Sistema e método de negociação de empréstimo bancário

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Sistema e método de negociação de empréstimo bancário.
Entrar Inscrever-se. Como podemos ajudar? Qual é o seu email? Atualize para remover anúncios. Os economistas com pequenas quantidades para investir raramente fazem empréstimos diretamente a pessoas físicas ou jurídicas porque os custos de transação e os custos de informação fazem pequenas transações muito caras em relação ao retorno. Quais são os custos de informação? Os custos de transações são os custos de um comércio. Os custos de informação são os custos que os poupadores incorrem na determinação dos e dos mutuários. Por que os intermediários financeiros são importantes para o sistema financeiro? Os intermediários financeiros, como bancos comerciais e fundos de investimento, canalizam fundos de poupadores para mutuários. Eles são importantes para o sistema financeiro porque criam um mercado bancário para economizar e emprestar, combinando poupadores e mutuários. Eles reduzem as transações e os custos de informações. Qual o papel das economias de escala para ajudar os intermediários financeiros a reduzir os custos das transações? Economias de escala são a redução nos custos médios que resulta de um aumento no volume de um bem ou serviço produzido. Os intermediários financeiros reduzem os custos de transação por causa de suas economias de escala na avaliação de risco. Os intermediários financeiros podem aproveitar economias de escala, tais como contratos legais padronizados, bancos de empréstimos especializados e sistemas informáticos sofisticados, para reduzir os custos de transações e informações. A Internet reduziu os custos das operações do método de informação. A Internet reduz o tempo de compra de consumidores e reduz a dificuldade de adquirir informações para tomar decisões de investimento inteligentes. Grandes bancos podem ser capazes de explorar economias de escala de forma que os bancos pequenos não possam. Assim, grandes bancos teriam custos mais baixos por transação. Como cada um contribui para tornar a informação assimétrica? O risco moral ocorre nos mercados financeiros quando os mutuários usam fundos emprestados de forma diferente do que eles teriam usado seus próprios fundos. A seleção adversa ocorre quando os devedores que são riscos ruins são mais propensos a aceitar um contrato financeiro do que os mutuários que são bons riscos. Cada um torna a informação assimétrica: o credor talvez não saiba o que o mutuário fará com os fundos como resultado do risco moral, e o credor talvez não conheça o risco do mutuário como resultado da seleção adversa. O "problema dos limões" refere-se ao problema de seleção adversa que surge de informações assimétricas. Como os potenciais investidores têm dificuldade em distinguir os devedores do sistema de mutuários bons, eles oferecem bons termos de mutuários, eles estão relutantes em aceitar. Como os bancos se especializam na coleta de informações, eles são capazes de superar esse problema. O banco seria um crédito de ração de credor em vez de aumentar a taxa de juros que cobra em empréstimos? O racionamento de crédito é a restrição do crédito por parte dos credores, de modo que os mutuários não podem obter os fundos que eles desejam na taxa de juros dada. Crédito de raça de empresas, em vez de aumentar as taxas de juros, porque a informação assimétrica leva apenas os mutuários mais arriscados a contrair empréstimos nas taxas mais elevadas. Por que foi fundado? Qual o efeito que a SEC teve no nível de informação assimétrica na U. A Securities and Exchange Commission SEC é uma agência do governo federal que regula U. O principal papel da SEC é reduzir a seleção adversa, exigindo a divulgação de informações financeiras e contábeis de todas as empresas negociadas publicamente. A SEC foi fundada em uma tentativa de aliviar o problema da informação assimétrica que se tornou evidente após o crash da bolsa de ações da SEC ter sido bem sucedida na redução do custo da informação assimétrica, mas não a eliminou completamente. Como os bancos usam garantias para reduzir a seleção adversa na obtenção de empréstimos de carro? A garantia refere-se a ativos que um mutuário promete a um credor que o credor pode aproveitar se o devedor omitir o empréstimo. Ao comprar um carro, o carro serve como garantia porque o banco pode aproveitar o carro se o mutuário não efetuar pagamentos. Qual o papel do valor líquido nas tentativas dos credores de reduzir os problemas de seleção adversa? O patrimônio líquido é o e entre o valor dos ativos de uma empresa e o valor de seus passivos. O valor líquido fornece a mesma garantia aos credores como garantia. Como os bancos e os mutuários se beneficiam do relacionamento bancário? O banco de relacionamento é a capacidade dos bancos de avaliar os riscos de crédito com base em informações privadas sobre os mutuários. Os bancos têm menos riscos devido à informação adicional que eles coletam sobre o mutuário. O mutuário recebe uma taxa de juros mais baixa porque eles são um risco menor para o banco. Como o problema principal-agente está relacionado ao conceito de risco moral? O problema principal-agente ocorre quando o agente dos gerentes sucumbir ao risco moral e seguir seus próprios interesses e do interesse do principal dos acionistas. Que papéis desempenham no sistema financeiro? Uma empresa de capital de risco é uma empresa que aumenta o capital próprio dos investidores para investir em empresas em fase de arranque. As empresas de private equity elevam o capital social para adquirir ações em empresas estabelecidas com a intenção de reduzir os problemas de risco moral. Você concorda em negociar esta declaração? Em caso afirmativo, o que os proprietários sabem que os inquilinos potenciais podem não? Os proprietários sabem mais sobre a qualidade do imóvel e, portanto, o seu verdadeiro valor, do que os locatários. Se a afirmação estiver correta, quais as implicações para o mercado de apartamentos de aluguel? Os proprietários tentarão cobrar um preço superior ao que de outra forma receberiam na ausência dessa assimetria de informações, e existe a possibilidade do "problema de limões" de propriedades de locação ruim gerando boas propriedades de aluguel fora do mercado. De que forma o mercado de apartamentos de aluguel é o mercado de carros usados? De que maneira é diferente? O mercado imobiliário e o mercado de automóveis usados ​​são semelhantes, já que o proprietário e o proprietário atual do carro sabem mais sobre a propriedade ou o carro do que o potencial locatário ou comprador. No entanto, eles diferem em que o senhorio não está vendendo o apartamento, apenas o alugando. Assim, se um senhorio quer que o inquilino renove o arrendamento, o senhorio será forçado a manter a propriedade em forma, de modo que seu valor se aproxima da taxa de aluguel. Isso seria semelhante ao revendedor de automóveis oferecendo uma garantia. O vendedor diz que o carro foi "conduzido por uma pequena e velha senhora de Pasadena", que teve dois meses e depois decidiu que "não gostava da cor. Que tipo de problema de informação assimétrica está presente aqui? Como você pode? O problema é a seleção adversa. É provável que apenas um limão seja vendido tão rápido. Um comprador poderia contornar o problema ao fazer um mecânico inspecionar o carro ou obter uma garantia do revendedor ou confiar na reputação do revendedor O que os economistas chamam o problema que está sendo descrito aqui? Seleção adversa, não sabemos se eles podem ser de alto ou baixo risco por isso existe o risco de as pessoas de alto risco comprarem mais seguros. Se as companhias de seguros estão corretas em sua suspeita, Quais são as conseqüências para o mercado de seguros? Isso aumentará o preço do seguro. E este [CDO] está terrivelmente faltando de transparência. O que é "transparência" neste caso? Transparência refere-se a informações perfeitas em ambos os lados da transação especialmente no caso em questão, como os títulos garantidos por hipotecas para os CDO do Abacus foram escolhidos. Por que os mercados financeiros não funcionam sem uma boa informação e transparência? A falta de transparência cria problemas de risco moral e de seleção adversa que aumentam o risco da transação. Qual a informação que faltou e quem faltou no caso Abacus CDO? Os compradores dos CDOs não tinham informações. Por que você quer ver alguém vendendo um investimento financeiro da mesma maneira? Ao comprar um carro comercial, os compradores devem sempre estar atentos à assimetria de informações. O vendedor normalmente sabe mais sobre o carro do que o comprador. Os vendedores de instrumentos financeiros também possuem mais informações do que os compradores de instrumentos financeiros. Devido a essa assimetria, os compradores devem ser cautelosos. A securitização é o processo de combinação de empréstimos, como hipotecas, em banco de valores mobiliários que o banco pode vender nos mercados financeiros. Por que a securitização pode levar a que um corretor de hipoteca se desconecte do resultado de uma decisão de empréstimo? Quando os empréstimos são agrupados e vendidos, o banco que emitiu o empréstimo não suporta o custo se o mutuário não pagar o empréstimo. O banco que emite o empréstimo faz seu dinheiro originando e vendendo os empréstimos no mercado secundário. Isso cria um problema de risco moral. O problema com a securitização é que ele dilui a responsabilidade individual. O corretor de hipoteca pode facilmente se desconectar do resultado da decisão de empréstimo inicial. A regulamentação federal é necessária para garantir que os criadores de hipotecas realizem a devida diligência apropriada ao combinar potenciais devedores com produtos de empréstimo. O que é due diligence? O que a Reinhart quer dizer quando diz que a regulamentação federal deve exigir que os criadores de hipotecas façam a devida diligência nesse contexto? Due diligence é a pesquisa realizada em um ativo financeiro que avalia de perto seus fundamentos. Neste caso, a due diligence seria a pesquisa sobre os mutuários para determinar o risco envolvido no mutuário pagando o empréstimo. A regulamentação federal deve forçar o originador a suportar algum risco do empréstimo. A transferência de empréstimos de bancos para investidores através da securitização de ativos ajudou a abrir essas oportunidades. A titularização de empréstimos hipotecários permitiu ao emissor de bancos de empréstimos eliminar o risco envolvido na oferta de empréstimos. Se um banco tivesse que manter um empréstimo por 30 anos, levaria mais tempo para avaliar o risco do mutuário e reduziria os clientes de alto risco. Como os bancos simplesmente vendem esses empréstimos aos investidores no mercado de hipotecas secundárias, eles não têm incentivo para avaliar com precisão os clientes. Em uma de suas postagens, ele observou: Explique brevemente se você concorda. Somente as empresas mais financeiramente sólidas teriam o fluxo de caixa para aproveitar a oferta, deixando American Express com uma carteira de crédito desproporcionalmente preenchida com os mutuários mais arriscados. O perigo moral é menos provável de ser um cenário de empréstimo problemático b. Note que você pode usar essa questão para explicar por que as grandes empresas normalmente oferecem opções de estoque como parte de pacotes de compensação de executivos. Atribuir salário com lucros proporciona um incentivo para que os gerentes tomem decisões que sejam dos melhores interesses dos acionistas. Por que uma empresa usaria opções de compra de ações como parte da remuneração de um alto gerente? As opções de ações oferecem um incentivo para que os gerentes tomem decisões que aumentam o valor do estoque. Uma opção de compra de ações permite que um empregado compre ações de uma empresa a um preço predefinido em uma data futura. Qual é o "preço de exercício" em um contrato de opções? Por que esse gerente queria que suas opções fossem retroactivamente? O preço de exercício é o preço pelo qual o comprador de uma opção tem o direito de comprar ou vender o ativo subjacente. Neste caso, o preço de exercício foi o preço que o CEO da KB Home poderia comprar ações Ao retroceder as opções a uma data anterior quando o preço das ações era menor, o CEO pode comprar ações da empresa a um preço mais barato e depois revender o estoque no preço mais elevado do sistema. Do ponto de vista dos investidores na KB Home, qual problema de informação está envolvido aqui? O problema da informação envolve o problema do agente principal - o problema de risco moral dos gerentes que buscam seus próprios interesses e não os dos acionistas. O que é um esquema Ponzi? Um esquema de ponzi é uma operação que paga retorno aos investidores de seu próprio dinheiro ou dinheiro pago pelos investidores subseqüentes. Como emprestar os operadores de um esquema Ponzi conseguem mantê-lo em andamento? Os investidores têm a culpa por acreditar que podem ficar ricos rapidamente, como indica esse artigo? Os esquemas Ponzi usam dinheiro de novos investidores para pagar os atuais investidores. Muitos "fundos" não revelam suas estratégias de investimento, o que gera informações assimétricas. Isso torna difícil para os investidores determinar se uma empresa é honesta. Qual é a fonte mais importante de fundos externos para pequenas e médias empresas? Os fundos pessoais e os lucros dos proprietários são a principal fonte de fundos para pequenas e médias empresas. Os empréstimos de intermediários financeiros são a fonte mais importante de fundos externos para pequenas e médias empresas, porque os intermediários financeiros podem reduzir os custos de transações e informações, eles são capazes de fornecer um caminho pelo qual os fundos podem fluir de poupadores para empresas menores. Pequenas empresas também financiam crédito comercial. O crédito comercial é a situação comum em que um fornecedor envia o sistema de pedidos de mercadorias firmes concordando em aceitar o pagamento em uma data posterior. O mercado de títulos é preferido para o mercado de ações como a fonte de financiamento mais importante para as empresas, porque os títulos apresentam menos risco de risco moral do que comprar ações. As três principais características são: intermediários financeiros podem reduzir os custos de transação dos empréstimos para pequenas empresas. Isso ocorre porque há menos riscos morais envolvidos com títulos do que com ações. O objetivo da garantia é reduzir o risco moral. Com o seguro de renda, se uma pessoa perde seu emprego ou não obtém um aumento tão grande como previsto, ele seria compensado sob sua cobertura de seguro. Por que as companhias de seguros não oferecem seguro de renda desse tipo? Os problemas são de risco moral, uma vez que você assegurou, você não funcionará como pessoas difíceis e adversas, que são mais propensas a serem demitidas ou a obter baixos aumentos seriam mais propensos a comprar esse seguro. A seleção adversa não ocorre necessariamente devido a desonestidade, ocorre porque um lado de uma transação não tem tanta informação quanto o outro lado da transação. Ser sincero não eliminaria a necessidade de intermediários financeiros. Os intermediários financeiros podem ter economias de escala no processamento de informações. Esses problemas de informação implicam que as empresas podem gastar menos na expansão do que é economicamente otimizada? As informações assimétricas tornam