MuniAuction trades total $9.1 trillion
Published November 20th, 2007
MuniAuction, is an innovative system of auctioning fixed-income securities over the Internet.
The firm now known as the Grant Street Group has conducted to date more than 82,000 auctions over the Internet whose securities total more than $9.1 trillion. The firm counts more than 1,800 institutional clients, from the city to the Commonwealth of Pennsylvania to Freddie Mac, the giant housing-finance enterprise.
“I don’t think even e-Bay does over $1 trillion a year in volume,” said Harrington, 48, co-founder and president of Grant Street Group. “We started out as independent financial advisers and eventually became auctioneers.”
“It’s like an art auction; you keep raising your bid until you win or lose,” said Dan Veres, 46, who co-founded MuniAuction Inc. with Harrington and is chief operating officer.
At one of the firm’s auctions, interested underwriters log onto the MuniAuction Web site and bid for the fixed-income security. Participants’ bids contain how much they would pay for the securities, along with what interest rates they would yield. For instance, a bid might be $130 million at a 4.8 percent yield.
MuniAuction’s system then converts each pair of numbers into an index number that indicates the issuer’s true interest cost. It typically takes 15 to 30 minutes to complete an auction, with the lowest number the winner. Securities issuers can audit the process in real time.
“We were the first municipality ever to use the Internet to issue bonds,” said Paul Hennigan, who was Pittsburgh’s finance director during the $70 million bond offering in 1997.
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