Longtime muni market veteran Steve Winterstein’s strong interest in technology has been a constant in the direction of his 30-year career.
“I’ve always been deeply interested in technology, and how to make workflows a lot more efficient and effective,” Winterstein said.
After decades in the business and working with other firms focusing on tech, most recently Alphaledger and MarketAxess, Winterstein said opening his own shop was the next logical step for him to take because the marriage of his connections with broader technology firms and
his vast expertise in municipal finance would be a natural fit for the marketplace.
His firm, SP Winterstein & Associates, which he opened in June, advises buy-side and sell-side clients on vetting vendors, looking at synergies between different technologies and advising on their product set.
He also looks at new technologies, not all of which are in the muni space. Some of the technologies he considers are in other asset classes, but could be applicable to munis in the future.
“Most of the fintech that we have in the municipal space began someplace else, and eventually worked its way down into the municipal market,” he said. “So I decided to go upstream and review technologies that are being used in other markets and try to imagine their application in the municipal market.”
Winterstein spent 17 years at PNC, starting in 1993, where he started the buy-side muni shop at the firm, before moving to Wilmington Trust where he spent eight years running strategy. Since leaving the buy-side in 2019, Winterstein has spent around four years in fintech, working at MarketAxess and Alphaledger.
After leaving Alphaledger in April, he started getting calls from market participants about him signing on as a consultant. He began working with a company in the software space in munis.
But from there, he said he continued fielding calls, asking “if I knew this person or if I knew anybody that did this or that, or am I familiar with this technology. Before you know, it, I was like, ‘I can do this and do it at my own pace and be involved in technology in the municipal space.'”
SP Winterstein & Associates was born shortly thereafter.
He said the reception has been positive.
“Everyone that I talked to, they told me the market has needed this for quite some time,” he said.
Winterstein does not believe many fintech developers fully understand the muni market, and muni market participants are generally very interested in changes happening outside the space, but might not have the time to dig into it themselves.
“So I functionally can perform sort of a bridge between the rest of fintech and the municipal market,” he said.
As for why few other firms or market participants have stepped in to fill such a specific role, he said he has a “unique experience” after spending 25 years on the buy side during which time he focused on workflows, market structure and technology. He also immersed himself in electronic trading, data and blockchain.
Additionally, he said over-the-counter markets, like munis, are the last to adopt new technologies.
And because of the nature of the muni market, as opposed to other fixed-income asset classes, the recent developments in technology are “just now coming into their own,” he said.
Electronic trading, for instance, started in munis back in the early aughts but was not more widely adopted later on, he said. Comparatively, electronic trading started in corporates in the late-90s and in U.S. Treasuries even before that.
However, the acceptance and implementation of technology has accelerated over the past several years as more startups have cropped up, more acquisitions have taken place and new technologies have been developed, he said.
“It inevitably takes longer to find its way into the municipal market, but it’s doing that right now,” he said of adaption.
Technology, he said, is “very quietly and maybe not so quietly going to become a determining factor of who succeeds and who doesn’t.”
And “we’re going to find ourselves in a place where those who are quick to adopt once things start to happen, those are the firms that really excel,” he added.