os custos de informação dos fundos externos mais elevados do que os fundos internos. Os custos de informação não implicam necessariamente que as empresas possam gastar menos na expansão do que é economicamente otimizada. As empresas precisam responder a pergunta: "O custo de eliminar o problema de informação é menor do que o custo associado a menos investimento? O que é um criador de mercado? Um criador de mercado é semelhante a um agente imobiliário. O Goldman Sachs atua como um criador de mercado por reunindo compradores e vendedores. Um fabricante de mercado tem responsabilidades diferentes de uma empresa financeira que está fornecendo conselhos de investimento para clientes? Um fabricante de mercado tem a responsabilidade de fornecer uma descrição precisa da segurança que está sendo negociada; um comerciante do sistema não revela a intenção dos compradores ou da intenção dos vendedores. Você concorda com a Blankfein que "os mercados não poderiam funcionar se [os criadores de mercado] tivessem que garantir que era bom para [os investidores]"? Existe desentendimento sobre o papel dos criadores de mercado Alguns argumentam que os fabricantes de mercado têm a obrigação de fornecer mais informações ao vendedor e ao comprador. Outros argumentam que é o sistema de trabalho que o comprador e o vendedor coletam essas informações. Por que seria mais co O produto financeiro mplex provavelmente será um negócio pior para um investidor do que um produto mais simples? Quanto mais complexo o produto, mais difícil é para um investidor avaliar o risco do produto. Quando os investidores compram produtos mais simples, normalmente eles têm mais informações e podem fazer escolhas mais informadas sobre os produtos. O negócio mais complexo é muitas vezes um para o qual os custos de informação aumentam, o que reduz o lucro resultante do negócio. Algo de valor de propriedade da empresa. Algo que a empresa deve. A diferença entre o valor dos ativos da empresa e as responsabilidades das empresas. As responsabilidades do banco, principalmente depósitos e empréstimos, são as fontes dos fundos que o banco investe. Os ativos de um banco, principalmente empréstimos e títulos, são os usos do banco desses fundos. Fundos arrecadados, incluindo dinheiro emprestado no mercado de fundos federais, bem como através de acordos de recompra reversa e empréstimos com desconto. Um ativo bancário composto por caixa de caixa forte mais depósitos bancários junto ao Federal Reserve. O patrimônio líquido do banco, ou a diferença entre o valor dos ativos do banco e as responsabilidades do banco. Os empréstimos imobiliários tornaram-se uma porcentagem muito maior do sistema total desde então, os empréstimos comerciais diminuíram. Por um lado, os bancos podem ser mais capazes de monitorar o comportamento das empresas às quais eles fizeram empréstimos, pelo que o risco moral deve diminuir. Por outro lado, a existência de seguro de depósito gera risco moral em relação às ações que um banco comprou. Na medida em que os investimentos de capital são mais arriscados do que os investimentos habituais dos bancos comerciais no sistema atual, os problemas de risco moral podem aumentar. Como as contas correntes agora pagam juros, não deveriam se tornar mais populares entre as famílias e não menos popular? Essa negociação aumentou a popularidade das contas correntes, mas ao mesmo tempo os bancos criaram vários instrumentos de poupança que oferecem taxas de juros mais altas que os poupadores podem escolher, incluindo certificados de depósito e contas de depósito do mercado monetário. Além disso, à medida que a riqueza aumentou ao longo do tempo, as famílias detêm menos nas contas correntes em relação a outros ativos financeiros. Usar as entradas para construir um balanço semelhante ao do quadro RNB's capital é qual a porcentagem de seus ativos? O Tesouro empresta os fundos aos bancos. Quanto mais os fundos que os bancos emprestaram a pequenas empresas, menor será a taxa de juros, o Tesouro cobraria os bancos nos empréstimos. O deputado Walt Minnick de Idaho foi convidado a comentar se o projeto de lei seria útil para pequenas empresas. Aqui é parte de sua resposta: o banco que está lutando para anotar seus ativos imobiliários comerciais está tendo que ter um impacto no capital, e isso fornece capital de substituição em termos muito, muito favoráveis. Então, trata do lado esquerdo do balanço. Um empréstimo do Tesouro será contado como parte do capital de um banco? Não, um empréstimo do Tesouro não seria contado como capital do banco. Seria contado como empréstimo e apareceria no lado direito do balanço patrimonial. O capital de um banco aparece no lado esquerdo do balanço do banco? O capital do banco aparece no lado direito do balanço patrimonial. Uma conta T é um empréstimo contábil usado para mostrar mudanças nos itens do balanço. Como é relacionado ao retorno do banco de ROA de um banco? A margem financeira líquida é a diferença entre o interesse que um banco recebeu em seus títulos e empréstimos e os juros que ele paga em depósitos e dívidas, dividido pelo valor total de seus ativos ganhadores. Retorno sobre os ativos O ROA é igual à soma da margem líquida de juros acrescida e do rácio da receita da taxa bancária, líquida do custo de prestação de seus serviços aos ativos bancários totais. Como eles estão relacionados? Retorno sobre ativos ROA: a proporção do lucro pós-imposto de um banco para o valor de seus ativos. Retorno sobre o capital próprio ROE: a proporção do valor do lucro pós-imposto de um banco para o valor de seu capital. Como é relacionado ao ROE de um banco? A alavancagem do banco é a proporção do valor dos ativos de um banco para o valor de seu capital. A alavancagem pode ampliar o retorno sobre o ROE de capital. Por que os acionistas do banco querem que o banco seja menos alavancado? Os gerentes do banco fazem bonificações no desempenho trimestral da empresa e em suas ações, o que fornece o incentivo para assumir riscos com alavancagem para aumentar o ROE. Os acionistas que investiram na empresa muitas vezes querem o melhor retorno ao longo dos anos e querem que o banco leve menos riscos, o que normalmente seria associado a menos alavancagem. Use contas T para mostrar o efeito desta transação no balanço de cada banco. Use as contas T para mostrar como os balanços de cada banco serão afetados depois que o cheque for cancelado. Depois que o cheque apagar, quanto das reservas excedentes tem cada banco? O Banco Nacional de Guerneville agora tem como parte do esforço, os cães de guarda estão pedindo aos bancos para aumentar suas reservas de capital e de perda de empréstimos ainda mais. Como o aumento das reservas de perda de empréstimos reduziria o risco de falência para um banco menor? Se os órgãos de controle regulamentares considerem que os empréstimos dos pequenos bancos comunitários estão em pior forma do que os bancos pensam, as reservas crescentes de perda de empréstimos refletirão melhor a rentabilidade e o capital atual dos bancos. Aumentar as reservas de perda de empréstimos poderia reduzir o risco de falência porque o gerenciamento do método e os órgãos de controle reguladores de empréstimos teriam uma melhor compreensão da condição dos bancos. A ajuda poderia ser o sistema necessário e os bancos teriam uma imagem mais clara de suas necessidades de capital. Se um banco aumentar suas reservas de perda de empréstimo, terá e dinheiro disponível para emprestar? Aumentar as reservas de perdas de empréstimo não reduzirá a quantidade de dinheiro que os bancos têm disponível para emprestar, a menos que o banco cai abaixo dos requisitos de capital. Qual empréstimo o ROE do First National agora? Apesar do declínio no ROE, o artigo afirma que o valor total que a negociação ganhou em lucros foi maior do que era um ano antes. Qual é a explicação mais provável de um banco sofrer o aumento dos lucros totais e um ROE decrescente? Alavancagem do banco, o índice de ativos do banco para o capital do banco caiu, reduzindo o retorno sobre o patrimônio, mesmo que os lucros dos bancos aumentassem. Você se tornaria um investidor neste banco? Quanto maior a proporção de método para capital, mais dinheiro um banco pode fazer, mas o alavancar mais o banco se torna. Como os bancos gerenciam o risco de liquidez? O risco de liquidez é a possibilidade de que os depositantes decidam coletivamente retirar mais fundos do que o banco tem de imediato. Os bancos gerenciam esse risco mantendo alguns fundos muito líquidos, como no mercado de fundos federais ou em um contrato de recompra reversa. Os bancos também podem aumentar seus empréstimos para cobrir o risco de liquidez. Como os bancos gerenciam o risco de negociação? O risco de crédito é o risco de inadimplência de crédito. Os bancos podem gerenciar o risco de crédito, diversificando seus ativos, realizando análise de risco de crédito, exigindo que os mutuários ofereçam garantias, racionamento de crédito e criando relações comerciais de longo prazo através das quais o banco adquira informações sobre um credor. Como os bancos gerenciam o risco de taxa de juros? O risco de taxa de juros é o risco associado à mudança de valor de ativos e passivos devido a um aumento ou empréstimo nas taxas de juros. Os bancos podem reduzir o risco de taxas de juros, fazendo mais empréstimos de taxa flutuante, ou ARM, usando swaps de taxa de juros e usando contratos de futuros e opções. Qual é o objetivo da análise de lacunas e análise de duração? A análise da lacuna é a análise da diferença entre o valor em dólar dos ativos de taxa variável de um banco e o valor em dólares de seus passivos de taxa variável. Análise de duração e análise de quão sensível é o capital de um banco para mudanças nas taxas de juros do mercado. O objetivo de ambos é determinar a sensibilidade do banco aos movimentos da taxa de juros. O risco de liquidez enfrentado pelos bancos durante esses anos provavelmente teria sido maior ou menor do que hoje? O risco de liquidez teria sido maior porque a ausência de seguro de depósito criou e para os depositantes retirar fundos sempre que eles se preocupassem com a viabilidade do banco, colocando assim essa viabilidade em risco. Sim, a existência de requisitos de reserva torna mais fácil para os bancos lidar com corridas bancárias porque eles são obrigados a manter dinheiro com o Federal Reserve. Os ativos sensíveis à taxa aumentarão em valor, mantendo mais como ativos, enquanto os reduzem como passivos, aumentarão os lucros do banco. Uma queda nas taxas de juros que negociam uma diferença de duração positiva aumentará os lucros. A maior duração de seus passivos reduzirá a rentabilidade. O projeto de lei exigiria que cada candidato recebesse um empréstimo, não importa quão alto o risco de o candidato não pagar o empréstimo. Ela defende a conta argumentando: Não há nada neste projeto de lei que impede que os bancos cobrem qualquer taxa de juros que gostariam de seus empréstimos; eles simplesmente têm que dar um empréstimo para todos os que se aplicam. Se os bancos são inteligentes, eles definirão suas taxas de juros para que o retorno esperado em cada empréstimo - depois de ter em conta a probabilidade de que o método do candidato seja padrão no empréstimo - seja o mesmo. Avalie os efeitos prováveis ​​do banco e do sistema da congressista sobre o projeto no sistema bancário. O problema com este projeto de lei é que ele cria seleção adversa. Com as altas taxas de juros, os mutuários de baixo risco neste grupo abandonarão o pool de empréstimos, deixando apenas os mutuários de alto risco. Se os ativos da RNB tiverem uma duração média de cinco anos e seu passivo tiver uma duração média de três anos, qual é a diferença de duração da RNB? O que são os bancos nacionais? Por que os Estados Unidos disseram ter um sistema bancário duplo? Os bancos estaduais são bancos que possuem cartas em estados específicos. Os bancos nacionais são bancos federados. Os Estados Unidos mantiveram esse sistema bancário duplo desde que a Lei de Banca Nacional permitiu que um banco obtenha uma carta federal. Por que foi estabelecido? A FDIC representa a Federal Deposit Insurance Corporation. A FDIC foi criada após uma série de falhas bancárias. O FDIC foi estabelecido para melhorar as corridas bancárias. Historicamente, na América, havia um medo de que os bancos tivessem muito poder e que os bancos só deveriam financiar empréstimos em sua área local; Assim, foram criadas leis contra grandes bancos nacionais. Liste quatro atividades fora do balanço e explique brevemente o que elas são. As atividades fora do balanço são atividades que geram receita com taxas, mas não afetam o balanço patrimonial de um banco porque não aumentam os ativos do banco ou seus passivos. Uma promessa de um banco de emprestar fundos, se necessário, ao vendedor de papel comercial no momento em que o papel comercial amadurece. Um banco concorda em fornecer um mutuário com um montante declarado de fundos durante algum tempo especificado. Um contrato financeiro em que um banco concorda em vender os retornos futuros esperados de um empréstimo bancário subjacente a um terceiro. Negociação de futuros, opções ou mercado bancário. O banco bancário eletrônico refere-se a transações bancárias realizadas eletronicamente, como a ATMS e serviços bancários on-line. Os bancos virtuais realizam todas as transações bancárias on-line. Quando e por que foi criado? O TARP negocia o "Emprego de Alívio de Ativos problemáticos, que é um programa de governo sob o qual o Tesouro da U. comprou ações em centenas de bancos para aumentar o capital dos bancos. O TARP foi criado para permitir aos bancos a flexibilidade financeira para manter seus balanços solventes. é enganosa porque as restrições de ramificação nos Estados Unidos dão aos bancos locais mais poder de monopólio do que o possuído por sucursais de bancos nacionais canadenses. O método de fornecedor de negociação, os fornecedores ou fornecedores, bancar uma pequena empresa, fazem empréstimos ao negócio além do habitual de curto prazo O financiamento de uma empresa de compras de produtos do vendedor, por exemplo, um fabricante de roupas femininas pode fazer um empréstimo para uma pequena loja de roupas. No início, por que as pequenas empresas estão tentando emprestar de seus fornecedores e não de bancos? O que seria as vantagens e desvantagens para uma pequena empresa de empréstimos de um fornecedor e não de um banco? Quais seriam as vantagens e D desvantagens para o vendedor de fazer o empréstimo? Em geral, os bancos reduziram seus empréstimos durante a crise financeira. Assim como os empréstimos expiraram, os bancos construíram reservas. As pequenas empresas tiveram dificuldade em encontrar fontes de fundos. E das soluções era pedir emprestado aos vendedores de fornecedores. As vantagens para a pequena empresa é o acesso aos fundos de um empréstimo e as desvantagens geralmente são uma taxa de juros mais alta do que o banco cobraria. A vantagem para o fornecedor é que a pequena empresa continua a operar e comprar seu produto, e a desvantagem é que o fornecedor não possui economias de escala na avaliação de risco e a chance de o sistema ser o padrão. Existem certas atividades bancárias que são difíceis de realizar ao confiar exclusivamente em celulares e sites? Tirar dinheiro do seu banco seria difícil por telefone. A maioria das atividades bancárias pode ocorrer através do e-banking. Por que o governo