Wall Street has controlled the municipal-bond market for a long time, but now the control is being challenged by small, independent firms referred to as municipal advisors, according to The Wall Street Journal.
The Securities and Exchange Commission (SEC) is considering allowing these municipal advisors to coordinate private bond sales with investors without large banks and brokers getting involved.
Large banks and midsize brokers have controlled the market for high-grade local government debt for decades. These private sales do not account for much of the overall market, so large banks and brokers would be reluctant to lose these sales.
“We’re pushing for this whole thing to be killed,” said Mike Nicholas, CEO of Bond Dealers of America. The SEC has opened the floor for comments regarding the topic until December 9, 2019.
Wall Street's control over the high-grade local government debt is being tested as the SEC considers allowing municipal advisors to enter the market.