SIFMA contended that "full disclosure and transparency by benchmark sponsors" is the key to a more robust understanding of existing benchmarks. SIFMA's feedback was a response to an MSRB request for feedback from market participants on the accessibility, methodology and utility of indices, yield curves and benchmarks available in the municipal market.
SIFMA explained that members currently use a variety of indexes and yield curves, and that the benchmarks are used for:
- new issue pricing;
- institutional investor bids and offers in the secondary market;
- individual investor bids and offers in the secondary market;
- block-size dealer bids and offers;
- retail-size dealer bids and offers; and
- periodic interest rate resets.
SIFMA said that benchmarks are used predominantly by dealers, issuers, municipal advisors and institutional investors, and that the most popular benchmark used for pricing new issues and secondary market trades is the MMD Scales ("MMD"), which is published by Thomson Reuters. SIFMA also stated that all market participants should have the ability to access benchmarks on an "equal basis."
SIFMA referred to the IOSCO "Principles for Financial Benchmarks" as a crucial guide for benchmark sponsors. Generally, SIFMA said that there may be justified interest in forming a market-wide advisory group of stakeholders to give feedback to municipal benchmark providers on their processes.
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