federal consideraria importante aumentar o capital do banco? Quais poderiam ser algumas das conseqüências de bancos com capital insuficiente? O governo federal queria aumentar o capital do banco para manter os bancos com solventes solventes. Uma consequência do capital insuficiente é a insolvência. John Stumpf, CEO da Wells Fargo, foi citado dizendo: agora estamos ganhando capital tão rapidamente. Como pode uma negociação "ganhar capital"? Como o fracasso de um banco em pagar a compra de ações do governo federal no âmbito do Programa de Compra de Capital "diluir os acionistas existentes"? O capital pode aumentar à medida que os bancos ganham lucros e, em vez disso, em vez de pagá-los em dividendos, mantenha-os como reservas ou outros ativos. Dilui o patrimônio líquido existente porque o governo possui ações. Quando Wells Fargo paga o governo federal, o banco está essencialmente comprando as ações de volta. A base da banca comercial está cobrindo depósitos e empréstimos. Em contrapartida, a banca de investimento está preocupada principalmente com 1. Fornecer aconselhamento sobre novas questões de títulos 2. Subscrição de novas questões de valores mobiliários 3. Fornecer aconselhamento sobre fusões e aquisições 4. Engenharia financeira, incluindo a gestão de risco 5. Quais dessas atividades são consideradas as principais atividades de bancos de investimento? Fornecer aconselhamento sobre fusões e aquisições Outros 4. O que é um sindicato? O IPO é a primeira vez que uma empresa vende ações para o público. Syndicate é um grupo de bancos de investimento que asseguram em conjunto uma questão de segurança. Por que os bancos de investimento às vezes foram criticados por suas atividades de engenharia financeira? A engenharia financeira é o processo de criação de novos valores mobiliários. Isso foi criticado por decisores políticos e economistas, porque estes eram excessivamente complexos e o risco era difícil de avaliar. As agências de classificação, o método de banqueiros de investimento compreendem alguns desses títulos e não conseguiram avaliar com precisão o risco deles. A negociação exclusiva é a compra e venda de títulos para a conta própria do banco e não para clientes. Por que durante a s, os bancos de investimento tornaram-se mais dependentes do financiamento de recompra e mais altamente alavancados? Financiamento utilizando empréstimos de curto prazo apoiados por garantias que o banco concordaria em comprar novamente em uma data posterior. A alavancagem é a proporção do método de ativos do banco, seu capital. A banca de investimento não deve ser sobre jogos de azar, mas Warburg sempre ficou enigmática com os lucros obtidos com o investimento do capital próprio da empresa, preferindo receitas de taxas de assessoria e subscrição. Em que sentido é um banco de investimento que se dedica à subscrição agindo como intermediário financeiro? Is an investment bank that buys securities with its own capital acting as a financial intermediary? Despite the fund's seemingly brilliant strategy, the high leverage meant that it did not take much of a setback to wipe out the fund's underlying capital. What information from this excerpt indicates that Long-Term Capital Management was highly leveraged? What risks did Long-Term Capital Management's high leverage pose to the firm? What risks did it pose to the financial system? Would the same reasoning apply to the managers of an investment bank? Calculate your leverage ratio for this investment in each of the following situations: Calculate the return on your investment for each of the situations listed above. In your calculations, ignore interest you pay on the mortgage loan and the value of any housing services you receive from owning your home. If becoming a public corporation increases the risk in investment banking, how do publicly traded investment banks succeed in selling stock to investors? Many large law firms and accounting firms use a similar policy, as do colleges with respect to their tenure-track faculty. Most firms, however, do not use this policy. In a typical firm, after a short probationary period, most employees continue to work for the firm indefinitely, with no set time before they are considered for promotion. What bank the advantages and disadvantages to investment banks and other firms of using an "up or out" employment policy? Are there advantages to employees? If there are no loan to employees, how are investment banks able to find people willing to work for them? In what ways are investment institutions and to commercial banks? In what ways are they different? What is an exchange-traded fund ETF? How does an ETF differ from a closed-end fund? Briefly describe the role of money market mutual funds in the commercial paper market. How are finance companies able to compete against commercial banks? So, how are banks method to attract small savers? What is "Lehman paper"? Why was the Lehman paper in the fund's portfolio worthless? What does "breaking the buck" mean? Why was it significant to the financial system? What is a "run"? Why would one money market fund having broken the buck cause a run on other money market funds? What is an auto finance company? What advantages might automobile dealers gain from using a finance company, rather than a bank, to finance their customers' purchases? What advantages might customers gain? What is a hedge fund? Are these three facts contradictory, or can you provide a consistent explanation for them? This meant that capital was being provided too expensively to solid, workhorse firms and too cheaply to their flashier rivals. It was the function of hedge funds to correct inefficiencies like this. Explain what the first two sentences in this excerpt mean: What is the connection between the relative prices of these two types of firms and their cost of and capital? Who is "providing" capital to these firms? How can hedge funds correct this inefficiency? In what ways are contractual savings institutions similar to commercial banks? What is the difference between a defined contribution pension plan and a defined benefit plan? What benefits do employees receive from saving for retirement using a k plan? What is the difference between a life insurance company and a property and casualty insurance company? From your point of view, what are the advantages and disadvantages of each type of plan? From your employer's point of view, what are the advantages and disadvantages? Do vesting periods have any advantages to employees relative to a system where new hires are eligible to participate in a pension plan right away? Suppose that the Ohio state legislature passes a law stating that insurance companies must offer fire insurance to every business in the state and may not take into account the prevalence of arson fires when setting insurance premiums. What will be the likely effect on the market for fire insurance in Ohio? So, why do they hold large amounts of long-term, relatively illiquid assets, such as corporate bonds or private loan payments, that may be difficult to sell quickly if they need to make payments to policyholders? Set trading of the complexity aside, and at its heart a CDS is merely a bet as to whether a company is going to default on its bonds. According to AIGFP's method financial division of AIG] computer models, the odds were What is a CDS? How is a CDS similar to insurance? Why might AIG's computer models have given an incorrect forecast of the likelihood of the firm having to make method payment on the CDSs they were selling? What was different about the housing market in the United States during the early s compared with previous years, and how might that difference have been relevant to AIG? Can a CDS be both a hedging or insurance instrument and a speculative bet? In what ways does the shadow banking system differ from the commercial banking system? Why have runs on commercial banks become rare, while several shadow banking firms experienced runs during the financial crisis? Treasury implemented the Guarantee System for Money Market Funds, which insured investors loan losses on their existing money market mutual fund shares. In explaining the program, a Treasury statement noted that: If money market mutual funds have problems, can't savers just deposit their money in banks? Why might relying too much on short-term borrowing be a problem? In what sense is a repurchase agreement like a bank deposit? What would be the consequences for a shadow bank if "depositors" failed to renew their repos? Treasury and the Federal Reserve arranged for the sale of the Bear Stearns investment bank to JPMorgan Chase in order to avoid Bear Stearns having to declare bankruptcy. A columnist for the New York Times noted that: It was an old-fashioned bank run that forced Bear Stearns to turn to the federal government for salvation. The difference is that Bear Stearns is not a commercial bank, and is therefore not eligible for the protections those banks received 75 years ago when Franklin D. Roosevelt halted bank runs with government guarantees. How can an investment bank be subject to a run? What "government guarantees" did commercial banks receive 75 years ago? How did these government guarantees halt commercial bank runs? At a hearing of the commission inRobert Rubin — who had served in top management at Goldman Sachs, had been secretary of the Treasury in the Clinton administration, and had served on the board of directors at Loan during the crisis—testified that "all of us in the [financial] industry failed to see the potential for this serious crisis. Were there changes in the financial system that—at least with hindsight — might have indicated that by a financial crisis had become more likely?
4 thoughts on “Bank loan trading system and method”
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Bank loan trading system and method

This application is a continuation of application Ser. No. 12/062,004 filed Apr. 3, 2008, which claims the benefit of U. S. Provisional Application No. 60/909,807 filed Apr. 3, 2007, each of which is hereby fully incorporated herein by reference.
FIELD OF THE INVENTION.
The present invention relates to the trading of financial instruments. More particularly, the present invention relates to systems and methods of trading closed loans, debt, and other financial obligations.
BACKGROUND OF THE INVENTION.
Existing trading exchanges for debt and equity securities rely on open-market forces to efficiently and reliably match buyers and sellers of financial securities. These exchanges may incorporate a traditional trading floor where participants gather at a common location to negotiate the buying and selling of financial instruments. More recently, Internet-based technology has enabled electronic exchanges to facilitate the trading of financial instruments, absent a brick-and-mortar trading floor. In some cases, a combination of face-to-face trading occurs in conjunction with remote electronic trading, as in well-known exchanges such as the New York Stock Exchange. Regardless of the forum, trade in a wide variety of financial instruments feeds the activities of exchanges throughout the world.
With respect to debt instruments, most exchange-based trading occurs in securitized debt such as bonds, T-bills, commercial paper and so on. Cash instruments, such as loans, are usually traded in the secondary market as pools of loans, rather than individual loans. For example, large institutional investors, such as Freddie Mac, buy closed mortgage loans in pools. The pools may then be securitized and sold to other investors as mortgage-backed securities.
However, such loan pools do not address the risk of individual closed loans. Loan pools group individual loans that may have similar risk characteristics, but the pool itself is sold as a single investment, with a single average risk characteristic, leaving little or no transparency as to the risk of the individual loans within the pool. As a result, an investor is unable to screen individual loans and make purchasing decisions based on the risk-level of an individual loan. Furthermore, individual closed loans tend to be illiquid trading instruments. Not surprisingly then, most buying and selling of closed loans is accomplished through private deals between buyers and sellers.
Until recently, the availability of loan pools in individual closed loans through established trading platforms and private networks served the needs of the industry. However, with delinquency and default rates suddenly rising, investors previously content with trading in loan pools no longer can tolerate their hidden risks.
When interest rates were at all-time lows, subprime lenders made loans to borrowers with poor credit histories. Many of these loans ended up in loan pools in the secondary market, where the individual risk of such loans are often masked by the overall average risk of the loan pool and aided by the inaccessibility of loan-file details. The market value of many of these loans now lies below face value, which has created a subprime crisis, and forced many large lenders and investors to close or file bankruptcy.
Many investors previously content with purchasing loans in the aggregate now recognize the need to scrutinize their debt instrument investments on a loan-by-loan basis, possibly building their own loan pools through individual purchases. However, existing trade exchanges are not structured to support such transactions, nor can limited private networks efficiently accommodate the new demand. Therefore, there exists a need in the financial industry for an efficient trading system to facilitate the buying and selling of individual closed loans, especially closed residential mortgage loans.
SUMMARY OF THE INVENTION.
In one embodiment, the present invention is a method of trading individual, closed residential mortgage loans, without loans being presented in a structured pool. The method includes authorizing a file associated with an individual, closed residential mortgage loan to be made available to a plurality of potential buyers and converting information in the file into electronic file data for submittal to the plurality of potential buyers. The information in the file includes one or more of loan application, loan summarization, insurance information, appraisal information, copy of note, copy of security instrument, payment history, principal balance, settlement statement, income or other verifications, closing documents, credit report, current servicing information, recapture and repurchase information, and risk-rating instruments, for the individual, closed residential mortgage loan. The method also includes making the electronic file data available to the plurality of potential buyers for review and purchase without pooling or averaging the electronic file data prior to making it available to the plurality of potential buyers, thereby making the risk of the individual, closed mortgage loan transparent to the plurality of potential buyers; receiving a bid from one or more of the potential buyers on the individual, closed residential mortgage loan; accepting the bid and electronically forwarding a note associated with the file to a clearing agency for delivery to the potential buyer; and receiving funds from the clearing agency into a seller account as payment for the individual, closed residential mortgage loan.
