Fax machines are still used to bid competitive deals in the $4 trillion market for municipal bonds, which spans over 50,000 unique issuers.

Looking to pull the market into the 21st century, Munichain, a New York-based startup, organized the first ever conference focused on technology for the market.

I moderated the sold-out event, which drew people from around the country. The audience skewed younger than is typical for muni gatherings. (Full disclosure: I’m an advisor and investor in Munichain, which is building a platform to help municipal market participants communicate.)

What was clear from the discussions was the enormity of the challenge and opportunity in modernizing a market that still largely lacks transparency and automated processes.

A buy side panel consisted of Susan Joyce, head of trading and market structure at Alliance Berstein; James Pruskowski, chief investment officer at 16Rock and Abhishek Lodha, director of strategy and innovation at AG Analytics. Their observations included:

-AI offers tremendous opportunities but has yet to be leveraged widely
-Challenges remain in onboarding new, non-traditional data sets
-The growth of ETFs and separately managed accounts is inevitable
-The market will remain predominently negotiated sales

The primary market panel consisted of Matthew Gerstenfeld, CEO of Munichain; John Murphy, head of PFM’s Munite investor relations service; Brit Stock, who manages the debt program at the Dallas Fort Worth Airport and Stephen Wintersetin, founder of SP Winterstein & Associates.
Their observations included:

-Technology will facilitate faster answers from prospectuses and documents
-AI will allow investors and dealers to identify bond statistics faster
-Many processes are still more manual than necessary
-The lack of standard processes and systems hinders efficiency
-We are unlikely to see many issuers use the blockchain

The sell side panel consisted of Matthew Smith, founder of Spline Data, Alex Domenick, head of trading at RBC Capital, Josh Rosenblum head of algorithmic trading at Brownstone and Chris Comey, senior sales relationship manager at MarketAxess. Their observations included:

-Algorithmic trading is emerging as an opportunity
-Non-traditional participants are likely to enter
-Data is expensive and too difficult to access
-The buy side will increasingly be a provider of liquidity
-Curve generation depends on more than just pricing