funk. I'm the executive editor at the Bond Buyer. and to my left is Gregg Bienstock who's CEO of Lumesis. and next we have Roni Gannon who's CEO of MyTrustMe.com LLC. And we've got Chris Fenske who's head of Capital Markets Research Global Markets Group at S&P Global Market Intelligence. And lastly we have Steve Winterstein who is Head of Capital Markets at Alphaledger. So I would ask that each of you kind of just give us a give the group a a short overview keep it brief and what you do in muni's band technology how how you're what you're working on right now in this space. So Greg do you wanna start?
Gregg Bienstock (
Here? Sure, So for those of you that don't know Lumesis, we are a software and data company, focus exclusively on muni space. we've we well we started kind of a little bit buy side focus. We ended up doing a lot of reg tech stuff over the years. and then over the past couple of years we've launched into on the pricing side not evaluated pricing but a pricing platform that started initially with new issue focus and then secondary and then a muni ticker as well. So I'll kind of as we have a discussion a bit later on I'll go into that in terms of what we're working on right now probably the two principle things Lynn you'll get the draft press release coming up shortly. All right. But we have a new debt analysis coming out end of this week into early next week which we'll be calculating debt service reserves and for every algo in the market and pulling in all the relevant information so something that the market's asked for and then the other thing just kind of focused and one of my colleagues is here. Who's spending some time on this as well is there's a fair amount of work being done on the ML AI side in some of our existing models in some of what we do as well as some newer things that we'll be we are working on that we'll be kind of exposing to our platforms and our clients in the coming months. So
Lynne Funk (
Thanks. Great Ronnie.
Roni Gannon (
Hi, I'm Roni Gannon and I'm with MyTrustMe.com. I started MyTrustMe.com a couple years ago to address some of the inefficiencies. I noticed over my 20 plus years in the capital market space particularly when it comes to selecting servicers for debt issuers. So what we're focused mostly on is pre and post issuing services for issuers whether they're corporate or muni it's actually a very robust muni market as you all know. While my background is traditionally on the 143 a regs corporate space we're focused mostly right now where what we're we're tweaking constantly is improving processes. So improving transparency for issuers increasing automation and we're always focused on reducing costs. So costs are a huge factor a lot of the transactions that that we work on obviously there are annuities for a lot of the providers. We try to provide the best solutions for each transaction. Each one is different and it's typically not something that's only based on price. It's also based on other factors but we do a we provide a comprehensive analysis for each transaction which add a tremendous amount of value for the transactors when they're looking to select the provider we're based out at Miami. And we're very happy to be here.
Chris Fenske (
Thanks. Thank you Lynne. Thank you Balmer. My thank you everyone today. Chris Fenske, Global Markets Group, formally known as Ipreo, that's the Bitcom systems game day MUNI book running basically providing technology workflow solutions improve the efficiency of the markets. As far as like exciting cool stuff we're working on nothing to do with financial markets at all. It's actually a group called the engineering product design group that their clients are NASA aeronautics firms different engineering firms and they have this software called gold fire where you pretty much just plug in the type of documents you wanna look at. And it's sort of like a Google search on a succinct set of documents. So you can put in the entire bond buyer news archive to put in all the official statements from the history of the municipal bond market you could put in your own notes in a secure fashion and you could almost like Google it and basically just look through it. It's natural language processing engine. it actually does all sorts of different statistics on disclosures wording if you're a bond council you could say oh how is this worded by the others? The other deals at this period of time? It's a really cool cutting edge system used design rocket systems very secure. A lot of top seeker projects are actually done in gold fire. It's housed on premises. In addition to that I mean we have a new platform excuse me launching in a couple months called muni deal query. We're taking our vast history of municipal bond new issue data and actually making it very easy to query and actually tied to your own in-house data. And then there's of course game day where we're looking to take some of the data from game day and produce some analytics for issuers and underwriters to help them get a better understanding where the drivers of where the different demand of the capital structure is
Lynne Funk (
Cool, Steve.
Steve Winterstein (
Yeah. Hi Steve Winterstein relatively new to the company that I just joined about two months ago alpha ledger before that I ran municipals at market access and we're a company that is essentially building a blockchain platform to provide loan origination securities origination on the blockchain. We've done about two dozen transactions in the bank loan space municipal bank loan space. and we we started off in the muni space because it's largely underserved and data is really opaque there. And we thought it's a it's probably the place that's most ripe to to begin. so we've done as I said about two dozen transactions there we were the first to do a secondary market transaction in the in the municipal loan space where a bank in Washington sold a municipal loan that they originated by an issuer in Oregon and that bank traded that muni loan to a bank in Texas. So a lot of this is right now we're developing proof of concept but we believe that digitizing records on the blockchain is could be a great improvement on what has been here to for kind of opaque and disjointed data. And we think that's the next generation of things.