BRIEF DESCRIPTION OF THE DRAWINGS.
FIG. 1 is a diagram of one embodiment of a debt instrument trading system of the present invention.
FIG. 2 is a diagram of one embodiment of a debt instrument trading system of the present invention that utilizes a computer-assisted brick-and-mortar marketplace.
FIG. 3 is a diagram of one embodiment of a debt instrument trading system of the present invention that utilizes an electronic marketplace.
The present invention provides systems and methods of trading in debt instruments, including closed loans. In one embodiment, buying and selling is conducted in person in a brick-and-mortar marketplace with the assistance of a computer. In another embodiment, trading is conducted using an electronic or telephonic system that does not require the physical presence of all participants at, or near, the marketplace. In all embodiments, the present invention provides liquidity to a traditionally non-liquid asset, adding value to the debt instrument and the industry.
Referring to FIG. 1 , one embodiment of the present invention is a debt instrument trading system 10 . Debt instrument trading system 10 includes debt instrument file 12 , centralized marketplace 14 , selling participant 16 , buying participant 18 , and clearing agency 20 . System 10 may also include file-selling facilitator 22 and file-purchasing facilitator 24 . In one embodiment, facilitators may be independent brokers selected from a multitude of brokers primarily representing one side of a transaction. In some cases, facilitators may coincidentally represent both sides, but typically this is not the case.
Debt instrument file 12 may be a closed loan, such as a residential mortgage loan, or another type of closed loan paper. Files 12 do not include loans being presented in a structured pool, such as loans meant for bidding as a group of two or more loans, and not individual loans. Loans can only be bid on an individual loan basis.
Centralized marketplace 14 facilitates the trading of debt instruments by providing an open-market forum for selling participants 16 to disclose information on specific, individual loans available to potential buying participants 18 . Centralized marketplace 14 may be a trading floor where participants 16 and 18 may view and trade files 12 , as described in more detail below. Alternatively, marketplace 14 may be an electronic forum as also described below, or some combination of a brick-and-mortar trading floor and an electronic trading floor.
Selling participant 16 may be an individual seller or mortgage broker representing themselves in the transaction, or may be a representative of a financial company, group, or other entity. Similarly, file-selling facilitator 22 may be an individual or an entity representative that serves and represents selling participant 16 by presenting file 12 information, or loan information, to marketplace 14 , and completing transactions on behalf of selling participant 16 .
Buying participant 18 may represent himself or herself, or larger entities in their marketplace transactions. File-purchasing facilitator 24 may assist or represent buying participant 18 in marketplace 14 .
In one embodiment, participating in trading in centralized marketplace 14 requires that selling participant 16 , buying participant 18 , or their representatives, be members of the centralized marketplace 14 . As such, members of centralized marketplace 14 act as trade facilitators, rather than having all trades be facilitated by a single common broker, primarily representing both sides of the transaction, that may also provide advice, as is done in some known models. In this embodiment, no broker primarily representing both sides simultaneously operates to bring buyers and sellers together.
Known exchanges or systems that rely on such a centralized broker to arrange deals are largely discount operations. Although such a model has potential to reduce brokerage fees, this model or platform cannot typically support premium pricing of higher quality loans that result from two broker fees, namely one for originating the loan application and one for selling the loan. Further, system 10 of the present invention may actually reduce overall fees by eliminating broker fees in some cases, with only a relatively small transaction fee being charged to the participants.
Clearing agency 20 may be a financial services company that provides clearing and settlement services, facilitating the transfer of cash funds and files 12 between marketplace 14 participants, operating in much the same way that known clearing agencies, or clearing houses, operate in other financial marketplaces. The use of an independent clearing agency 20 differs from some known models in which a centralized facilitator or broker that arranged the trade also provides clearing and settlement services.
In addition to the parties above, debt instrument trading system 10 also includes a number of transactions or steps A-M as shown in Table 1 below:
System 10 may not implement all of Steps A through M above. Furthermore, Steps A through M may or may not be implemented in the order listed in Table 1 above, and may vary from embodiment to embodiment.
Implementation of the algorithm described in Table 1 may be accomplished through the use of a special-purpose computer or microprocessor programmed to perform any or all steps of the algorithm.
Referring still to FIG. 1 , in one embodiment, a selling participant submits file 12 to centralized marketplace 14 at Step A. Alternatively, selling participant 16 instructs file-selling facilitator 22 to submit file 12 to marketplace 14 at Step B, followed by file-selling facilitator 22 submitting file 12 to marketplace 14 . In one embodiment, file 12 is physically placed into the marketplace for viewing, in another, information representing file 12 is presented in an electronic format to marketplace 14 .
Files 12 may be delivered to marketplace 14 with required information including, but not limited to: 1003 and 1008 (i. e., loan applications and loan summarizations) required disclosures, insurance information (e. g., homeowners, title, mortgage, other), appraisal information, copy of note, copy of security instrument with filing information (if applicable), payment history, principle balance, settlement statement, certificate that loan meets all federal, state, and local regulations, income, employment, or other verifications, all related closing documents, credit report, all related verifications, Automated Valuation Method (AVM), flood certification, Mortgage Insurance certificate showing terms and coverage, any other standardized risk rating instruments, and any written or verbal agreements with a borrower associated with the loan.
Further, information related to current servicing may also be included. This information may include, but not be limited to servicer calls log with collection activity and/or any foreclosure information, payment history, any payment agreements/deferments, and so on. Also included may be whether servicing will be released or retained.
Also included in the above information, or separately as a term of the sale, may be whether the seller is offering any recapture, and terms of recapture payment. As those skilled in the art will understand, recapture is when the seller is willing to refund the buyer some or all of the premium paid for a loan in the event of pre-payment. When a seller is willing to offer some form of recapture, if the loan sells at a premium, potential buyers should be willing to pay more for the loan.
Finally, in states where it is still allowed, or on loans where it was put in place when it was still legal, file 12 may also include information on pre-payment penalty and related terms. At Step D, buying participant 18 enters marketplace 14 , either physically or virtually, and accesses file 12 for review and possible purchase.
As described in the steps above, in one embodiment, system 10 is especially adapted to facilitate the trading of closed residential mortgage loans, as opposed to closed commercial loans.
In one embodiment, trading in centralized marketplace 14 is accomplished through a “bid-offer” process, where selling participants 18 offer a selling price of file 12 , and buying participants bid the price they are willing to pay. Often this price is presented in the form of a percentage of the loan principal, e. g., 102% or 97.4%. In other embodiments, other methods of setting selling and buying prices may be used. Additionally, marketplace 14 may enable the selling of individual loan files 12 , or groupings of multiple loan files 12 . However, even if files 12 are grouped for sale, the loans are still being bought and sold on an individual loan basis, rather than on a loan pool basis that relies on averaging. As such, the risk on each individual loan or file 12 is transparent to buying participant 18 . Furthermore, trading in this open-market occurs with potential for near-simultaneous, multiple bidding.
In all cases, a final price is determined by the bid/offer method of price discovery, and not by a proprietary pricing model or other method of predetermining price. As such, system 10 avoids reliance upon potentially flawed pricing engines or models that may remain transparent to market participants. Such proprietary pricing models may also rely upon flawed historical data, thereby producing unsound prices upon which the participants rely. The present invention avoids this issue by relying upon market forces to determine final pricing.
Alternatively, buying participant 18 enters marketplace 14 through file-purchasing facilitator 24 at Step E, who in turn enters marketplace 14 at Step F, receiving file 12 information.
If the bid presented by buying participant 18 or file-purchasing facilitator 24 matches the marketplace 14 offer presented by selling participant 16 or file-selling facilitator 22 , or if buying participant 18 makes a bid otherwise acceptable to selling participant 16 , at Step G, the transaction progresses to clearing agency 20 .
After price agreement is reached, selling participant 16 forwards a note associated with file 12 to clearing agency 20 at Step H, while buying participant 18 deposits payment for the note into an account with clearing agency 20 at Step I. Subsequently, clearing agency 20 delivers the note to buying participant 18 at Step J, and funds to selling participant 16 at Step K, completing the transaction.
However, if no price agreement is reached at Step L, file 12 is removed from marketplace 14 , and returned to selling participant 16 at Step M.
Referring now to FIG. 2 , debt instrument trading system 10 may facilitate trading of a financial obligation primarily through transactions and negotiations conducted at least partly at a common physical location. In the embodiment of debt instrument trading system 10 depicted in FIG. 2 , marketplace 14 may be a trading floor housed in a building or physical structure, and may include file presentation and containment devices 26 . Devices 26 may be as simple as a table 28 upon which files 12 in paper format are placed by selling participants 16 or file-selling facilitator 22 for review by prospective buying participants 18 or file-purchasing facilitator 24 . Devices 26 may also include computerized file presentation system 30 to present file 12 information. Computer file presentation system 30 may include a single computer terminal, a computer server, one or more computer terminals connected to a LAN or WAN, or other variations of computer systems and electronic data-storage devices used to make file 12 data available for viewing by participants.
The embodiment of system 10 as depicted in FIG. 2 operates in essentially the same fashion as the embodiment described previously in FIG. 1. One or more selling participants 16 make files 12 available to potential buying participants 18 by providing files 12 to marketplace 14 . Buying participants 18 review files 12 , and if a price agreement is reached, clearing agency 20 facilitates the exchange of funds and files 12 .
Referring now to FIG. 3 , in another embodiment of system 10 , trading is conducted at least partially, and in some embodiments completely, through electronic and telephonic methods. The embodiment of system 10 as depicted in FIG. 3 includes a marketplace 14 , selling participants 16 , buying participants 18 , remote computer terminals 32 , clearing agency 20 , Internet 34 , and telephone network 36 . In this embodiment, marketplace 14 includes central server 38 with database 40 , connected to local computer terminals 42 .
As depicted in FIG. 3 , server 38 contains database 40 that stores information regarding files 12 . In one embodiment, local participants gather at a common location to trade, while others tap into marketplace 14 remotely. In a marketplace 14 that supports local participation, one or more local computer terminals 42 may be connected to server 38 through a local area network, or LAN. Local selling participants 16 and local buying participants 18 access data on files 12 by connecting to server 38 . File-selling facilitators 22 and file-buying facilitators 24 may also use local computer terminals 42 to access files 12 data. In another embodiment, marketplace 14 does not support local access, and all participants access file 12 information remotely.
Remote participants may include selling participants 16 , file-selling facilitator 22 , buying participants 18 , file-buying facilitators 24 , or any combination thereof. These remote participants utilize computer terminals 32 to connect to server 38 through Internet 34 to participate in trading activities in marketplace 14 . In other embodiments, computer terminals 32 may connect to server 38 via a wide-area network (WAN). Such participants may also access server 38 or marketplace 14 using telephone network 36 . A method of narrowing the field of loans to be purchased from all available loans, to loans that meet the criteria of the certain parameters that are entered into the computer. Such a method may be implemented through a series of menus, checkboxes, checklists, and so on. Once this is accomplished, then the review process can begin.
As in other embodiments, selling participants 16 or selling facilitators 22 provide files 12 or data describing files 12 to centralized electronic marketplace 14 . Server 38 stores information or data on files 12 , while buying participants 18 or buying facilitators 24 review the file 12 data and submit bids electronically or telephonically.
When deals are reached, clearing agency 20 , guided by server 38 , completes the buy-sell transaction by transferring funds from buying participant 18 to selling participant 16 , and the note from selling participant 16 to buying participant 18 .
Assuming a deal has been reached, system 10 in one embodiment employs particular rules for transfer of account to ensure the quality of the transaction and the loan.
More specifically, in one embodiment, no repurchases are allowed. Repurchases are largely responsible for many mortgage industry problems. In prior art systems, repurchases are allowed, and neither buyers nor sellers accept responsibility for poor loans and poor loan application files. Companies purchasing loans have relied too heavily on the “repurchase clause” in their contracts as a way to remove or mitigate responsibility and risk for poorly underwritten loans and risky loan offerings. Not allowing any repurchases will force buyers to perform their due diligence appropriately when reviewing files 12 , or loans, for purchase. This will in turn encourage sellers selling loans to make sure their facts are straight and there are no problems with the documentation in the file, in order to get the maximum price for their loan. As such, fraud and non-disclosure of fraud and other problems will be minimized.
Further, a standard trade date may be established as part of the rules or standards of transfer of account. For example, if the standard trade date is the 15th of every month, then buyers taking ownership prior to the 15th can expect to collect the following month's payment. Sellers selling a loan after the 15th can expect to collect the following month's payment as it will not be included in their funds from the sale of the loan. Funds from the sale of a loan may include, or not include, principal, interest figured to the day of transfer, escrow balance, premium or discount, less transfer fees.
This method or standard may include standardized documents, signed by all members/participants, that will supersede any agreements that may exist between participants.
This method of employing strict, standard rules of transfer, overall and in time, will encourage full disclosure, full due diligence, accountability, and integrity in the sale and purchase of closed loans, especially individual, closed mortgage loans. Adherence to the principles of this method will substantially reduce, if not eliminate, problems that are currently being experienced by the mortgage industry.
In one embodiment, all members buying and selling files 12 will need to carry the required amount of Errors and Omission insurance, Fidelity Bond coverage, and have in place all required licensing and necessary approvals. All members will be required to take responsibility for all government rules and regulations regarding the mortgage industry and the relationship to their respective loans and related matters. Doing so will improve the overall quality of the loan, while reducing risk to all parties.
