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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. 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

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  1. MIS 3090:IT for Financial Services Bond Market Technology and Web Services October 26, 2014

  2. 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

  3. Bond Types (cont.) • Corporate – used to fund long-term projects • Riskier, so higher return • Convertible • Callable • Zero-coupon

  4. CBOT • Open outcry market located around auction pits • Electronic trading is available through e-cbot • Links to LIFFE as part of Euronext and Eurex

  5. IT and APIs

  6. Schwab issues periodic alerts as to new bond issues

  7. self-service model

  8. Auctions are announced

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

  10. Bond Market Association

  11. Information sources on bond types…

  12. Don’t forget corporate bond…

  13. Municipal bonds used to finance important ventures…

  14. EDI, EFT, and Web Services • 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

  15. Materials releases 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

  16. What an EDI Invoice Looks Like… EDI Implementation Conventions set the rules for the data stream ST 810 means invoice

  17. The Path to Web Services • 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

  18. <soap:Envelope> <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)

  19. WSDL 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

  20. For Next Class… • Read • FleetBoston case • Guest speaker Joe Leinhauser from JPMorgan

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