2000 Municipal Market Roundtable
United States Securities and Exchange Commission
Mr. Maco Thank you, Martha, for those very kind words. Thank you all of you. It's been an honor and a pleasure to have worked with all of you in the municipal market over the last six and a half years.
Welcome to the 2nd Annual Municipal Market Roundtable. Once again we open this forum for all municipal market participants to share their perspectives on current market issues and controversies with each other and with the Commission staff.
From the beginning of our nation, states have issued debt to meet their infrastructure needs. They are joined quickly by local governments. Today over 52,000 issuers access this market to finance the very basics of civilized society, school, roads, water and power, sustaining our quality of life and building for tomorrow.
Over $1.5 trillion in municipal bonds are outstanding today. Investors in municipal bonds cover a cross section of the U.S. financial landscape.
The largest category of investors in the municipal market is not the mutual funds, although they're certainly an important category. Nor is it any other class of institutional investor. The investor category holding more municipal bonds than any other is that of the individual investors. And the trend this year has been for an increase in individual ownership.
Given the combination of factors I just reviewed, the importance of this municipal market to over 52,000 issuers, the enormous amount of debt outstanding, and the predominance of individual investors, no one should be surprised that the Securities and Exchange Commission, charged with protecting our nation's securities markets, and the investors in those markets, demonstrates a continuing interest in the health of the municipal securities market. It's only appropriate given the magnitude and the importance of this market.
Look at the results. Today many issuers routinely provide annual financial information in the market as well as notices of material events. Seven years ago such information was, at best, the exception rather than the rule. Seven years ago investors had great difficulty in determining the price at which bonds they held currently traded. Today that information is available on a next-day basis. Lawyers can access municipal enforcement materials on our Web site, including a compendium of enforcement actions in the municipal market over the past 30 years, prepared by the Office of Municipal Securities staff.
Private initiative and advances in technology have combined to make all of this information even more accessible through such means as the Bond Market Associations in investing in bonds' Web site.
This morning the continuing Commission interest in the municipal market is manifested in this roundtable. Over the last years, topics dominating the press coverage of the municipal market include continuing disclosure, concerns about issuer's ability to speak to investors without incurring selective disclosure problems, the changes in daily practice and overall structural changes propelled by new technologies and to the growing strength of the retail sector of the municipal market, yes, the individual investor.
Today's roundtable discussions will highlight all these issues and likely many more. As we did last year, Commission staff will listen and learn and, when appropriate, provide comment. You may recall that at last year's roundtable several issues developed that were addressed by the Commission or the staff later in the year. Such as the specific Commission comments addressed to the municipal market contained in this spring's interpreted release on use of electronic media; as well as the recent staff legal bulletin on independent financial advisors.
You shouldn't be surprised if today's dialogue prompts similar results.
One factor we consider particularly unique about this year's roundtable is found in the composition of the panels. As I noted earlier, individual investors represent the largest segment of holders of municipal bonds. Rarely, if ever, has an individual investor participated in the document negotiation session or attended a pre-closing. I suspect that, other than perhaps the elected officials in their own communities, they rarely come face to face with issuer officials of the bonds that they own.
Rarely, if ever, are they part of the dialogue at industry workshops and conferences. Yet this group represents the largest segment of those who routinely loan their money for long periods of time to municipalities through the purchase of municipal bonds.
Today you will find individual investors on the panel. We welcome their voice.
As I hope you know by now, I and those on my staff hold the health and vitality of the municipal market and the issuers, investors, dealers, lawyers, and advisors participating in it, very close to our hearts. Few people, however, exceed the enthusiasm, commitment and devotion to this market of our keynote speaker this morning, Mr. Jim Lebenthal.
Please welcome him.