The U.S. municipal bond market hit $3.8 trillion at year-end 2016, according to the Federal Reserve. Of that, $1.6 trillion was held by retail investors attracted to the tax advantages wielded by these securities, including investors’ exemption from federal income tax and, in some cases, state income tax. The appeal of muni bonds might diminish somewhat depending on how high interest rates go, as well as how low tax rates go as part of President Trump’s proposed tax plan.

Nonetheless, muni bonds will continue to play a role in the portfolios of many investors. A new trading system rolled out last month by 280 CapMarkets targets independent financial advisors and aims to help them get the best price on their muni bond purchases.

Based in San Francisco, 280 CapMarkets says it is staffed by muni bond traders and specialists who know the market and how to ferret out the best prices in this sprawling acreage of the investing landscape.

“Price discovery is difficult for municipal bonds because they aren’t as liquid as corporates or Treasurys,” says Jason Ware, manager of the muni-bond trading desk at 280 CapMarkets, who previously ran retail bond trading desks at JP Morgan and Robert Baird. “We created a capital markets desk to be granularly involved in the market and understand what price levels are good and what levels aren’t in order to solve a problem for independent advisors.”

Independent advisors can access munis through their custodian’s platform or other platforms such as at BondDesk Group (which was bought by Tradeweb Markets in 2013). Ware says advisors who access munis through these sites are accessing only one exchange.

“To put it in layman terms, it’s like buying a book before Amazon bookstore came along where you’d walk into a book store and buy a particular title for $10 without knowing the same book cost $7 at another shop two blocks away,” Ware explains. “As a trader and owner of a muni bond, I can take one bond and offer it across different platforms at various prices. Based on each platform and its audience, as a trader I know where the more and least sophisticated eyeballs are, and I price my bonds accordingly. We can solve this problem because when an advisor places an order through our platform we canvass the various different exchanges to find the best price on any one given bond.”

280 CapMarkets’ service is a mix of old-school customer service involving human beings on the trading desk at its broker-dealer, and a new-school cloud technology product called Bond Navigator, a fixed-income platform that’s still in beta mode but is expected to be available free to advisors later this year. 

280 CapMarkets believes that offering Bond Navigator gratis will help bring many users to the company’s trading desk for more in-depth help in accessing the muni bond market.

Fees charged by 280 CapMarkets will depend on the type of bonds being bought. “Once we get the order we’ll utilize our capital to try to buy those bonds as cheap as possible, and we’ll pass on those savings to the independent advisor,” Ware says.

And given that Bond Navigator will be a free service, the company says that’s further motivation for its bond desk to provide the best price so that it can keep advisors coming back for more.

“Advisors can go to Bond Navigator and buy those bonds wherever. They don’t have to buy them through us,” says 280 CapMarkets CEO Gurinder Ahluwalia.  

“We have to win their business,” adds Ware. “That’s what 280 is all about.”