Lynne Funk (
Great. Thank you all for for giving that intro. So some of the questions I'm gonna ask are I'd like you to just they're broad questions but given from your seat you can I believe you all can give your inputs on them and please feel free to ask each other questions. If you want to interrupt one another you guys are good at that. I know so I'll start though with the first question which is quite broad but a lot of folks in the muni industry say transparency lacks right? we're we really lack transparency full complex data. So I guess the first question is how how is technology the products that you're working on making transparency better in munies? Do you wanna just start down the line right.
Gregg Bienstock (
Wanna Start again?
Lynne Funk (
Yeah sure sure.
Gregg Bienstock (
So in terms of what we're doing and when we think about transparency where I'm gonna spend my time talking is around our our pricing platform and what distinguishes what we're doing from other kind of pricing platforms in the marketplace is we're not evaluated pricing. there's no black box. What our platform about is about is about being able to take the structural and credit characteristics of a transaction a potential transaction or a potential segment of the market or a specific bond whatever it is that you're interested in and being able to use those those defining characteristics to then create your scale or to identify comparable securities in the marketplace. So that when you start to think about pricing that you have a sound basis to support that. And we give the users not only the ability to play with variables but then also the ability to drill into what's inside. So when you're looking at the 20 27 maturity and we're showing that we've identified six bonds and 27 trades you're able to see those specific bonds and specific trades why they support comparability. If in you're a professional opinion for example and this is this is part of the way we built a platform is not only is it their transparency but there's the ability to manipulate is probably a bad word but manipulate the data right? If a comp doesn't belong because it's retail and you didn't set a parameter to eliminate retail you can pop it out. Or if there's just a wonky trade in there you're able to pull those out or a wonky issue. So there's the idea was to address a need around the idea of how do we use technology to become more efficient around creating scales. And what that's led to is a platform that is not only now for new issues but also for secondary trading activity as well. And then being able to actually see the underside and being able to see all the transactions that make up each of the points on a curve.
Lynne Funk (
Okay let's go on line.
Roni Gannon (
So they may have mentioned my background as banking. So I've been in the banking industry for 20 plus years. And when I built my trustme.com I was thinking about numbers. I was thinking about costs. I really wasn't thinking about any other aspect of the transactions right? Speed efficiency and cost. I went into Tallahassee in February I think of this past year. And I met with Ben Watkins. He runs the the state of Florida's bond program. And I'm sitting there and waiting for him. He walks in and I never met him before. And he turns around to me and he goes I love what you're doing. I'm absolutely a big supporter of what you're doing. I'm gonna let everybody know. What I love about is the transparency. And I said absolutely that's what we focused on. And, I had no clue what he was talking about. And and then I went back and I realized when you when you when you have an idea other people see it from other perspectives. And I subsequently had a conversation with David Erman. Who's a he ran the bond program for state of Wisconsin. I think he just moved over recently to Baker Tilley and same conversation with with with David. He looked at it and he said we love the transparency. We love the fairness of it. oftentimes we're asked from an auditing perspective how did you arrive to this conclusion? How did you select this? And it turns out that the added value that we bring to each transaction which is analysis of what that particular transaction is doing it turns out that was much more valuable that I had originally understood it to be I just thought it was just something else that we were adding some kind of extra feature that we were adding to the transaction. So, transparency's incredibly incredibly important. I think a lot of people see transparency from their own lens. they think of it in different ways. From my perspective I think transparency is just making sure that all the information that everybody should have is available to them and it's not as Greg was mentioning the word manipulated by anybody else right. It's fresh and accurate data. So yeah for us that's it's quite important.