Further to this embodiment, when one member has an unresolved complaint against another member, or is seeking recourse, a relevant governing body will deal with problem solving through pre-established methods of dispute resolution.
The present invention may be embodied in other specific forms without departing from the spirit of the essential attributes thereof; therefore, the illustrated embodiments should be considered in all respects as illustrative and not restrictive, reference being made to the appended claims rather than to the foregoing description to indicate the scope of the invention.

Sentry LT™ – Loan Trading System.
Sentry LT™ represents the next generation of Syndicated Loan trading platforms and offers both the features and functionality to successfully streamline your loan trading operation.
Na ClearStructure Financial Technology, trabalhamos com empréstimos sindicados por mais de dez anos. Our Sentry LT™ system brings this experience and expertise together into a robust web-based bank loan trading platform, which eliminates many challenges loan trading desks face by automating tasks and improving efficiency. Sentry LT is built using the latest technology and is positioned to easily scale as your business grows.
Sentry LT’s customizable workflows and configurable screens ensure that users see data that is important to them by making this information easily accessible.
Sentry LT™ Featured Functionality.
Customizable P&L and trade blotter views. Ability to generate reports and export data with a single click. User-defined trade/settlement workflows, which allow users to adapt the system to current processes and compliance procedures. Pre-trade allocation and trade eligibility through rules-based compliance engine for multiple accounts, including counterparty limitations. Calculation of trading fees (such as delayed compensation, break funding, cost of carry, etc.) with drill down into detailed formulas, showing exactly how each fee was calculated. Ability to generate par & distressed LSTA/LMA trade documentation (Trade Confirm, Funding Memo, Pricing Letter, PSA, Assignment Agreements, Netting Letters, etc.). Full audit trail and user navigation log tracks every change that occurs within the application. Powerful user permission system, through which the system administrator can create groups, as well as restrict and control access to features and screens by various levels.
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Bank loan trading system and method

The present invention relates to a loan trading system and corresponding method and, more particularly, to a loan trading system carried out over the Internet to match buyers and sellers of loans via the matching of bids and offers or through the conducting of auctions.
Bank Loan Facilities.
Large corporations and trusts arrange bank loans in facilities provided by a group of banks and financial institutions, otherwise known as a syndicate. Bank loans typically consist of term loans and revolving credit facilities (also known as revolvers). Term loans are lent to the borrower and have a stated maturity date for repayment. In addition, term loans may be structured with an amortization schedule providing different maturity dates for partial amounts of the term loan with the final payment due on the final maturity date. Term loans may be prepaid but not re-borrowed under the same facility.
There may be more than one type or tranche of term loan under the same facility. These term loans are typically differentiated by the maturity date of the tranche. For example, the term loan with the shortest maturity date, typically referred to as the Term Loan A, may require a single amortization or have an amortization schedule with the last payment due on the final maturity date. A longer dated term loan or series of term loans under the same facility may have a maturity date longer than the Term Loan A. For example, a bank loan facility may have a Term Loan A tranche, a Term Loan B tranche with a final maturity date longer than the Term Loan A tranche, and a Term Loan C tranche, with a final maturity date longer than both the Term Loan A and Term Loan B tranches.
A revolver provides a commitment from the syndicate for the borrower to draw upon a set amount of money until the maturity date. The commitment is then composed of two portions, the drawn amount and the undrawn amount. The borrower may draw upon the revolver, increasing the drawn amount and reducing the undrawn amount. Part or all of the drawn amount may also be repaid, thereby increasing the availability under the commitment. Draws and repayments may take place continuously until the maturity date when all outstanding amounts are due. There is no requirement that any draw be followed sequentially by a repayment.
In some revolving credit facilities, draws may be predicated upon the satisfaction of certain requirements that limit the availability of money to an amount less than the total revolver commitment. These requirements, generally in the form of financial calculations, will generate a maximum available amount that the borrower can draw upon. This restricted amount of funds is typically referred to as the borrowing base.
Typically, bank loans have floating interest rates. Borrowed amounts are drawn for intervals which have base interest rates set by industry or bank standards plus an interest rate spread charged to the borrower. For example, funds may be drawn for a number of days, weeks or months. The most common form of base interest rate is the London Interbank Offered Rate or LIBOR. For example, a borrower would inform the bank group of its desire to borrow funds under 1 month LIBOR. The interest rate would then be set for the 1 month interval at the then current 1 month LIBOR interest rate plus the interest rate spread that is set under the facility. At the end of the 1 month period, the money may be repaid or reborrowed for another period, whether or not the period would be the same or different length. In this way, the interest rate is said to float as it is resets periodically.
There are generally two types of lenders in bank loan facilities. Banks typically provide loans under the revolver and term loan A tranches. Institutional investors such as mutual funds, privately-raised funds, investment companies or insurance companies typically provide loans under the term loans with longer maturity dates than the term loan A tranche. These term loans, such as the term loan B and the term loan C in the previous example, are typically referred to as institutional term loans. The combination of the term loan A and revolver tranches are typically referred to as the pro rata tranches.
To date, the institutional term loans typically have a higher interest rate spread than the pro rata tranches. Other than the differences in the maturity dates and amortization schedules, the lenders under the different tranches typically have the same legal rights under the bank loan facility.
Bank Loan Trading.
An active market has developed for the trading of bank loans. As a private instrument, the trading of bank loans is not subject to the laws pertaining to the trading of public securities. Bank loan trades are conducted by the assignment of the bank loan from one lender to another. Bank loan trades may be arranged through the negotiation of individual parties, with the assistance of brokers, or through an auction. There is no regulation on how these trades are conducted, but assignments typically require the approval of the administrative agent and the borrower. An administrative agent provides the processing of paperwork and movement of funds associated with a bank loan on behalf of the syndicate and the borrower. The approvals typically require that they not be unreasonably withheld.
There are generally two restrictions on the assignment of bank loans, compliance with a minimum assignment amount and a minimum retained amount. The minimum assignment amount sets a floor for the amount to be traded and the minimum retained amount pertains to the amount the assignor or seller of the bank loan will continue to hold after assignment of a partial amount of their commitment. The seller may assign its total commitment, but it may not retain a commitment below the minimum retained amount.
The participants in the bank loan market include the aforementioned banks and institutions, as well as dealers who make markets in or act as brokers for bank loans. Therefore, there are two types of trades in bank loans: principal and brokered. Principal trades pertain to transactions where a dealer will buy the loan with its own capital and hold the position in inventory until resale. Brokered trades are those that the dealer has arranged for both the purchase of the bank loan from a seller and sale of the bank loan to a buyer. Therefore, the dealer does not risk its own capital on the two transactions.
Each trade or assignment generally requires the payment of an assignment fee to the administrative agent of a bank loan facility. Typically, the parties split these fees. In the case of a brokered trade, the dealer will typically pay half the fee for the purchase from the seller and half the fee for the sale to the buyer. Note that a dealer is not required to conduct a trade in such a manner to avoid the buyer and seller learning each others' identity. Therefore, a buyer and seller may conduct a single trade to effect the assignment and split the fee amongst themselves.
How the Market Functions.
The loan trading market is considered an over-the-counter market. This means that there is no exchange through which bids and offers are quoted and matched bids and offers are processed. For purposes of this discussion, trading is broken down into two types: trades through interdealer brokers and all other trades.
Interdealer brokers match trades between dealers only. The interdealer brokers will market bids and offers, also known as offerings, to the dealers without disclosing the name of the potential buyers and sellers until a bid and offer is matched. The interdealer brokers will market the offerings to dealers either through telephone contact or through the posting of offerings on terminals connected via a direct telephone line to the interdealer broker's computer system. The interdealer broker systems do not use the Internet for transmission.
These interdealer broker systems provide limited information that includes only the name of the borrower, the tranche offered or bid, the amount of the bids and offers and the price at which the bids and offers are quoted. To complete a trade, a dealer must contact the interdealer broker by telephone. Trades cannot be completed on the system itself.
All other trades consist of those between any of the dealers, bank or institutions. These trades are all conducted by the telephone.
Current Electronic Trading Systems.
The most common form of on-line trading is stock or equity trading. This trading pertains only to publicly-traded securities which are securities that are registered with the U. S. Securities and Exchange Commission. At least a dozen firms have on-line trading websites.
All of these websites essentially perform the same function as each other. Clients are able to enter orders into the system connected through the Internet for the purchase or sale of stock that may subsequently be executed through a stock exchange or over the counter market makers. The parameters of the orders are limited to the particular issue of publicly-traded stock, the number of shares to be sold, whether the order requires execution to take place for the entire number of shares indicated (referred to as all or none) or execution is allowable for some part thereof, whether the order will remain open until the end of the day or until canceled (referred to as good for the day and good until canceled, respectively), and order types such as market order (the trade is executed at the currently available bids or offers), limit order (the trade will not occur unless the user receives a bid at or above his required price or an offer at or below his required price), stop order (the trade will occur at the then market price once the security has traded at the price chosen by the user, referred to as the stop price), and stop limit (a limit order that becomes effective once a trade occurs at the stop price). The only differentiation between website-based stock brokerage sites lies in the amount of information to which the users have access. For example, some websites may provide current news and financial statistics, others may include historical data and others may provide analyst research reports.
There currently are approximately thirty (30) electronic trading systems engaged in the on-line sale and/or trading of one, two or all of treasury, municipal and corporate bonds. These systems can be broken down into dealer systems that allow users to trade only with dealers, but not with each other, cross-matching systems that allow users to trade with each other anonymously, primary market bidding systems that allow users to bid directly on new issues, and a direct issuance system that allows investors to buy securities directly from the issuer. Limited information is available on most of these systems as access is limited to authorized users.
There are also financial information websites and direct wireline systems that provide databases of news and financial information to allow for the analysis of issuers of stocks, bonds and derivative securities and their underlying securities. Bloomberg provides one such news and financial information database system and provides to the user the ability to input current information to determine the yield of a bank loan (the rate of return including adjustments for purchase prices with a premium or discount to par measured in terms of two interest rate components, one being the floating rate of interest utilized as a base rate such as LIBOR and the other a numerical measure of the rate of interest). Bloomberg does not provide information on bank loan interest rate spreads after a transaction has closed, nor does it provide a comparative table of bank loan yields.
In addition to the above-mentioned limitations and shortcomings of currently available electronic trading systems, currently available financial websites are limited to the trading of financial assets such as even lots of stocks and bonds in the secondary market or the auction of financial assets in the primary market, in other words at the time of their initial issuance, such as the sale of treasury bonds or initial public offering of stock by on-line investment banks.
Auction websites of non-financial assets typically are conducted with a non-blind process and a preset end time. Therefore the then highest offer is revealed to users throughout the process and the website typically receives a large influx of bids just prior to the deadline since doing so generally increases the bidders' chances of success, whereas earlier bidders' efforts go unsuccessful.
Bank loan auctions are currently conducted manually by sponsors with the assistance of facsimile and telephone transmission. These manual auctions are limited in the number of participants that may be reached and the process of conducting such manual auctions may not proceed equitably. For example, blind auctions, where bids are not revealed, often do not close at or near their deadlines, indicating that the auction's sponsor is disclosing the highest bid to a favored third party in the hope of an even higher bid. In a further example, sponsors have pulled auctions when bids are too low, thereby wasting the efforts of participants who may do a significant amount of work prior to submitting a bid or offer.
OBJECTS OF THE INVENTION.
It is therefore an object of this invention to provide a bank loan trading system that provides to prospective buyers and sellers information regarding bank loans not previously available to such parties.
Another object of the present invention is to provide an electronic matching of buyers and sellers for the trading of bank loans.
A further object of the present invention is to provide such electronic matching of buyers and sellers that avoids the shortcoming and limitations of electronic trading systems previously mentioned.
An additional object of the present invention is to conduct electronic auctions for bank loans in a fair and equitable manner.
These and other objects, advantages and features of the present invention will become readily apparent to those of ordinary skill in the art, and the novel features will be particularly pointed out in the appended claims.
SUMMARY OF THE INVENTION.
In accordance with one embodiment of the present invention, apparatus and method are provided for facilitating the trading of bank loans between buyers and sellers. Bank loan information (e. g., borrower and tranche) regarding bank loans for trading are posted to potential buyers and sellers, sellers and buyers enter offers and bids, respectively, for posted loans and the offers and bids are then posted to all potential buyers and sellers. It is determined whether a match between one of the bids and one of the offers for the same bank loan exists, and if a match exists, the matching bid and offer are filled by conducting a trade between the buyer who entered the bid and the seller who entered the offer.
As one aspect of the present invention, only unfilled bids and orders are posted.
As a further aspect of the present invention, the seller of a bank loan provides the information regarding a bank loan for sale not previously posted.
As an additional aspect of the present invention, when either a bid or an offer is entered by a buyer or seller, respectively, a dollar amount and price of the bid or offer for that bank loan are provided. The type of bid or offer also is provided and identifies the order as an All or None order, a Partial Fill order, or a Partial Increments Only order. The All or None order represents an order having a possible fill amount of only the bank loan dollar amount, the Partial Fill order represents an order having possible fill amounts between and including a minimum partial fill size and the order dollar amount, and the Partial Increments Only order represents an order having possible fill amounts of the minimum size, incremental amounts greater than the minimum size and less than the bank loan dollar amount in increments of an increment size, and the order dollar amount.
