Muni Bond Market Structure 2025:
The Dealer View
Q4 2024
The Dealer View
Q4 2024
2 | COALITION GREENWICH
Executive Summary
The U.S. fixed-income market has seen renewed excitement and an
increase in interest in the past two years, following aggressive interest
rate hikes by the Federal Reserve. Retail and institutional investors
alike enjoyed yields of 5% or more with very limited credit risk.
Municipal bonds (munis) were an important part of that opportunity,
with dealers willing and able to provide the liquidity the market needed
while municipalities delivered the bonds investors wanted to buy.
Supply of and demand for munis remained strong throughout 2024,
with issuance up nearly 40% year over year1 (YTD October) and average
daily trading volumes reaching just over $13 billion,2 15% above pre-
pandemic levels in 2019.
As the muni market grows, changes in market structure are presenting
challenges to a dealer community that is simultaneously striving
to keep customer service high and improve efficiency in order to
maximize the market opportunity. Electronic trading now accounts
for 18% of market volume, muni exchange-traded funds (ETFs) are
growing as both an investing and a trading vehicle, and nonbank
liquidity providers are bringing new strategies and technology to the
market, encouraging dealers to put even more focus on their digital
transformation.
Coalition Greenwich data estimates that muni broker-dealers will
generate $3.5 billion in revenue in 2024, up 4% from 2023. Expectations
for continued retail demand and issuance increases in 2025, coupled
with the market’s natural evolution, are driving long-overdue
technology adoption in one of America’s most important markets.
Based on responses gathered from 35 sell-side muni bond traders in
October 2024, this research examines the impact of market structure
changes, client needs and sell-side priorities to provide insight into
where the municipal bond market is headed next.
1 Source: SIFMA
2 Source: GreenwichMarketView
70% of muni dealers
feel e-trading allows them
to scale their business
more effectively
C O N T E N TS
2 Executive Summary
3 Liquidity Is Improving
4 Electronic Trading Is Growing
5 The Impact of Nonbank Liquidity
Providers
6 The Use of ETFs and SMAs
7 Approaching New Issuance
8 What Worries You?
9 Planning for the Future
Kevin McPartland is the Head of Research
for Market Structure & Technology at
Coalition Greenwich.
Executive Summary
The U.S. fixed-income market has seen renewed excitement and an
increase in interest in the past two years, following aggressive interest
rate hikes by the Federal Reserve. Retail and institutional investors
alike enjoyed yields of 5% or more with very limited credit risk.
Municipal bonds (munis) were an important part of that opportunity,
with dealers willing and able to provide the liquidity the market needed
while municipalities delivered the bonds investors wanted to buy.
Supply of and demand for munis remained strong throughout 2024,
with issuance up nearly 40% year over year1 (YTD October) and average
daily trading volumes reaching just over $13 billion,2 15% above pre-
pandemic levels in 2019.
As the muni market grows, changes in market structure are presenting
challenges to a dealer community that is simultaneously striving
to keep customer service high and improve efficiency in order to
maximize the market opportunity. Electronic trading now accounts
for 18% of market volume, muni exchange-traded funds (ETFs) are
growing as both an investing and a trading vehicle, and nonbank
liquidity providers are bringing new strategies and technology to the
market, encouraging dealers to put even more focus on their digital
transformation.
Coalition Greenwich data estimates that muni broker-dealers will
generate $3.5 billion in revenue in 2024, up 4% from 2023. Expectations
for continued retail demand and issuance increases in 2025, coupled
with the market’s natural evolution, are driving long-overdue
technology adoption in one of America’s most important markets.
Based on responses gathered from 35 sell-side muni bond traders in
October 2024, this research examines the impact of market structure
changes, client needs and sell-side priorities to provide insight into
where the municipal bond market is headed next.
1 Source: SIFMA
2 Source: GreenwichMarketView
70% of muni dealers
feel e-trading allows them
to scale their business
more effectively
C O N T E N TS
2 Executive Summary
3 Liquidity Is Improving
4 Electronic Trading Is Growing
5 The Impact of Nonbank Liquidity
Providers
6 The Use of ETFs and SMAs
7 Approaching New Issuance
8 What Worries You?
9 Planning for the Future
Kevin McPartland is the Head of Research
for Market Structure & Technology at
Coalition Greenwich.