Chris Fenske (
Yeah. As far as transparency goes in our perspective I mean when you think of like price transparency and secondary market you think of trade prints when you think of the primary market you think of basically our APRI platforms our Muni bicep platforms vast majority of all new issue deals go through our book running system. And that actually that information gets funneled to the buy side in a realtime basis. You're getting deal pricing deal documentation changes in scales as they happen. There's no delay as far as some sending messages or emails Bloomberg messages whatnot. So we're filling that gap in the primary market on a realtime basis with our platforms
Steve Winterstein (
Abhishek, brought up an interesting point in his panel this morning and it is the data is interesting but you need a mechanism to organize it in a centralized place. And I say centralized it sounds a little bit unintuitive because I work for a company that's particularly in defi but centralized in in a way that there there needs to be a mechanism for you to process any data that you want. See and that's really important. I'll use an example of how my company is bringing transparency to the market. So we start off as I mentioned in the municipal loan space where we did a couple dozen transactions bank loans in the municipal space is very opaque. It's typically a community bank doing a loan with a local water and sewer authority or a school district. And that ends up being the original documents end up in the vault somewhere or in a PDF file stored on their own network and the problem. And I've used this as an example. The problem is that if you have let's say you have a small town that does a local 2 million water and sewer deal with a community bank. And now five years later that school district in that community wants to build a pool for their middle school. Well the bank doesn't have any room on their balance sheet right. And so how do they practically make room on their balance sheet? Well the obvious answer is they can sell that loan in the secondary market that wasn't the original intent the original intent was to hold it but now they've decided five years on that they want to sell that loan. How do you do that? I mean it's documents buried on a network somewhere and to get a competitive market going in a direct loan is a very difficult thing. So at alpha ledger what we've done is we've built a network of these community banks where we've digitized the records of these loans where you can actually have an open marketplace. So we originate them. And we create these records that are well we create them they're they store on the blockchain and they're accessible to all the nodes on the network. And if you think about that if it comes time to move things around in the secondary market it's a great venue for being able to do that. The very nature of the blockchain is that those records are immutable. They can't be changed and there's a complete audit trail. You go back with with the Providence going back to the Genesis record and you know exactly what happened all the way along the way. And that's the way that we're providing transparency right now.
Gregg Bienstock (
Hey Steve I just wanna ask you a question just maybe throw a softball here but.
Steve Winterstein (
I did leave my tie at home. Yes.
Gregg Bienstock (
This in terms of transparency and data integrity data quality as as you guys with blockchain as you guys are proceeding here one of one of the issues that all of us confront in our market is even when there is data transparency we'll get a phone call. It's like Hey your data's different from Bloomberg's and it's different from this one. It's different from that one. Why? and we're and we're going and obviously researching it we're going back to the source stocks to to make sure we're getting it right. Is that is that an avenue that you you all are gonna also be penetrating and pursuing?
Steve Winterstein (
I think so actually the the ideal situation is where the firm that's underwriting and the firm and the issuer when they come together to create a new deal that that golden record gets created at at at that moment. And then of course human error can enter into it because you can. And Lynn and I were talking about this earlier you can transpose two digits a 525 ends up being a 552 should have been a 525 coupon for example. And it needs to get corrected. The nice thing about working in in a distributed ledger is first of all nobody can just go in and change it. It can't be changed but it can be it can be added to and the correct coupon can be added to but there's a complete record of who changed it. Why? And the interested parties involved have to agree on it. The easiest way that I can explain it is through an illustration. And I used this this morning. So for those of you who've heard me I apologize but if you have a dealer an asset manager and a custodian this is a great ex I think it's a great example. I didn't think of it but but if you think about I'm the asset manager you are the dealer I buy the bond from you and I delivered into Chris right? He's the custodian. So in buying that electronically we confirm we compare numbers. And then I tell Chris I'm delivering. You're gonna get these bonds delivered into you from Greg. And they go into these 10 accounts unless sometimes I have the accounts wrong or I have the par value wrong.All of a sudden it's a busted trade right? Because now I'm triangulating this with you guys. And we're trying to figure out who's got the right numbers what accounts they go into and so on and so forth on on a distributed ledger where all those nodes are interested parties in that transaction you all see the same copy of an immutable record all at once. And you all have to agree on it instantaneously. And if one party doesn't then the block is broken or it doesn't get verified and then it can be amended. I immediately but but I think I think that can solve the problem that you're talking about and whether it's an alpha ledger or it's some other source of of blockchain code. I think that's the future of where we're headed. It's just the next obvious step in the internet.
Chris Fenske (
I wanna image too Greg that and as far as that golden source record goes our platform is that golden source some syndicate persons actually typing in that deal information. Hundreds of eyes of looking at during the marketing process it's vetted corrected near perfect or perfect more than likely in most cases before it actually goes to one of those other reference data services including our own. And then it can go to the blockchain
Lynne Funk (
So that's actually a pretty good segue. when I talk about integration in the market we there's there's a lot of data there's a lot of technology tools out there that various participants are working on. So I guess how how can we integrate these tools better? And it do you wanna start
Steve Winterstein (
Subscribe to alpha ledger.
