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MIS 3090: IT for Financial Services. Bond Market Technology and Web Services. October 26, 2014. Bond Types. Agency (governmental) Mortgage-backed (see MBS) Ginnie Mae, Fannie Mae, Freddie Mac Pay higher rate than treasury bonds Sallie Mae riskier than mortgage backed (!) Municipal

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Mis 3090 it for financial services

MIS 3090:IT for Financial Services

Bond Market Technology

and Web Services

October 26, 2014


Bond types
Bond Types

  • Agency (governmental)

    • Mortgage-backed (see MBS)

      • Ginnie Mae, Fannie Mae, Freddie Mac

      • Pay higher rate than treasury bonds

      • Sallie Mae riskier than mortgage backed (!)

    • Municipal

      • State, local governments and utilities

      • Free of federal and some state and local taxes


Bond types cont
Bond Types (cont.)

  • Corporate – used to fund long-term projects

    • Riskier, so higher return

    • Convertible

    • Callable

    • Zero-coupon


CBOT

  • Open outcry market located around auction pits

  • Electronic trading is available through e-cbot

  • Links to LIFFE as part of Euronext and Eurex






The government is acting as its own broker – there is no need for an intermediary in order for you to become an investor.


Bond Market Association need for an intermediary in order for you to become an investor.


Information sources on bond types… need for an intermediary in order for you to become an investor.


Don’t forget corporate bond… need for an intermediary in order for you to become an investor.


Municipal bonds used to finance important ventures… need for an intermediary in order for you to become an investor.


Edi eft and web services
EDI, EFT, and Web Services need for an intermediary in order for you to become an investor.

  • EDI – Electronic Data Interchange

    • Been around for ages; low tech

    • >100,000 businesses use this

  • Financial EDI – for exchange of payments

  • EFT – any transfer of funds via electronic means

    • Used by banks and government


Electronic data interchange edi

Materials releases need for an intermediary in order for you to become an investor.

price updates

Order Management

Purchasing Department

X

X

Shipping Department

Receiving Department

Shipping notices

Discrepancy reports

X

X

Accounts Receivable

Payments

remittance information

Invoice

Accounts Payable

X

X

Electronic Data Interchange (EDI)

Via USPS

Order

P. O.

System

System

Invoice


What an edi invoice looks like
What an EDI Invoice Looks Like… need for an intermediary in order for you to become an investor.

EDI Implementation Conventions set the rules for the data stream

ST 810 means invoice


The path to web services
The Path to Web Services need for an intermediary in order for you to become an investor.

  • Motivation: information must be shared across platforms

  • EDI

    • Relatively inflexible

    • Expensive to maintain

    • Mainframe-era, so what happens when servers appear?

  • Legacy systems were not designed to share data

  • ERP possibilities

    • Expensive

    • Error prone

    • Maintenance problems if one partner in transaction changes

  • Internet

    • Leverage the strengths of HTML


Understanding the lingo part 1

<soap:Envelope> need for an intermediary in order for you to become an investor.

<soap:Header>

<m:language soap:mustUnderstand="0">en</m:language>

<m:currency soap:mustUnderstand="1">USD</m:currency>

<soap:/Header>

<soap:Body xmlns:m="http://www.experian.com/">

</soap:Body>

</soap:Envelope>

<CreditApproval>

<Name>William P. Wagner</Name>

<CardNumber>4225….</CardNumber>

<Expiration>03-2005</Expiration>

<Issuer>First USA Bank N.A.</Issuer>

<Amount>500.00</Amount>

</CreditApproval>

SOAP

XML

XML: Extensible Markup Language

SOAP: Simple Object Access Protocol

Understanding the “Lingo”… (part 1)


Understanding the lingo part 2

WSDL need for an intermediary in order for you to become an investor.

SOAP

SOAP

WSDL: Web Services Description Language

UDDI: Universal Description, Discovery and Integration

Understanding the “Lingo”… (part 2)

  • What does Expérian do with this SOAP message?

    • WSDL – interprets what needs to be done and generates a SOAP response to the originator

<soap:Envelope>

<soap:Body>

<CreditApprovalResponse>

<CardNumber>4225….</CardNumber>

<AuthNumber>9416102</AuthNumber>

<Vendor>Best Buy Inc.</Vendor>

</CreditApprovalResponse>

<soap:/Body>

<soap:/Envelope>

XML

UDDI

411


For next class
For Next Class… need for an intermediary in order for you to become an investor.

  • Read

    • FleetBoston case

    • Guest speaker Joe Leinhauser from JPMorgan


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