As a feature of this aspect, a match exists when bids and offers for the same loan with the same price have a common possible fill amount.
As yet a further aspect of the present invention, the actual offer is rounded off to the nearest even incremental dollar amount (e. g., $1,000,000) before it is posted and further information is posted that indicates whether the rounded amount is within a predetermined amount (e. g., $100,000) of the actual offer.
As yet another aspect of the present invention, a buyer can identify the maximum dollar amount of a loan that can be purchased with respect to a particular posted loan and a trade occurs if the loan is less than or equal to that maximum dollar amount, but if no trade occurs, the buyer is not informed of the actual amount of the offer.
As yet an additional aspect of the present invention, offers are rounded to the nearest million dollars prior to determining whether an offer and a bid match. Upon finding a match, it is determined if the amount to be sold is the actual offer amount, which may be an odd amount, or a rounded even dollar amount.
Still yet a further aspect of the present invention, offers are accepted only if filling them do not violate the terms (i. e., minimum retained amount and minimum assignment amount) of the bank loan.
Still yet another aspect of the present invention, a seller or buyer can enter a linked offer comprised of two orders with a different set of terms for the same bank loan, and upon filling one of these orders, the other order is automatically canceled.
Still yet an additional aspect of the present invention, after an order is partially filled in compliance with the order's terms, it is determined whether a second match exists for the unfilled portion of the order.
As a further aspect of the present invention, undisclosed bids and offers may be entered which are not posted to buyers and sellers.
As a feature of this aspect, if no match is found for an undisclosed order, then it is determined if the undisclosed offer or undisclosed bid is within a predetermined amount of a corresponding bid or offer, and if so, the parties making the respective offer and bid are contacted to see if a match can be made.
In accordance with another embodiment of the present invention, apparatus and method are provided for carrying out an auction by placing by a seller of an existing bank loan, disclosing to participants in the bank loan auction information regarding the bank loan for sale, setting by the seller start and end time parameters by designating a start time and an end time, respectively, of the bank loan auction, receiving, after the start time, bids for the bank loan for sale from the participants in the bank loan auction, closing the bank loan auction at the end time, identifying the largest participant who made the largest, and conducting a trade for the bank loan for sale between the seller and said one of the participants.
As an aspect of this embodiment, the end time parameter corresponds to an elapsed time interval amount necessary to elapse with no highest bids for the bank loan auction to close.
As another aspect of this embodiment, the auction is identified as a blind auction or as a non-blind auction, and the highest bid is posted only during the non-blind auction.
As a further aspect of this embodiment, each bid received is comprised of a price and a dollar amount, the bids are ranked by their respective price, a list is generated that includes all necessary ranked bids, starting from the highest ranking and continuing down the ranking, with corresponding dollar amounts that collectively cover the dollar amount of the bank loan, and the participants whose respective bids are included in the list are identified as the buyers.
As an additional aspect of this embodiment, the seller sets a minimum acceptable bid, and the trade is discretionary to the seller if the highest bid is less than the minimum acceptable bid.
In accordance with a further embodiment of the present invention, apparatus and method are provided for carrying out a reverse-offer bank loan auction by placing by a buyer a bid for a bank loan to be purchased, setting by the buyer start and end time parameters designating a start time and an end time, respectively, of the reverse-offer bank loan auction, receiving, after the start time, offers to sell bank loans from participants in the reverse-offer bank loan auction, closing the reverse-offer bank loan auction at the end time, identifying one of the participants who made the lowest offer, and conducting a trade for the bank loan offered for sale between the one of the participants and the buyer.
BRIEF DESCRIPTION OF THE DRAWINGS.
The following detailed description, given by way of example and not intended to limit the present invention solely thereto, will be best appreciated in conjunction with the accompanying drawings, wherein like reference numerals denote like elements and parts in which:
FIG. 1 is a flow chart broadly illustrating the operation of the bank loan trading system of the present invention;
FIG. 2 is an exemplary webpage that is displayed to users showing quote information;
FIG. 3 is an exemplary webpage that is displayed to the user when a bid or offer is initiated;
FIGS. 4A-4D represent a flow chart detailing the specific steps and inquiries taken during the offer and bid input process;
FIG. 5 is an exemplary order confirmation webpage displayed to a user upon entry of an order;
FIGS. 6A-6G represent a flow chart detailing the specific steps and inquiries taken during confirming the order and matching of bids and offers in accordance with the present invention;
FIG. 7 is an exemplary webpage displayed to a user who seeks to schedule an auction;
FIG. 8 is an exemplary webpage displayed to a user who seeks to make a bid or offer in an auction;
FIG. 9 is an exemplary webpage displayed to a user participating or sponsoring an auction that requires the user to certify that it complies with particular restrictions of the loan's credit agreement; e.
FIG. 10 is an exemplary analytics webpage that can be displayed to a user.
DETAILED DESCRIPTION OF CERTAIN PREFERRED EMBODIMENTS.
The bank loan trading system and corresponding method of the present invention, as hereinafter described, preferably is embodied within an Internet website at a particular website address such as “lexc,” but other addresses may be used. “Users” of the present invention, generally buyers (i. e., potential assignees) and sellers (i. e., potential assignors) of bank loans, access the lexc website, enter pertinent and required information as set forth by the lexc website and the lexc website matches buyers with sellers, all as discussed in detail below. It is appreciated that the present invention is not limited to the Internet and may be applied to other public or non-public forums including, but not limited to, intranets.
The bank loan trading system of the present invention provides two methods for buyers and sellers to trade bank loans and also presents information with sorting capabilities for the analysis of the bank loan offerings. In the first method for matching buyers and sellers, bids and offers are posted on the lexc website embodying the present invention. The second method entails an electronic auction.
Matching of Bids and Offers.
In accordance with the present invention, the matching of bids and offers is carried out by the process schematically illustrated by the flow chart shown in FIG. 1. Each process and step shown in FIG. 1 is discussed hereinafter. Initially, existing bank loans for sale are displayed to users accessing the website previously mentioned, as represented by step 101 shown in FIG. 1. FIG. 2 is an exemplary webpage that is displayed to users and for convenience herein is identified as “the quote page.” Of course, existing bank loans and associated information may be displayed to users in various formats.
As shown in the quote page shown in FIG. 2, existing bank loans are shown in table 20 , with each loan posted on a separate row of the table. For example, row 20 a displays a loan to the company Allied Waste, row 20 b displays a second loan to Allied Waste and row 20 c displays a loan to the company American Axle. Generally, each loan (i. e., each row of information within table 20 ) includes information pertinent to the loan itself including the loan's borrower in column 22 , the tranche in column 24 , the loan's base rate in column 26 , the loan's base rate spread in column 28 , the interest rate as of date (“IRD”) in column 30 , whether the IRU is from pre-closing, the inception date or the current date in column 32 , the revolver unutilized commitment fee in column 34 , the maturity date in column 36 and the minimum assignment in column 38 . If applicable, the amount of the loan's previous trade is displayed in column 39 (e. g., see FIG. 10 ). Other information pertinent to the loan including, but not limited to, the minimum retained amount, whether the loan interest rate is fixed or based upon a grid, the minimum retained amount, LTM or LQA, quarter ending, debt/EBITDA, EBITDA/interest, Moody's long-term rating, Moody's rating security, S&P's long-term rating, S&P's long-term rating security, and industry also may be displayed. Some of this information may change for each tranche.
The bank loan system of the present invention (hereinafter, “the system”) obtains the above-identified loan information from various known sources. In accordance with the present invention, the system is capable of obtaining information about loans for sale from the users themselves, as represented by block 102 in FIG. 1. Users may enter borrowers and tranches of loans that are not already listed or posted by the system and may enter not-yet listed tranches of loans for sale having borrowers who already are listed by the system. Here, a user provides to the system the borrower's name and the tranche, and the system, either automatically or via supporting personnel, obtains the maturity date and industry of the loan. Other information regarding the loan, mentioned above, may be obtained from the user or through other means. The user-supplied information will be verified by the system and/or the supporting personnel prior to the loan's posting.
In addition to the above-mentioned loan information, table 20 shown in FIG. 2 also displays, if any exist, current bids and offers for each loan. If a bid currently exists for a particular loan, then the bid, the size of that bid, the terms of that bid and the minimum fill size are displayed in the appropriate row in columns 40 , 42 , 44 and 48 , respectively. Similarly, if an offer currently exists for a respective posted loan, then the offer, the size of that offer, so-called odd size information, the terms of that offer and the minimum fill size are shown in columns 50 , 52 , 54 , 56 and 58 , respectively. Information regarding bids and offers shown in columns 40 , 42 , 44 , 46 , 48 , 50 , 52 , 54 , 56 and 58 are discussed further below.
The quote page shown in FIG. 2 further includes a table 60 that displays to the user information pertinent to the bids and offers made by that particular user. Other information also is displayed within the quote page, as further discussed below.
Bids and Offers.
Users can enter a bid or offer pertaining to a particular tranche on the listed bank loans, as represented by block 103 in FIG. 1. Such a bid or offer is initiated by selecting an appropriate selection within the quote page shown in FIG. 2, such. as box 70 shown, or by “double-clicking” a particular row within table 20 , or carrying out another appropriate event. FIG. 3 is an exemplary webpage that is displayed to the user when a bid or offer is initiated. As shown in FIG. 3, the user is asked to enter information about the loan. For example, if the minimum assignment amount is not already in the system, the user will be asked to enter the amount. If the loan has a grid for the base rate spread depending on the financial characteristics of the borrower, then the user will be asked to input the most recent base rate spread and the underlying base rate, as well as supply to the system (e. g., via a facsimile communication) a funding report that verifies the entered information. If the tranche offered is a revolver or pro rata offering of revolver and term loan, then the user will be asked to provide the unutilized commitment fee.
In addition to the above user-supplied information, the user is asked to identify how long the order (i. e., bid or offer) will be outstanding. For example, possible choices for expiration include good until cancel, good until the end of the day or good until an expiration date, hour and minute chosen by the user. In addition, orders can be canceled at any time prior to the chosen expiration time/date.
Further, the user is asked to enter the bid or offer price and the amount. As is well known, bank debt prices are measured in terms of points which equal the percentage of the par amount of the loan. For example, a price of 99.5 means the loan is priced at 99.5% of the par amount. 99.5 is also 0.5 points less than par. The price tendered and the loan amount equate to that displayed in columns 40 and 42 (for bids) and columns 50 and 52 (for offers) in table 20 in FIG. 2. The user also is asked to enter the terms of the bid or offer with regard to the size of the bank loan willing to be purchased or sold. The terms selected equates to that information displayed in column 44 (for bids) and column 56 (for offers) in table 20 . If the user seeks no partial order, then “All or None” is selected thereby requiring another user's matching bid or offer to match exactly or to closely match (as discussed below with regard to “odd”) the amount of the current user's order. An example of an “All or None” bid is shown in row 20 c in table 20 of FIG. 2, wherein the bidder (i. e., prospective purchaser) seeks to purchase the entire $5 million of a pro rata loan to American Axle.
If the user is willing to enter into a trade of less than the entire amount of the user's own bid or offer, then the user can select one of the following two alternative set of terms. The user can select the term “Partial Fill≧Minimum Size (Partial Fill)” thereby allowing for a matching bid or offer to equal the designated minimum size (which is an even million dollar amount), to equal any even million dollar amount higher than the minimum size and at least one million less than the order amount rounded to the nearest million, or to equal the exact offered amount. As an example of this selection, a user offers $12 million with the requirement Partial Fill≧$5 million and thus the user is willing to enter into a trade in the amounts of $5 million, $6 million, $7 million upwards to $12 million (the entire amount). The user also can select the term “Partial Increments≧Minimum Size (Partial Increments Only)” as shown in FIG. 3, thereby allowing for a matching bid or offer to equal the designated minimum size, to equal any amount above the minimum in increments of $5 million or some multiple thereof (e. g., $5 million, $10 million, $15 million, etc.) as chosen by the user, or to equal the exact offer amount. As an example of this selection, a user offers $22 million with the requirement “Partial $5 Million Increments Only≧$7 Million” and thus the user is willing to enter into a trade in the amounts of $7 million (the minimum), $10 million, $15 million, $20 million (representing the partial incremental amounts) or $22 million (the ad entire amount). In another embodiment, the system trades in the amounts of, for example, $7 million (the minimum), $12 million, $17 million, (representing the partial incremental amounts) or $22 million (the entire amount). Thus, the present invention is not limited to the numbers and increments provided herein.
Transactions in Odd Amounts.
Bank loans, unlike bonds, may be held in odd amounts. For example, bonds are typically issued in even $1,000 par amounts. In contrast, bank loans may be allocated amongst a bank group with odd amounts rounded to the nearest cent. In addition, even if the bank loan was allocated in even million dollar increments during syndication, prepayments and scheduled amortization payments may result in borrowers owing odd amounts to members of the bank group. As buyers and sellers may wish to maintain their anonymity, as do the system operators wish to maintain the anonymity of its users prior to the matching of bids and offers (discussed below), and revealing an exact amount offered for sale may provide information that will help identify the seller making an offer, the system displays even million dollar amounts and employs methods, rules and algorithms to provide for trades in odd amounts.
