MIS 3090:IT for Financial Services

Bond Market Technologyand Web Services

April 20, 2023

2/20April 20, 2023

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

3/20April 20, 2023

Bond Types (cont.)

Corporate – used to fund long-term projects Riskier, so higher return Convertible Callable Zero-coupon

4/20April 20, 2023

CBOTCBOT Open outcry market located

around auction pits Electronic trading is available

through e-cbot Links to LIFFE as part of

Euronext and Eurex

5/20April 20, 2023

IT and APIsIT and APIs

6/20April 20, 2023

Schwab issues periodic alerts as to new bond

issues

7/20April 20, 2023

self-service model

8/20April 20, 2023

9/20April 20, 2023

10/20April 20, 2023

Auctions are announcedAuctions are announced

11/20April 20, 2023

The government is acting as its own

broker – there is no need for an

intermediary in order for you to

become an investor.

12/20April 20, 2023

Bond Market Association

13/20April 20, 2023

Information sources on bond types…

14/20April 20, 2023

Don’t forget corporate bond…

15/20April 20, 2023

Municipal bonds used to finance important ventures…

16/20April 20, 2023

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 paymentsEFT – any transfer of funds via electronic means Used by banks and government

17/20April 20, 2023

Electronic Data Interchange Electronic Data Interchange (EDI)(EDI)

Materials releasesprice updates

Shipping notices

Discrepancy reports

Payments

remittance information

XX

XX

Invoice

Order Management

Shipping Department

Accounts Receivable

Invoice

Purchasing Department

Receiving Department

Accounts PayableX X

System SystemP. O.Order

Via USPS

18/20April 20, 2023

What an EDI Invoice Looks What an EDI Invoice Looks Like…Like…

ISA*00*0000000000*01*01*PASSWORDME*01*123456789bbbbbb*9 87654321bbbbbb*890714*2210*U*00204*000000008*0*P*: GS*IN*012345678*087654321*900509*2210*000001*X*002040 ST*810*0001 BIG*900713* 1001 *950625*P98932 N1*BT*ACME DISTRIBUTING COMPANY N3*P.O. BOX 33327 N4*ANYTOWN*NJ*44509 N1*ST*THE CORNER STORE N3*601 FIRST STREET N4*CROSSROADS*MI*48106 N1*SE*SMITH CORPORATION N3*900 EASY STREET N4*BIG CITY*NJ*15455 PER*AD*C.D.JONES*TE*618555823 ITD*01*3*2**IO ITI**3*CA*12.75**VC*6900 ITI**12*EA*.475**VC*P450 ITI**4*EA*.94**VC*1640Y ITI**I*DZ*3.4**VC*1507 TDS*5111 CAD*M****CONSOLIDATED TRUCK CTT*4*20 SE*21*000001 GE*1*000001 IEA*1*000000008

ST 810 means invoice

EDI Implementation Conventions set the rules for the data stream

19/20April 20, 2023

The Path to Web ServicesThe 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

20/20April 20, 2023

Understanding the “Lingo”… (part Understanding the “Lingo”… (part 1)1)

<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>

SOAP<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>

XML

XML: Extensible Markup LanguageSOAP: Simple Object Access Protocol

21/20April 20, 2023

Understanding the “Lingo”… (part Understanding the “Lingo”… (part 2)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

SOAP SOAPWSDL

WSDL: Web Services Description LanguageUDDI: Universal Description, Discovery and Integration

UDDI

411

22/20April 20, 2023

For Next Class…For Next Class… Read

− FleetBoston case − Guest speaker Joe Leinhauser from JPMorgan