MSRB Chair Feinberg Inappropriate: "Urination" Comment

On April 11, 2002 The Bond Buyer reported from The Bond Market Association conference. Something was said by the Chair of the MSRB that needs some type of response.

I'm presuming that Hill Feinberg was asked about what he thought of price transparency and real-time pricing and how it is a "touchy" subject for dealers. Chairman Feinberg is quoted as saying "we're urinating up a tree if we don't think it's coming."

I'm presuming that Chairman Feinberg is a good person...so I'm not quite sure why he would say something like this.

First and foremost, Mr. Feinberg seems to be representing and including himself with Muni broker/dealers. This underscores a fundamental problem with the MSRB. It is important that an MSRB Chair as well as all the MSRB members remember they represent the people...and the interests of investors. Is it always going to be that the SEC or some other source must pressure the MSRB Board into doing something?

Secondly, Chairman Feinberg should have reminded everyone in the Muni Markets that price reporting began in 1994. The correct use of "urinating up a tree," if this analogy is to be used at all, should be applied to the difficulty in getting the Muni industry to properly report and then fully release trade and price information. It has been almost a decade.

I would like to remind Chairman Feinberg and the other MSRB members of MunicipalBonds.com and its ongoing price transparency demands:
1) all trade and price data be reported next day
2) dealer identifiers be attached
3) if there are reporting errors -- they be corrected and explained in a dedicated and public error report

Thank you,
Kevin Olson
Executive Director
MunicipalBonds.com

Excerpt from BB article 4/11/03:

Feinberg also commented on MSRB plans to move by mid-2004 to real-time price reporting, under which dealers would have to report prices and other trade data within 15 minutes after the trade occurs. The MSRB chairman acknowledged "it's a touchy subject" for dealers, but added, "I think we're urinating up a tree if we don't think it's coming."

"It's coming, you can't fight the tape," he said. The SEC wants investors to have this information so that they can better gauge what they are buying, he said.

Many TBMA members are concerned that reporting prices on securities that trade infrequently will hurt market liquidity. But, Feinberg said, "the regulators are very adamant about" moving to real-time price reporting. He urged the dealers to talk to the SEC about their concerns.

Meanwhile, Haines told reporters that the SEC is about to publish for public comment the MSRB's controversial plan to report pricing and other information from all muni trades on a next-day basis. She said she does not have any a problem with the board's proposal to no longer report the specific par values of trades over $1 million because this "is consistent" with the NASD's TRACE program for corporate bonds.

On the question of whether real-time reporting could hurt the liquidity of bonds traded infrequently, Haines told a reporter, "How do we find out except by trying it?" She added, however, that she "is pleased" to see a TBMA task force studying this issue.

Haines said that price transparency and market spreads are on the SEC's muni office agenda for this year.

Contact: Kevin Olson
Company: MunicipalBonds.com
Phone: 415-922-7870
Email: Kevin@MunicipalBonds.com
URL: http://www.municipalbonds.com