The first rule is that buyers must bid in even million dollar amounts. Sellers can make offers in odd amounts, meaning an exact amount to the nearest cent, but that amount will be displayed by the system rounded to the nearest million dollars. In addition to displaying offers rounded off to the nearest million dollars (in column 52 in FIG. 2 ), the system displays the previously mentioned “odd size information” (in column 54 ) that identifies whether the displayed amount (i. e., the rounded amount) is within $100,000 of the exact amount of the offer. If so, the odd size information column is left blank. If not, the odd size information column is provided with the term “odd.” For example, an “odd” $5 million dollar offer represents an offer that falls between the values $4,500,000.01 and $4,899,999.99 or falls between the values $5,100,000.01 and $5,500,000.00. An “even” $5 million dollar offer therefore represents an exact offer of an amount within (and including) the range $4,900,000.00 and $5,100,000.00. Although it is preferred to utilize an offset of $100,000 as the gauge to identify an offer as odd or even, other amounts, such as $50,000, $75,000, $150,000, etc., may be used.
In general, since buyers are highly likely to accept non-exact offers, notification to the potential buyer that an offer either is or is not within $100,000 of the stated amount is, for most purposes, sufficient. If a buyer requires further information, that buyer may inquire further by either personally contacting (e. g., via telephone) personnel operating the system or, alternatively, making an appropriate request via his or her own computer terminal. In either case, however, the system (or its personnel) does not disclose the exact offer amount until after the order has been filled (i. e., the buyer finally accepts). For example, if the buyer can not buy more than $5,250,000 of a loan and the offer is an “odd” $5 million, the buyer can inform the system (or its personnel) of the $5,250,000 limitation. This action operates as an offer to buy the “odd” $5 million loan if the exact amount is equal to or below $5,250,000. If the exact offer amount is less than or equal to $5,250,000, then the order is filled, at which time the buyer is informed of the exact amount. On the other hand, if the exact offer amount is greater than $5,250,000, the buyer is advised only that the order was not filled. By obligating the buyer to the above process, buyers are prevented from “fishing” for information to identify who the seller may potentially be.
FIGS. 4A-4D represents a flow chart detailing the specific steps and inquiries taken during the above-discussed order and bid input process. As shown in FIG. 4A, inquiry 200 determines if a bid or offer is being made. For an offer, the process for determining the particular selections to be included within the bid and offer input webpage (FIG. 3) begins at step 201 . Inquiries 202 , 203 and 205 and steps 204 and 206 concern grid, base rate spread, pro rata and revolver information. The minimum assignment amount of the bank loan in issue is either known or entered at inquiry 207 and steps 208 , 209 . The seller then enters the offer at step 210 (FIG. 4 B). If a bid is being made, the buyer enters the bid at step 211 .
After the bid or offer is entered, inquiries pertaining to the type of bid or offer are made at steps 212 - 216 . At inquiry 217 (FIG. 4 C), the system inquires as to whether the order is “linked” (discussed below) and if so, inquiries regarding the linked order are made at steps 218 - 223 . Finally, the user enters the expiration date and time of the offer at inquiry 224 (FIG. 4 D), this information is displayed at step 225 , and a confirmation page (shown in FIG. 5) is generated during process 226 (discussed below).
Matching of Offers and Bids.
After at least one bid (by a potential buyer) and at least one offer (by a potential seller) pertaining to the same loan (i. e., the same borrower and tranche) have been entered into the system at the same price or at a price in which the bid exceeds that of the offer, the system carries out the process of determining whether a match exists, as represented by block 104 in FIG. 1. Initially, each offer is rounded to the nearest million dollars and, as required, each bid already is in an even million dollar amount. As previously discussed, each offer and bid can be an “All or None” type bid, a “Partial Fill” type bid, or an “Partial Increments Only” type bid. Offers and bids are compared to one another to determine whether a match exists there between. Using standard logic routines, the existence of matches between offers and bid is obtained. Table 1 below shows example bids and offers, showing both the actual offers and the offers rounded off to the nearest million dollars (in millions), the bids (in millions), as well as the amounts (in millions) of the matches that exist.
After identifying whether a match exists between a particular offer and bid, the system determines whether the buyer is subject to purchase an even million dollar amount (i. e., the offer amount rounded to the nearest million) or the exact amount of the offer (i. e., the unrounded amount), as represented by block 105 in FIG. 1. If the matched amount represents the entire offer rounded to the nearest million, then the buyer is subject to purchasing the exact amount of the offer. Thus, if the entire offer is filled by a single trade, the buyer must accept the actual offer amount, which may be as much as $500,000 above or below the buyer's bid. If, on the other hand, the entire offer is not filled by the trade (i. e., the match represents an amount in millions less than the rounded-off offer), then the buyer is subject to purchasing only the matched amount, which is an even million dollar amount. Therefore, the outstanding amount of the loan still retained by the seller generally is an odd amount equal to the actual offer less the even million dollar matched amount. Table 2 below shows the example bids (in millions) and offers previously set forth in Table 1 along with the corresponding amounts of the loan to be transferred to the purchaser.
Prioritizing Multiples Bids and Orders.
Generally, a “better” bid for a particular loan is represented by a second bid of the same dollar amount as the first bid but the second bid has a higher price than the first bid. Similarly, a “better” offer is represented by a second offer of the same dollar amount as the first offer but the second offer has a lower price than the first offer. In these instances, the order with the lower bid or greater offer is canceled and a new order is filled.
The following priority is followed when more than one existing order matches a newly entered order: (1) best price (if a bid price exceeds an offer price, the difference between the two is split); (2) largest size (the order that allows the largest amount of the order to be filled is utilized); (3) time priority (if two existing orders match the new order and both provide the same size trade, the first order to be entered is utilized).
Compliance with Minimum Assignment and Retained Amount Terms.
As previously discussed, the seller of a bank loan generally is imposed with two restrictions when assigning the bank loan to a buyer: compliance with the loan's minimum assignment amount and the loan's minimum retained amount. The minimum assignment amount sets a floor for the amount to be traded and the minimum retained amount pertains to the amount the assignor or seller of the bank loan will continue to hold after assignment of a partial amount of its commitment. These amounts may and often differ from the minimum fill size chosen by users in Partial Fill and Partial Increments Only order fill instructions previously discussed. The loan's minimum assignment, if known, is posted in column 38 of table 20 shown in FIG. 2, as previously mentioned. The loan's minimum retained amount may be posted in the system, but is currently not embodied in the system.
Since bank loans typically provide for both minimum assignment amount and minimum retained amount restrictions, sellers of such loans may have difficulty or be inhibited from using Partial Fill or Partial Increments Only order fill instructions since a partial fill (i. e., an assignment of a portion, not the entire amount, of the loan) may result in the seller retaining less than the minimum retained amount. For example, a seller owns a $17 million loan with a minimum retained amount restriction of $5 million, and the seller seeks to sell as much of the bank loan as possible. Given this scenario, the seller offers the entire loan as a $17 million Partial≧$5 million offer. However, a buyer's purchase of $15 million results in the seller retaining $2 million in violation of the bank loan credit agreement.
To solve the aforementioned loan violation from occurring, the system of the present invention allows users to create so-called “linked” orders. A user (a buyer or seller) may enter two bids or two offers with respect to the same loan, and then “link” those bids or offers so that when one of those bids or offers is filled, the other is immediately canceled. Given the above example wherein the seller owns a $17 million bank loan with a minimum retained amount restriction of $5 million, the seller can enter a $12 million Partial≧$5 million offer (as the first order) and then enter a second linked order as a $17 million All or None offer. If the second order is filled, then the first order is canceled. Conversely, if the first order is filled, the second order is canceled. Table 3 below illustrates the possible outcomes for this example. Since the system seeks to fill the largest orders first, the All or None offer is first attempted to be filled prior to filling partial orders.
Additional Trade on Retained Amount.
If less then the entire amount of an order (bid or offer) is filled, then the system checks whether the amount of the loan retained by the seller or the amount of a bid still unfilled can be filled, as represented by block 106 in FIG. 1. That is, if an offer is partially filled (by the first match), then the system determines whether the unfilled amount (i. e., the amount retained by the seller) can be filled by another bid (a second match). Similarly, if a bid is partially filled (with the first match), then the system determines whether the unfilled amount (i. e., the difference between the bid and the first match) can be filled by another offer (a second match).
The above determination of whether a second match is possible (and, if possible, a third match, a fourth match, etc.) is carried out for both linked and non-linked orders. During this determination process, the system repeats the above-discussed matching process for the unfilled amounts and assumes a Partial Fill order fill instruction. This assumption maximizes the chance of a second match. Alternatively, although not preferred, the type of order for unfilled amounts for both offers and bids use the same type of order as the original order (i. e., “Partial Fill” or “Partial Increments Only”). If second and subsequent matches are found, the user(s) involved are notified that their offers or bids that are not fully satisfied (i. e., the entire amounts thereof are not bought or sold) can be filled fully or partially by one or more additional trades, depending on the circumstances. Since users generally are obligated to conduct only one trade per offer or bid, a user can decline subsequent trades.
Avoiding Broken Trades—Possible Order Fill Amounts and Seller Compliance Representation.
The present invention seeks to prevent the user's ability to “break” trades, that is, not complete a trade after a match has been made. One possible way for a seller to break or not close a trade is when the actual carrying out of that trade would be in violation of the bank loan's minimum assignment amount or minimum retained amount restrictions. If such non-closure of trades were allowed, then buyers may miss opportunities to purchase loans elsewhere possibly resulting in increased expense to the buyer. All of this in turn may result in loss of support for the system by the users themselves.
To prevent the foregoing possible non-closure of trades from occurring, the system has a number of safe-guards, one of which is its confirmation process. Firstly, upon entry of an order (offer or bid), the user's order is posted to that user as an order confirmation webpage, such as shown in FIG. 5. The order confirmation webpage may repeat some or most of the information that the user entered in the Bid and Offer Input page shown in FIG. 3. The order confirmation webpage further repeats the offer or bid amount with the associated fill instructions (i. e., “All or None”, “Partial Fill”, “Partial Increments Only”) and all of the, fill amounts that can satisfy the order. This information presented to the user ensures that the user is aware. of the possible outcomes of the order and bears most significance in the requirement that the seller represent that the minimum assignment amounts and minimum retained amounts as provided in the credit agreement are complied with.
Table 4 below shows exemplary offer amounts and fill instructions that may be entered by a seller and the “possible fill amounts” that would be provided to the user upon entry thereof. Similarly, Table 5 below shows exemplary bid amounts and fill instructions that may be entered by a buyer and the “possible fill amounts” that would be provided to the user upon entry thereof.
The order confirmation webpage further requires a seller to confirm that if a trade is conducted, that such trade would not be in violation of any relevant credit documents, specifically the minimum assignment amount and minimum retained amount restrictions thereof, regardless of whether the order was partially or fully filled. Since sellers already have the credit documents by virtue of their participation in the bank loan facility and buyers may not necessarily already be in the facility and have access to the credit agreement, the onus is on sellers to confirm that only amounts equal to or in excess of the minimum assignment amount can possibly be traded and any retained amount be equal to or in excess of the minimum retained amount.
The order confirmation page further may request that the seller confirm the amount of the minimum assignment amount of the credit agreement, for example, by sending via facsimile a copy of the credit agreement containing such information, if such information was not already confirmed.
The present invention further allows users to place undisclosed orders within the system. Undisclosed orders (bids or offers) are identical in all respects to the previously discussed bids and offers, except they are not displayed to users (e. g., on the quote page shown in FIG. 2 ). By providing an undisclosed bid or offer, the user's order will not move the price of the loan against that user's position, whereas a disclosed order might move the price. Generally, when a borrower is experiencing financial or operating difficulty, the placement of an offer to sell a loan concerning that borrower may induce other potential sellers to post offers at lower prices. This disadvantageous result to the seller is prevented by placing an undisclosed order.
As with disclosed orders, if an entered order matches an undisclosed order, a trade takes place. However, if a bid and an offer are within 1.5 points (or other suitably close position) of one another and one or both of the bid and offer are undisclosed, the system or, alternatively, the system's personnel determines the likelihood of a trade taking place. If a trade is likely to occur, then the two users involved are notified of the proximity of the opposing orders. The system or personnel will then negotiate with both sides to complete a trade. This additional intervention by the system advantageously results in trades that otherwise would not take place when undisclosed orders are involved.
The above-discussed functions and features of confirming the order and matching of bids and offers, whether disclosed or undisclosed, with the various confirmations are further schematically illustrated in the flow chart shown in FIGS. 6A-6G. Steps 300 - 304 concern user authentication security measures. User order information is printed at step 305 and based upon whether the order is a bid or an offer, as determined at inquiry 306 , the process proceeds to step 307 for an offer and inquiry 316 (FIG. 6B) for a bid. Steps 307 - 310 concern compliance with the credit agreement. Inquiries 311 and 316 determine if the indicated borrower is in the system and if not, a user message is provided at step 312 . Similarly, inquiries 314 and 317 determine if the indicated tranche is in the system and if not, a user message is provided at 315 . The system's personnel is notified at step 313 . For offers, the system verifies that the grid or that the tranche's base rate and base rate spread are in the system at inquiries 318 and 319 (FIG. 6 C). If not, the user is informed at step 320 . Whether the minimum assignment information is in the system is determined at inquiry 321 and if not, the user is asked to provide proof of the minimum assignment amount at request 322 .
