Municipal Securities Markets, Regulation, and Disclosure

Municipal securities are debt instruments that state and local governments typically issue to finance diverse projects. Individual investors, through direct purchases or investment funds, own 75% of the estimated $3.7 trillion in municipal securities in the U.S. market. In the secondary market, where these securities are bought and sold after issuance, trading largely occurs in over-the-counter markets that are less liquid and less transparent than the exchange-traded equity securities market. The Dodd-Frank Wall Street Reform Act required GAO to review several aspects of the municipal securities market, including the mechanisms for trading, price discovery, and price transparency. This book examines municipal security trading in the secondary market and the factors that affect the prices investors receive and the SEC and self regulatory organizations' enforcement of rules on fair pricing and timely reporting.