Editing Municipal bond (section)

===Liquidity===
Historically, municipal bonds have been one of the least liquid assets on the market. One indicator of this is their infrequent trading. Municipal bonds are actively traded in a "when issued" market, and also immediately after they are issued. Once the bonds find their way into retail and mutual fund portfolios, the volume of trade drops off dramatically. The MSRB reports that from March 1998 to May 1999, 71% of the outstanding issues did not trade at all. A 2005 study concluded that 4–6 months after issuance, less than 10% of the sampled bonds traded at all; the probability then rises
somewhat so that by four years from issuance, roughly 15% of the bonds in the sample traded at least once during a given month.<ref>{{cite journal |last1=Green |first1=Richard |last2=Hollifield |first2=Burton |last3=Schurhoff |first3=Norman |title=Financial Intermediation and the Costs of Trading in an Opaque Market |journal=The Review of Financial Studies |date=March 2007 |volume=20 |issue=2 |pages=275–314 |doi=10.1093/rfs/hhl012 }}</ref>
A 2007 study concluded that the average investment grade tax exempt 1-10 year municipal bond traded 21 times over its 11-year sample and 5.65% of issues only traded once.<ref>{{cite journal |last1=Ang |first1=Andrew |last2=Bhansali |first2=Vineer |last3=Xing |first3=Yuhang |title=Taxes on Tax-Exempt Bonds |journal=The Journal of Finance |date=March 6, 2007 |volume=65 |issue=2 |pages=565–601 |doi=10.1111/j.1540-6261.2009.01545.x }}</ref>

Unlike corporate and Treasury bonds, which are more likely to be held by institutional investors, municipal bond owners are more diverse, and hence harder to locate, giving this market less liquidity.<ref>{{cite journal |url=https://onlinelibrary.wiley.com/doi/pdf/10.1111/jofi.12511 |title=Municipal Bond Liquidity and Default Risk|year=2017|doi=10.1111/jofi.12511|last1=Schwert|first1=Michael|journal=The Journal of Finance|volume=72|issue=4|pages=1683–1722}}</ref> Compared to stocks, municipal bonds are much harder to maneuver. At the same time, the minimum investment amounts for stocks are typically <$500 and about $1000 for CDs and money markets; in comparison, municipal bonds typically have minimum denomination buy-ins of $5000 but smaller issuers may have buy-ins of $1000 to incentivize local or regional investors.<ref>{{cite web |title=How Are Municipal Bonds Quoted and Priced? |url=https://www.msrb.org/sites/default/files/How-Are-Municipal-Bonds-Quoted-and-Priced.pdf |publisher=MSRB}}</ref><ref>{{cite news
|newspaper=[[The New York Times]] |url=https://www.nytimes.com/1998/08/23/business/investing-it-focus-bonds-yields-municipal-bonds-make-haven-look-better-than-ever.html|title=Focus on Bonds: Yields on Municipal Bonds |date=August 23, 1998}}</ref> An investor's overall principal cost may be lower than the $5000 minimum denomination by purchasing the bonds at a discount.<ref>{{cite web |title=Discount Bond |url=https://corporatefinanceinstitute.com/resources/fixed-income/discount-bond/ |publisher=Corporate Finance Institute}}</ref>

While minimum denominations contribute to illiquidity, another such reason is the total amount of municipal bonds outstanding. There are over 1,500,000 individual municipal CUSIPs representing over 50,000 issuers.<ref>{{cite web |title=Uncovering Local-level Risk Factors for Municipal Exposures |url=https://www.spglobal.com/marketintelligence/en/news-insights/blog/uncovering-local-level-risk-factors-for-municipal-exposures |publisher=S&P Global}}</ref> To put this into context, there are ~4300 US domestically incorporated exchange-listed stocks and 10,500 stocks that trade [[Over-the-counter (finance)|over-the-counter]].<ref>{{cite web |title=Number of Listed Companies for United States |url=https://fred.stlouisfed.org/series/DDOM01USA644NWDB |website=fred.stlouisfed.org |publisher=FRED}}</ref><ref>{{cite web |title=Population, Total for United States |url=https://fred.stlouisfed.org/series/POPTOTUSA647NWDB |website=fred.stlouisfed.org |publisher=FRED}}</ref><ref>{{cite web |title=The Number Of Companies Publicly Traded In The US Is Shrinking—Or Is It? |url=https://www.marketwatch.com/story/the-number-of-companies-publicly-traded-in-the-us-is-shrinkingor-is-it-2020-10-30 |website=marketwatch.com |publisher=MarketWatch}}</ref>

Over the last decade, technology solutions have been applied to make the market more responsive to investors, more financially transparent and ultimately easier for issuers and buyers. The emergence of small denomination municipal bonds makes the muni market more accessible to middle-income buyers. It is believed that these initiatives will reduce lower debt issuance costs.<ref>{{Cite web |url=http://www.governing.com/topics/finance/gov-democratizing-municipal-market.html
|title=Startups Seek to Democratize the Muni Market |website=www.governing.com |date=14 December 2016 |access-date=2017-06-12}}</ref>