Gregg Bienstock (
So I guess I'll tackle this from two perspectives right? So one is the first point you mention which is data and the integration of data. And I go back to the quality question quality issue quality concern. And there are times for example where where responsible as as a technology company for bringing in the data we're doing all the mapping but in some instances we're actually bringing in the same data from two sources because one is better than another in certain situations. And the other is better in diff other situations. And you're building tests and queries on the back end to make sure that you are as good as you can be and as good as the data provider or providers are. In terms of just integration though with data the one thing if I could make a make a plea to the data providers if there are any out in the audience listening is in terms of transparency to go back to the prior item there are certain data items that that we can expose to our clients no problem. And then there are other data points data items that our clients required to have an appropriate license with a certain party. and so we have to go ahead and do this confirmatory process. I think it's incumbent upon tho those data providers that are licensing to our clients as well as licensing to us on a on a pass through basis or where we're paying a fee as well to be really upfront with their clients as to what their license allows or doesn't allow. We periodically hear yes I have a license with so and so and then when we reach out or the client reaches out no you don't have the right license and I and I think that's an important point. the other aspect of integration that I'll just speak to that I think is important. And it's influenced how we've evolved. Organizationally is the ability to integrate with other platforms. People have there's four of us up on here and between the four of us there probably God knows how many applications you all have but the fact of the matter is that there are so many applications and people have so many screens or now some people only have one with but but the point is you have to be able to integrate into the workflow. And so we've done that with our retail time and trade disclosure we're built into the trading platforms. That's wonderful with all of our newer technology everything's API based. And the idea is that you could buy the software with our interface and go ahead and launch it and we can be a single sign on on your desktop. Wonderful but the other reality is that there are component aspects of what folks want that can we integrate this piece or can we integrate the whole thing and making the workflow as easy as possible from an integration standpoint is just critical. So I'll just leave it that.
Roni Gannon (
Yeah. From our perspective integration it's simplicity itself. I mean if you're running a Microsoft platform you have Excel or you have PDF Adobe Acrobat that you can our system integrates smooth smoothly and seamlessly. Yeah so I mean we tried to keep it very very simple. I mean again coming from a banking background we had a multitude of different systems and toggling back and forth between the different screens. There's a lot involved there from a cost perspective I mean from a data retention perspective we act as a repository as well for all that data. So if if somebody does leave the organization or if people do collaborate across different offices or different time zones they're all able to access the data it's all cloud based. So in terms of integrating with other systems yeah it does. I mean I'm sure that any of the users that are on the platform right now probably take that data and bring it down a massage at someplace on some internal system. But integration for us has never been a challenge. And I don't think it's going to be either again we're not very it's not a very complex solution that we're providing a service for but it's integral to the transaction. So we tried to make it as seamless as possible in terms of working with other systems.
Chris Fenske (
So I mean couple of years ago we were trying to actually start to meld together primary secondary markets. And we realized that there's no common obligor identifier anywhere corporates it's easy this corporate entities and things like it's very easily mapped very well documented pretty much standardized municipals doesn't have that. So we actually have a team of people that have been spending about two years going through deal docs even like images files things like that and actually mapping oblig Gores to different entities. So that's important because Anusha issue doesn't have a QSIP. So when Anusha appears that oblig Gores gotta be tied to the secondary market somehow the only way to do is oblig gore issuers not necessarily the liable party per se an issue is just a vehicle to issue those bonds the obligor what actually counts. So if you have a compliance system risk system things like that you need to know your compliant your exposure to the obligor not to the issuer. So that's something we spent a lot of efforts on over the past couple years and that's key to integration to making the SMA market more work more efficiently to putting secondary prices alongside the new issue market which we just did recently. So it's one of our key focuses.
Steve Winterstein (
I think a lesson that I learned at market access was that people wanna see what they wanna see and they wanna see it where they wanna see it. And the biggest challenge that most vendors have in the technology space is that they love people to log onto their application. Right? Everybody loves that and the fact is that real estate is deer and it was a resounding theme that I heard every time I would step onto a buy side or a dealer desk. And that is look over here. I have my work stuff my email my in-house stuff here. I have my risk management system or my Charles river or a Ladin or perform or whatever I'm using. And over here I have Bloomberg. I don't wanna log into anything else. Right. and so the world has moved to as Greg mentioned API so you've gotta meet you have got to meet the customer. Whether that customer is a buy side firm whether it's a dealer or whether it's an issuer you have to meet them on their terms. They are not about to come to you. You have to go to them. And an API connection is the easiest way to deliver data into a client regardless of the nature of their how they're a market participant to deliver into them what they wanna see and where they wanna see it. And I think we we'd be so much further ahead if vendors if technology vendors and if data vendors understood that we'll meet you on your terms you don't have to meet us on hours.
