Does anyone buy muni bonds from secondary markets? The liquidity is so low

[muscleman]

I tried to buy some but could not even find the asking price. The broker(IB) said they only manually look for buyers if I want to sell, not the other way around.

What would you do in this case?

[bookie71]

Charles Schwab has quite a listing of muni's.

[benhacker]

There is a Muni board rule that there has to be a certain # of asks on similar munis for you to place a bid, but at IB, you can indeed plug in a CUSIP and submit a bid even with no bid/ask (assuming the prior condition is made).

 

Liquidity is shit, and you shouldn't have high hopes, but I have purchased two munis through IB this way... using limit orders to leave the buy open.

 

The alternative, is to use a broker that uses bond desk, and Schwab, Etrade, etc should have reasonable inventory available.  You will note the spreads are out of this world bad (makes the complaints about HFT look like lunch money by comparison).

[muscleman]

There is a Muni board rule that there has to be a certain # of asks on similar munis for you to place a bid, but at IB, you can indeed plug in a CUSIP and submit a bid even with no bid/ask (assuming the prior condition is made).

 

Liquidity is shit, and you shouldn't have high hopes, but I have purchased two munis through IB this way... using limit orders to leave the buy open.

 

The alternative, is to use a broker that uses bond desk, and Schwab, Etrade, etc should have reasonable inventory available.  You will note the spreads are out of this world bad (makes the complaints about HFT look like lunch money by comparison).

 

I see. If I submit a bid from IB, is that bid going to be seen by Schwab and Etrade's bond desks and respond to me?

What does the bond desk actually do? Do they call every of their customer and see if anyone wants to sell?

 

I am a bit lazy and I don't want to move my account away from IB just because of this.

[beerbaron]

I find it incredible that in 2014 there is no central bond exchange and that we still have to go trough trade desks. Trillions of dollars trade on the bond market and yet it's not accessible to the retail investor.

 

BeerBaron

[bookie71]

What is wrong about setting up a separate bond account? Keep the IB account and transfer your bond funds to another broker, no big deal.

[morningstar]

I find it incredible that in 2014 there is no central bond exchange and that we still have to go trough trade desks. Trillions of dollars trade on the bond market and yet it's not accessible to the retail investor.

 

BeerBaron

 

I have to say that in my experience if I want to trade a bond that is liquid in the institutional market, I can also buy it via Fidelity close to the market (which might still be a 2% spread). The problem is that 95% of bonds are not liquid in the institutional market - if you want to buy a million you can get a broker to hunt for offers, but if you want to buy $20k you are just out of luck most likely on those issues.

[muscleman]

I find it incredible that in 2014 there is no central bond exchange and that we still have to go trough trade desks. Trillions of dollars trade on the bond market and yet it's not accessible to the retail investor.

 

BeerBaron

 

So how does IB do the job? Do they send my bid to every bond desk and see if anyone wants to take it?

I noticed that sometimes when there is a reasonable ask price, I put in a limit order with the bid of that asking price, it could take 1 minute to get filled.