Information is the lifeblood of markets. Indeed, economic theory tells us that the benefits of a free competitive market—an efficient and optimum allocation of resources—is only possible if all market participants have access to the same knowledge about a product and its price.
Without this information, buyers, sellers, dealers, and others have little way to determine whether to purchase or sell the product being traded. Market participants need to know what is being bought or sold and what value/price is being attached to the product. None of us would go into a food store to purchase food if everything were wrapped in brown paper with just the briefest description of the contents and prices only known when we reach the checkout counter. Everyone participating in a market needs to be informed so that rationale decisions can be made and resources allocated efficiently and optimally.
Over the years, I often heard people in the equity markets and in parts of fixed income markets talk about how “complex” they were. Market participants would talk about the large number of variables, alternatives, and such that they would have to consider. But, of all the financial markets, the municipal securities market has the greatest informational requirements.
One only needs to peruse the table of contents of this book to see the myriad types of municipal securities being offered in the market today. Multiply those different credit structures by the number of possible issuers (50,000+) ...