Gregg Bienstock (
Now Steve to that point I I'll tell you having doing what we do for over 12 years now. When we started it was like here it is. And then people would ask you to make modifications with our pricing platform when we first rolled it out the MVP was it was a single point of entry is the way I like to describe it. So we have all this data all this information but it was a single point of entry. And what we learned as we rolled this out and started talking to clients in different parts of of the market is that you the point you just made which is I like to come at it this way. And I and this one likes to come at it this way and this and so it was how do you create essentially a platform where there are different entry points to satisfy different different market constituents to be able to get to the vast amount of data right? So it's the data at the end of the day is what's what's critical. And every single one of you if we gave you the same problem in here I'm guessing there'd be probably 50 different ways to solve that problem because you each have your own special sauce and so it was how do you create that with maintaining the integrity of a software platform without making it customization which is impossible then ultimately manage when you do upgrades
Lynne Funk (
So are there with all you kind of laid out like the integration question but I guess what are there challenges to making these technologies available to every party in the muni market and kind of going with that is why should these various participants adapt to these changes and at will cost you wanna go?
Gregg Bienstock (
So I'll go back to yesterday. If anybody was one of the sessions there was a phrase that I never heard before. It was a silver tsunami which which I thought was really interesting. So one of the challenges that I think technology faces especially in the muni sector right Steve Steve made the point earlier. I think it was Steve we're it's largely an underserved market. That's why we started our company 12 years ago. Cause it was largely underserved. And I still think on a relative basis it is today. I think part of our challenge is you have people in positions doing certain jobs who is I equate it to the old dunking donuts commercial if you remember it's time to make the donuts. Right. And they got and it's
Steve Winterstein (
It's they don't have that out here in California.
Lynne Funk (
Avocado toast.
Gregg Bienstock (
But I think the positive side of that is as our market has evolved. So as have spreads as the profitability of business has changed over time there is a need to bring on technology to generate efficiencies to eliminate some of the more manual tasks. So I think people in leadership roles are recognizing that and creating openings. But the challenge I think the challenge in an organization like ours for example is we rolled out our platform several months ago to a client and we are like oh it's great adoption. This is wonderful but why aren't the two head folks engaging and like they'll never do it. They're still using pencil and paper
Steve Winterstein (
Greg don't you think we've don't you think we follow the taxable the corporate market though in terms of technology we're
Gregg Bienstock (
About right. We're about 20 years behind.
Steve Winterstein (
I was gonna say stone age but okay.
Gregg Bienstock (
So I think that's one of the challenges that that that we face all let the others cause they're they're just interrupting anyways.
Steve Winterstein (
No I agree with Greg a hundred percent. I mean it's I think I said this morning and it's it's kind of a punchline that I use all the time. There are muni guys that are saying that Bloomberg thing will never catch on I mean it's just the market we live in and it's a tough way to go but it's gotta happen.
Chris Fenske (
I think like the best way to describe it is imagine you're building a library to put actual like books in it real books and stuff like that. So our library was built about 20 years ago to put books we have to put every single book ever published into that library. So over time it gets bigger and bigger. You gotta extend it out you gotta pay the rent and you gotta be able to navigate through the library. So as time goes on and issues go come to the market they price they mature this data doesn't go away. So actually maintaining that helping people navigate it through data mine there's a lot of work. And then actually investment that goes into that.
Gregg Bienstock (
Chris I thought you were gonna take it a step further. Cause I think one of the biggest challenges is for a technology company or any of us up here is getting paid right? There's an investment that we all make. There's an investment front. And there are times where you're sitting and talking to someone they said well well and I had this conversation relatively recently and I wanted to jump through the phone and strangled a person but they were like well you already developed it. There's no cost anymore.
Chris Fenske (
I'm still gonna pay to store it every day. ECP cybersecurity those. Yeah Important.
Lynne Funk (
Well so that that's that's another question right? The pushback perhaps from the industry we hear often is that technology's too costly. It's gonna reduce my head count. There's a real fear of it in a sense. So why should explain why why should these whether it's investors.
