Did you ever have the sense you were somehow being taken advantage of when buying or selling a municipal bond? It’s not a good feeling. But with EMMA, the Electronic Municipal Market Access, you will never experience that again. This online system lets you see all muni bond trade prices as they happen. In terms of providing transparency and protecting your interests, it can be your new best friend.
EMMA tells the truth
EMMA, which debuted in 2008, is a user friendly searchable database for muni bonds operated by the MSRB Municipal Securities Rulemaking Board, the self governing bond market regulator established by Congress in 1975. It shows historical prices paid for any muni bond, giving any buyer or seller instant price discovery and transparency the way the NYSE does for any listed stock. And it’s free.
The database shines a floodlight on the last dark corner of the muni bond market by answering the question: what is the real and fair price for that bond I want to buy/sell? The answer begins, just like stocks, with the last price paid and when. What you may find is that the true market value of a bond is not the same as the price quoted by a broker, who is supposedly working for you.
Loved by some, feared by many
EMMA is not popular among salespeople, broker-dealers, and traders who pad their own wallets by marking up the price when you buy a bond or marking it down when you sell. Your broker may reassure you that “this is a great price for this bond,” only to find that his trader just paid a full point less than you and will pocket the difference.
Markups and markdowns have been around forever, but with no one policing them, it’s been risk-free income absorbed by salespeople at the expense of their clients. EMMA removes the camouflage and ends the information monopoly. As we see in the stock market and elsewhere, when both the buyer and seller have access to the same information it’s far easier to see when you’re not being offered a fair deal.
Secret no more
Why haven’t you heard of EMMA before now? Well, there are tens of thousands of players in the financial services industry who benefit from you not having this information. We encounter very few investors — even the wealthiest and best-connected — who are familiar with EMMA and other capital market tools like it. We want you to have all the information and tools you deserve. We’d be happy to show you around EMMA if you’re interested.
John Osbon – josbon@osboncapital.com
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