Inquiry 323 verifies that the order amount is not less than the minimum size indicated. If it is, steps 324 - 325 advise the user. Inquiry 326 (FIG. 6D) verifies that the minimum size indicated is not less than the minimum assignment amount. If it is, steps 327 - 328 advise the user. Steps 329 - 332 concern providing advice to the user concerning the order, if necessary. Inquiry 333 and step 334 allow the user to return to the bid and offer input webpage, if desired.
At step 335 (FIG. 6 E), the order is entered into the system and at step 336 , the process for finding a match for the order begins. Inquiry 337 determines it a match exists and if so, steps 338 - 351 (FIGS. 6E and 6F) are carried out. If, on the other hand, no match exists, then the system determines if another similar bid or offer already exists at inquiry 352 (FIG. 6G) and steps 353 - 358 determine which bid is greater or offer is lower and cancels the other bid or offer. Then, if the order currently being made is accepted, inquiry 359 determines if it is an undisclosed order. If so, an inquiry is made as to whether the order is within 1.5 points of an opposing order at inquiry 361 and if so, system personnel are notified at step 363 . Disclosed orders are posted by the system at step 360 .
In addition to the above-described method and facility for matching buyers with sellers of bank loans, the bank loan trading system of the present invention further utilizes electronic auctions on the lexc website (or other suitable site), as discussed below.
Currently, in the bank loan market, auctions generally are conducted by the firm selling (or buying in a reverse-offer auction) the bank loan. This firm is also referred to as the sponsor of the auction. As previously mentioned, without clearly-defined rules and a third party following generally accepted or standardized procedures, many auctions are conducted with less than fair and equitable results. This in turn discourages participants from engaging in announced auctions for fear their due diligence prior to their participation will become a wasted effort. Accordingly, participants often will not participate or put their best efforts or bids into an auction. With reduced participation due to a history of poorly conducted auctions by various sponsors, sponsors likely experience lower bids or higher reverse-offers. Furthermore, since the participants in auctions are generally dealer desks, these dealers are receiving their compensation from the difference in the price paid by the dealer's buyer and the bid provided to the sponsor. This further reduces the amount received or increases the amount paid by the sponsor.
In accordance with the present invention, the system (via its website) provides clear rules that ensures fair and equitable execution of bank loan auctions. In addition, the system of the present invention bypasses dealers, thereby increasing the proceeds or reducing the purchase cost to the sponsor. Three types of auctions may be carried out by the present invention: standard, blind and dutch. Table 80 shown in FIG. 2 provides various information regarding currently scheduled auctions and FIG. 7 is an exemplary webpage displayed to a user who seeks to schedule an auction. FIG. 8 is an exemplary webpage displayed to a user who seeks to make a bid or offer in an auction.
The system of the present invention allows the user to schedule a so-called “standard auction” which places a bank loan for sale to the highest bidder until the “gavel falls.” A pre-announced start date and time and the allotted time “before the gavel falls” are provided by that user. At the start of the auction, the system accepts bids and continuously posts the highest bid. This type of auction remains open so long as increasing bids continue to be entered. The action closes after no new bids are received for a stated interval of time. Therefore, the system continues to conduct the auction until an amount of time, e. g., five minutes, has elapsed since the last bid was entered. During the auction, the current highest bid and the amount of time remaining (which time is reset upon receipt of a new highest bid) are posted to users. Reverse offers also are possible and operate in a similar manner. The system “refreshes” the information displayed to users at a rate significantly faster than the amount of time that must elapse before the auction closes, thus ensuring that the Internet-conducted auction is fair to all users. For example, the system may provide a refresh rate of 15 seconds versus 5 minutes for the period for the gavel to fall.
The system further allows users to schedule so-called blind auctions at a preset date and time. In a blind auction, the auction closes at a pre-announced time, but bids, including the highest bid, are not posted by the system to either the auction's participants or the sponsor of the loan. This ensures that all participants equally lack bidding information. Reverse-offer blind auctions also may be scheduled.
The system also allows users to schedule dutch auctions, which are similar to blind auctions, but provide for the sale of the loan (or purchase of a loan in a reverse offer) to one or more participants. Thus, while blind auctions can be considered to be an All or None type order, Dutch auctions may be partially filled by a number of auction participants. In the Dutch auction, the auction price for all purchasers is the lowest bid made by the eventual purchasers (representing the highest bidders) or, in the case of a reverse offer, is the highest offer made by the eventual sellers (representing the lowest offerors). Table 6 below shows example bids made during a Dutch auction sale of $50 million of a loan.
Participants providing Bid # 1 , Bid # 2 and Bid # 3 would all pay 98.00.
Once an auction is entered or posted by the system, it may not be removed. Sponsors are required to place a minimum acceptable bid for which they will sell their loan or a maximum acceptable offer for which they will pay for a loan in a reverse-offer auction. Thus, the sponsor is not forced to accept below-market bids or above-market offers and participants are assured that if they place a bid above the a minimum acceptable bid or an offer below the maximum acceptable offer, the sponsor cannot refuse such bid or offer if no better bid or offer exists. Therefore, the participant knows that if the minimum acceptable bid or maximum acceptable offer is reasonable, then it may not be a waste of time to conduct due diligence to participate in the auction because the auction can not be stopped prior to completion. In addition, knowing that their bid or offer can not be shopped at the end of the auction provides the participant with the knowledge that his effort to make a bid or offer will not be inappropriately used by the sponsor to achieve a better bid or offer from a favored third party. Bids and offers may be entered that fall below the designated minimum acceptable bid or above the maximum acceptable offer, respectively. In the case that the highest bid still falls below the minimum acceptable bid or the lowest offer still is above the maximum acceptable offer, the system provides the sponsor the opportunity to accept or reject the best bid or offer.
The system further allows the sponsor of an auction, prior to or during the auction, to modify various criteria previously set but only if such modification increases the likelihood of a completed trade. The system allows the sponsor to decrease its minimum acceptable bid and, similarly, to increase its maximum acceptable offer. Such changes could only tend to increase the likelihood of a successful, completed trade. Increasing the minimum acceptable bid or decreasing the maximum acceptable offer disadvantageously decreases the likelihood of a completed trade and thus is forbidden.
The system further allows participants in an auction to only increase their bids or decrease their offers (in a reverse-offer). In dutch auctions, participants can also increase the dollar amount tendered, but not decrease it.
Auctions Must Comply with Credit Agreement.
Whether the sponsor or the participant is the seller in a sale auction or reverse-offer auction, respectively, the system requires the seller to represent its compliance with the minimum assignment and retained amounts restrictions of the credit agreement. FIG. 9 is an exemplary webpage displayed to a user sponsoring and participating in an auction that requires the user to certify that it complies with these restrictions of the credit agreement.
System Analytics and Sorting Capability.
In addition to the foregoing matching of sellers and buyers of bank loans and bank loan auctions, the system of the present invention further allows users thereof to arrange the aforementioned bank loan data, including the offers and bidders thereof, in different manners on the users' computer monitors. FIG. 10 is an exemplary so-called analytics webpage that can be displayed to a user. Table 90 shown in FIG. 10 is similar to table 20 shown in FIG. 2, but table 90 is adapted for the purpose of comparing posted loans in different manners. For example, loans shown in table 90 can be sorted using any column therein as the sorting criteria. Thus, loans can be sorted chronologically depending on their quarter ending date, loans can be sorted numerically based on their total yield to an assumed maturity date (chosen as a percentage of time until maturity), and so on. For the sort on the yield, the system can assume the loan is outstanding for only 50% of the stated time until maturity. Therefore a premium or discount is amortized in half the amount of time, thereby reducing or increasing the yield, respectively. Given this feature of the present invention, users are able to quickly and easily obtain useful information helpful in their decision to make appropriate bids and offers.
In accordance with a further embodiment of the present invention, the disclosed system and corresponding method may be applied to the trading of bonds whereby setting matching rules or utilizing auctions could increase the liquidity for, or in other words increase the number of buyers and sellers interested in, the trading of bonds. Since most bonds are traded over-the-counter, therefore through dealers acting as middlemen rather than through exchanges, and the trading in any particular issue of bond is generally not as active as with stocks, there are generally a limited number of dealers through which an investor can buy or sell the desired bonds. Due to this lack of trading in any given bond, the cost of execution is generally more expensive for bonds than stocks due to a lack of liquidity or demand for secondary purchases of the bonds. Therefore dealers acting as middlemen have to spend more time and effort to execute transactions. In addition, with limited competition and limited publication of market prices, the dealers may charge a large amount or excessive mark-up for trade execution.
With the present invention applied to bonds, execution could be significantly more efficient as the number of potential buyers or sellers could increase and contacting these investors would be less expensive, thereby reducing the cost of execution. Furthermore, the rounding and matching method described in the present invention could increase the number of trades executed as it provides a method for matching buyers and sellers of unusual amounts and sizes. For example, bonds are typically issued in amounts of $1,000 per bond and trade in multiples of $100,000 or 100 bonds. If a seller has 231 bonds (worth $231,000), utilizing rules similar to that for bank loans whereby the buyers are subject to having their bids filled in odd amounts, the seller may sell its bonds to a buyer who placed a bid for 200 bonds plus or minus 50 bonds. Therefore, the rounding mechanism could increase the liquidity for odd-size trades of bonds. Further, an announced auction may increase interest in any particular sale or reverse-offer purchase of bonds.
Similarly, the present invention may be applied to the trading of large blocks of stocks where the utilization of existing bid and offer systems on exchanges may cause large order imbalances that significantly and adversely impact the sale price. Exchanges will typically display bids and offers for stock up to amounts of $1,000,000 for example. If an order were placed for $5,000,000 or more, the sheer size of this order may move the market price against the party placing the order. Block trades are therefore typically conducted through block trading desks of broker-dealers. Similar to trading bonds over the counter, utilizing these block trading desks may result in expensive execution as the large amount of the trade may require an extensive effort and. large risk to resell the large position. Therefore, like the trading of bonds, utilizing the disclosed system and either the auction method or the rounding and matching method in accordance with the present invention may be more efficient and less expensive than the current method of trading though dealers' block trading desks.
Another possible application of the present invention is to the trading of odd lots of stocks. Stock trades are usually executed in amounts of 100 shares of stock. The present invention could apply the rounding and matching method previously discussed to post even amounts of the number of shares that may lead to the filling of odd-size number of share trades.
The linked order aspect of the present invention could be used to allow sellers to post very specific alternative fill instructions for stocks and bonds. E. g., a seller may wish to sell only either $1,000,000 of bonds or $750,000 of bonds. This could be accomplished with a linked order of $1,000,000 All or None and $750,000 All or None.
The system's auction function could also be applied to other financial assets. In other markets where the financial assets may be somewhat illiquid, therefore there may not be a competitive bid for all specific assets for sale, sellers may wish to sell the specific asset by way of auction. This applies especially to large financial assets sales where the dutch auction method described herein would allow a large sale to be divided into small portions allowing for better execution of the sale.
In addition to the auctioning of financial assets, the present invention can be applied to the auctioning of non-financial assets. For both financial and non-financial assets, the present invention solves two issues at once. First, auctions with displayed prices and fixed end times create a rush to bid near the end time. By having a fixed end time, higher bids that may have been submitted given more time (or an open end until the “gavel falls”) would be prevented. Second, on-line auctions create an environment allowing for more participants, especially as most participants are not in the business of traveling to participate in small or one-off auctions. If a displayed-price auction is desired, then an on-line, open-ended auction would reach the most participants and generate the best bid because of (1) not preventing a higher bid (as discussed above), and (2) encouraging more participants such that more participants generates more bids, which generally will generate a higher highest bid in the long run.
While the present invention has been particularly shown and described in conjunction with preferred embodiments thereof, it will be readily appreciated by those of ordinary skill in the art that various changes may be made without departing from the spirit and scope of the invention. For example, although the present invention has been described with respect to the trading and auctioning of bank loans, the present invention is not limited solely thereto and may be widely applied to the trading and auctioning of other financial interests within the secondary market, such as real estate and project finance loans As another example, although the present invention has been described as being a functional website on the Internet, the present invention suitably may be applied to intranets or even the non-computer forum.
Therefore, it is intended that appended claims be interpreted as including the embodiments described herein, the alternatives mentioned above and all equivalents thereto.

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Um sistema e método de negociação de empréstimo bancário é fornecido para utilizar uma facilidade eletrônica para facilitar a negociação de empréstimos bancários. Os vendedores e os compradores entram em ofertas e lances que são postados para todos os potenciais compradores e vendedores, a menos que os pedidos não sejam divulgados. It is determined whether there is a match between one of the bids and one of the offers of the same loan. If an order can be filled, the system and method provide various confirmation techniques to ensure that a resultant trade does not violate the terms of the bank loan itself. If an order can be filled partially and the remaining portion of the order may be filled in part or in full, the party entering the initial partial order is given the choice of entering into the second trade. Buyers and sellers also can enter linked orders representing two different orders for the same loan and upon filling one of the linked orders, the other order is canceled.
Burkart, Mike, "Initial Shareholdings and overbidding in takeover contests", Dec. 1995, Journal of Finance, vol. 50, No. 5, pp. 1491-1515.* .
"A Revolution in Securities Markets'Structures?" Nov. 1996, Financial Market Trends (France), No. 65, pp. 15-37. .
Schwartz et al, "Next-Generation Securities Market Systems," Fall 1997, Journal of Management Information Systems, vol. 14, No. 2, pp. 57-79..
Primary Examiner: Cuff; Michael.
Assistant Examiner: Jaketic; Bryan.
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