Chris Fenske (
Let me start with gold fire. I mean back in the day when I was in the investment side I'd actually never municipal bond. So it was securitized. So a little bit different product but spent a lot of time just looking through documents hours upon hours back highlighter printing out pages whatnot goal fires not to replace jobs. It's not gonna basically say okay now we can get rid of three credit analysts. Cause they could look through documents quicker. It's actually to help them do their job twice as fast and they can actually do value added like strategy work you know? Okay. So now I've got all that. I've got the deals outta the way I had to analyze today put internal credit ratings. The portfolio manager bought them. Now let's look at the overall sector. Let's look at some history let's look at some data where should we tell our portfolio manager to steer capital towards? So it frees up time to do things like that. I think that's what technology does. That's at least what the goals of our platforms. I mean remember errors too.
Steve Winterstein (
Remember like back when I got into the business you guys wrote down trade posts on their notepad right? And you kept you kept the trade posts on your pad. And now we have the likes of TD automated trading the former Headlands we have brownstone millennium. These guys are city these guys auto bid right? They auto bid. There's no way they could do that without technology. What that means is more liquidity to the market. Now if you're on the dealer side you say okay well that it takes away my spread except dealers have figured out way other ways to make money. But I always say I like to use the analogy I'll I'll depart from your library and say when I was a kid we had one phone in the house and it was on the kitchen wall. And when I got to be a teenager and I got my first girlfriend I talked my dad into getting an extended cord. So I could go down the basement steps and talk to my girlfriend. Right. And and now we got this that recognizes your face. Anybody here wanna have be tethered to the kitchen phone forever and not have any other technology. So it doesn't really matter about I mean I agree with Chris I agree with Greg and Ronnie that we're not here to to to dis intermediate. That's not what this is about. It's about making workflows more efficient that people can concentrate on where they can unlock value in the marketplace because I don't wanna spend if an accountant has to spend three hours verifying a list of 500 numbers Reiding it five times versus an Excel spreadsheet.
Gregg Bienstock (
Steve that add to that point I think if you look at historically and just go outside the muni space for a second right? And you you alluded to the telephone but any industry has been affected in a positive way by technology advances in technology. They they've made everything that we do in our day to day lives better everything. Right, and the reality is that when you look at the labor market in this country and if you even go back before COVID right there aren't people losing jobs because of technology they're they're losing people will lose jobs for other reasons but not because of technology. businesses are smart enough to retrain where retraining needs to be done and it's just it's just how our economy is involved. I think the other point is with regards to technology and this again came up yesterday a little bit about the silver tsunami thing again is how do you attract and retain people younger people to our business and younger people. Aren't just the 20 somethings they're the 30 somethings and the 40 somethings as well. I can say that now. Cause I'm over more than over 50. but but but the reality is that if you're not bringing in technology and bringing in new technology and exposing your people to to the advantages that their competition has they're gonna be it your competition soon. So technology is just a critical component of what we do. And again it's to your point each of your points earlier it's it's how do we make ourselves better smarter faster to do the value added things as opposed to the minutia?
Roni Gannon (
Yeah. I just wanna add just a quick thought I also had one phone and but I didn't have any girlfriends so I don't have to worry about hide the closet. But it's funny when we had our when we had our pre-conference call I mentioned something I'm gonna repeat myself now but there was a OPIC minister back in the seventies when somebody asked him about running out of oil and if he's concerned and his response was well the stone age didn't end because he ran outta stones and I think the point that the lesson there is you have to be able to adapt right? You have to be able to recognize that okay things are changing and the world is changing and you need to be able to address those challenges. I respect technology. I'm not gonna say I love technology. I never really thought of getting involved with technology. Unfortunately that's what I'm doing now full time. I'm being honest. There's aside from the cost obviously and the the ongoing challenges of keeping up with the latest technologies and being able to bring people the solutions that they're looking for. I can't I mean I don't think there's one time that I showed my system to somebody where they turn around and say this is great. Doesn't do this. And now I'm starting to think well if I promise them this it's gonna cost me X amount of dollars to have my developer now do that. And I've spent a tremendous amount this past year doing just that adding new new features and new new solutions and it's starting to have some positive responses but the point is that there's so much talk about ESG and all these other initiatives and everything. I can't think of a greater equalizer than technology. It really regardless of what your background is regardless of what you're doing if you have a tool that makes your life easier and it makes things more efficient for you and your organization obviously it's something that you should have the solutions that we all have and that we're all presenting here I think are are very useful for all the industries that we speak to particularly the municipal industry where maybe the folks that are using our solutions don't necessarily see some of the benefits directly for themselves but for their constituents and for others it definitely has a positive impact. Right. So I think what we all have in common is that we're all out there trying to improve the world and trying to improve everybody's lives that we touch. And I think that if we have to do it through technology if that's what we do then great. That's that's how we bring those solutions to everybody. But yeah I think technology is just one of those things where you're gonna love it. You're gonna hate it but you have to respect it. Right. So that's my 2 cents.
