Municipal Market Pricing & Data Utilization: Key Takeaways from the Bond Dealers of America Conference

By: Eugene Grinberg

The municipal bond market is evolving rapidly, driven by AI adoption, regulatory shifts, and the need for greater price transparency. At the recent Bond Dealers of America conference, I had the pleasure of participating in a panel on municipal market pricing and data utilization, discussing the current challenges and opportunities in muni bond pricing. Here are the biggest takeaways from the panel discussion.

AI is Transforming Muni Bond Pricing

For years, municipal bonds—an asset class that has a high amount of illiquid securities—have faced challenges in price discovery. AI and machine learning are changing that by enabling traders and portfolio managers to access predictive pricing insights in real-time.

SOLVE Px™ is a prime example of this shift. Using AI and SOLVE Quotes data, SOLVE Px™ predicts the next trade price for 900,000+ municipal bonds, helping traders and portfolio managers identify arbitrage opportunities and navigate price transparency challenges. The construction of the SOLVE Px™ AI models is to explicitly minimize the prediction error compared to past trades, which the model sees as the most accurate reflection of fair market value. In addition to that, the prediction is specific to the size and side of the trade. The resulting predictions are not only helping enhance pricing accuracy and reduce risk for individual securities, they also help investors visualize and identify larger thematic opportunities.

Pre-Trade Price Transparency is More Critical Than Ever

It was especially important for me to highlight the increasing need for pre-trade transparency, especially for buy-side and sell-side traders and portfolio managers making investment decisions. This topic has been also getting more attention from the regulators in recent years. Traditionally, muni bond pricing relied heavily on post-trade data, but this approach is no longer sufficient in today’s fast-moving market. Why? To execute better trades, reduce slippage, and assess risk efficiently, traders and portfolio managers require real-time pricing visibility. AI-powered platforms like SOLVE Px™ aggregate vast amounts of pre-trade quotes, benchmark data, and trade history to create a more accurate pricing picture.

Market Volatility: Climate Risks, Fraud and Other Disruptions

We also addressed the increasing role of climate-related risks, fraud, and macroeconomic disruptions in municipal bond pricing. Natural disasters, infrastructure neglect, and cyber threats are reshaping credit risk assessments for municipalities and their investors.

Data providers and trading desks are adapting by integrating new risk factors into pricing models. This includes:

• Tracking municipal credit conditions after disasters
• Identifying fraud risks in bond proceeds and municipal financing
• Factoring in policy changes, tariffs, and regulatory shifts

The ‘Elephant in the Room’: Tax Exemption & Its Future

One of the most debated topics was the potential loss of tax-exempt status for municipal bonds. If tax exemption were to be eliminated, the pricing dynamics of the muni market could shift drastically.

• Would we see a surge in taxable muni issuance?
• How would tax policy changes impact investor demand?
• What role will pricing providers play in navigating this transition?

Final Thoughts

The municipal bond market is undergoing a data-driven transformation, fueled by AI adoption, regulatory proposals, and market volatility. As the landscape evolves, the ability to access accurate, real-time pricing insights will be critical for traders, portfolio managers, and issuers alike.

Schedule a demo to see how our AI-powered solutions are enhancing transparency and efficiency in the muni bond market.

About SOLVE

SOLVE is the leading market data platform provider for Fixed-Income securities, trusted by sophisticated buy-side and sell-side firms worldwide. Founded in 2011, SOLVE leverages its AI-driven technology and deep industry expertise to offer unparalleled transparency into markets, reduce risk, and save hundreds of hours across front-office workflows. With the largest real-time datasets for Securitized Products, Municipal Bonds, Corporate Bonds, Syndicated Bank Loans, Convertible Bonds, CDS, and Private Credit, SOLVE empowers clients to transform the way they bring new securities to market, trade on secondary markets, and value highly illiquid securities. Headquartered in New York, with offices across the globe, SOLVE is the definitive source for market pricing in Fixed-Income markets.