Gregg Bienstock (
So Ronnie. I just wanna know like go ahead someone someone paid you because I had a debt with someone that we were gonna be the only panel that didn't mention ESG
Steve Winterstein (
And you screwed it up man.
Roni Gannon (
I'm sorry.
Steve Winterstein (
So there there are some current dealers I guess banks and dealers in the in the room and some former dealers in the room. And you might disagree with me but I remember back when we were doing the pilot in I guess it was oh four Lynette Kelly and I were going around talking about the upcoming realtime transaction reporting requirements. And I can remember all the dealers and some you may still agree with this but I would argue that it didn't but the so many dealers were saying it's gonna destroy the business. Everybody's gonna leave the business that's it you are going to undermine public finance as we know it. and that was was back in oh four. And there again there may be some dealers in the room who would argue that it did but the fact is that it also introduced as I mentioned before the algorithmic traders it made the buy side much more informed. They were better customers. They knew what and it accelerated the turnover in the secondary market and that wouldn't have happened without real time transaction reporting. So the very naysayers that were concerned that it was going to completely undermine and destroy their business. Actually many of them thrive on it. And I can tell you it's the same thing at market access. The dealer firms that complained the most about electronic trading they were the biggest clients on market access. They were the biggest clients and they were making the most money on the platform. And I think that you're always gonna have naysayers out there but I think Greg or Ronnie you guys that that the do like it or or not respect it and it's here to make your lives better. Right.
Lynne Funk (
We hope, does anyone have any questions in the audience?
Gregg Bienstock (
Anyone other than the front row.
Steve Winterstein (
The Smartest guys in the room.
Chris Fenske (
It's like shark tank or something
Lynne Funk (
Just one second cause we're gonna bring a mic up.
Audience Member 1 (
So everybody's danced around this a bit but I think you said it best Greg of this silver tsunami and I know it's firm by firm but do you think there's a reticence at the top at municipal firms about technology period? No matter what it does if you say I can make you more money and you'll only charge one basis point a year they'll just say just say no because this is the way I've been doing it. Do we have that maybe more than other industries or just haven't been forced into it?
Gregg Bienstock (
I can't speak to other industries but I'll just say like I have seen as our business has evolved I there are still people who sit in the in positions of power who have that perspective. But I think more often than not now you're seeing people who are making the decisions who more than respect. They they they look at it and say I'm either going to do this or I'm gonna be left behind cuz everyone else is gonna be doing it. So I think there is a greater acceptance at least from our perspective what we're seeing these days than than 12 years ago. Certainly when we started.
Roni Gannon (
Yeah. I'll just say that you know what when I built my platform it was geared solely before the corporate market. I really never thought about the muni market as being attractive or something that I needed to invest time and efforts in. But when I'm dealing with somebody at GE for example they're SIX signaling everything right? So they're looking at every aspect of the transaction how are we gonna receive incremental costs over the present the future and so on. So when I'm speaking to somebody in municipality they really don't care about how it's gonna save that particular city or that municipality money. Right. And I'm focused on helping them save money helping them cut their costs. So it's a totally different conversation when I'm speaking to somebody on the MUNI side versus somebody in the corporate side it's unfortunate. I hope and I think that it'll probably change as time goes on only because you're gonna start seeing some of the technologies that we're presenting here just becoming the standard right? I mean it's gonna eventually people talk about tech and while it's so cutting edge but it's not really cutting edge it is the present right. It's no longer the future we're doing it now. Or it's in real time. So this is the stuff that next week or next month or next year is gonna start becoming the norm. So it's just human nature for people to obviously be a little fear. I'm gonna use the word fear but they'll just be a little hesitant right to automatically say yeah this is something that we we we we like and we need and we want only because they're maybe other people are gonna disagree with them in the organization and they're they're gonna be looked at as being priors or whatever. But I just think eventually just everything's based on time right? Time will eventually equalize everything. It'll just make everything a lot easier when they see other people solely but surely coming to the table and saying okay this is something that we want to do. And something we want to use.
Chris Fenske (
I would also say all the early adapters actually get the most cost benefit out of it. So you adopt it first you're cutting edge you start out competing the others. Then it becomes sort of just the ground level. It just levels the playing field when everybody else signs on. So it starts off with people that take the risk they take the financial risk sign up the new type of software technology use it make more money than the competitors and then everybody starts buying it. So that's typical life cycle this kind of stuff.
Steve Winterstein (
Yeah. I've used there are four ways you can respond to this and whatever this is you you can deny it. You can say well it's here today. It's gone tomorrow. You can decide to accept it and do nothing about it. In which case you will eventually end up adopting somebody else's technology right. Or you can you can just not invest in it and capitulate and move to somebody else's technology. Or you can be a part of it. You you can you can participate be an active participant in the development of the solution and that's kind of the four different alternatives. I mean I don't think there's any other way. You can frame the issue. And what I found over the years is being an active participant having a role in the development of technology you actually have your own best interests in mind and it moves the market forward.
Lynne Funk (
I think we have one time for Abhishek one more and pass the Mic.
Audience Member 2 (
Thank you. It's funny because the first time I heard about technology and was at a conference seven years ago and a panelist mentioned that we now it's a big technological innovation to see you guys out here since then talk about it with such zeal is is very refreshing. so follow up on the question. Justin asked do you with technology onboarding obviously there's a behavioral shift in change that's happening with the older generation but do you see the younger generation transitioning into newer skills? Like Excel was a big thing now are you seeing more and more people entering the muni market moving towards like SQL or Python? That's question number one on the technology front and then second question Steve for you on the blockchain side because it's a topic very close to my heart as well. Is what do you see the challenges in the market around adopting that? Right? Is it regulatory? Is it technological? Is it just network effects? So just curious to hear your thoughts.
Gregg Bienstock (
You hit the blockchain go for.
Steve Winterstein (
Thank you. $10 after we leave Okay, well I think I think the conflation of cryptocurrency and blockchain is our biggest challenge because people view it as a speculative vehicle and the illustration and I apologize again I used this this morning is it's you look at the internet the internet was developed by the military for the military and then you had to have a killer app to commercialize it. And that killer app was email right? Well email is an application on a technology cryptocurrency whether it's Ethereum or Bitcoin or whatever it is is simply a technology or excuse me an app that's built on a technology. The technology is what's here to stay. I also like to use the example of Netscape. I don't know if any of you guys remember Netscape but it was around when I was a younger man and it eventually got sold to I think AOL for like 2 or $3 billion. Well it doesn't even exist anymore. the fact that Netscape is out of business does not mean the internet was a bad thing. It moved along with or without the app. And so I think that's the biggest challenge. and I think the regulators have some work to do on kind of dividing the truth there and then market participants and understanding it. It's not that complex but they're intimidated by it. And I think that's the biggest challenge. I do believe my friend Chris told me something about four years ago three years ago he said all new and I hope I'm you weren't lying to me cause I'm in public.
Chris Fenske (
I hope so too.
Steve Winterstein (
He said all new employees at IHS market below a certain level have to have Python Cody
Chris Fenske (
Not all. Okay. Then it was within a group but yeah so that to that point.
(
No I was gonna say now about 20 years ago I mean Excel was like if you were a wizard Excel you can get a job at any major investment bank or an asset manager. That's now Python. So that's almost like for data intensive things like pricing valuations where you're handling millions of records of data and trying to analyze things yet Python is entry level right at this point.
Gregg Bienstock (
Okay I'll just add to it. So the first part of your question about what you're seeing in terms of skill of folks at organizations I would say it really depends. I'll go to larger institutions that are believe in technology and are doing things internally or want to leverage their own data. They're gonna have people with with advanced technological skill sets. And then I think smaller firms that are nimble and are very forward thinking are you mentioned Headlands you mentioned a couple of others before these these are firms that employ people with the requisite skillset to do those things. I think then there's the rest of the market. so I don't think we're seeing I don't think I've seen a material shift in that direction except for in there are exceptions to that rule. I think in terms of utility of technology I think definitely have seen and I think part of that is again generational right? You have people who are just it's what they use every day for everything we use it all use it now but I think of my kids are in their twenties and what they do with technology in their day to day was not inexistent when we were when we were in our twenties. So.
Lynne Funk (
Great. All right. Well I think we probably hit our time. Thank you everybody for joining us. Thank you to our panelists. They are fabulous.
Chris Fenske (
Thank you everyone.