The Bond Store with David Hemingway
Uploaded by ZionsDirectTV on 25.04.2012
Transcript:
>>Jacqueline Davies: Thank you for joining us again. I'm Jacqueline Davies with Zions
Direct, and I'm here today with David Hemingway, Senior
Investment Officer for Zions Bancorporation and
Chairman of the Board for Zions Direct. David has worked for the Bank for nearly four decades,
holding many senior positions, and today we're talking about the Bond Store. Thank you so
much for joining us today, David.
>>David Hemingway: Thank you, I am happy to be here with you.
>>Jacqueline Davies: Last time we talked about the auctions and let's say that I am searching
for a bond of some kind, a corporate or municipal
bond, and I don’t see it on Auction site. What other
sources are available to me?
>>David Hemingway: Well thank you, Jacqueline, that’s a great question. As you'd recall,
we did talk about the auctions last time I was here
and if you go to the Auction site, you're correct there
may only be 50 or 60 live auctions going on and the bonds you want or the security you
want may not be on the auction platform at that point
in time. For example, you may want a municipal bond
from the State of Colorado, for example, and there might not be any Colorado bonds there,
or you might want an FDIC-Insured CD from a different bank
so that you can get more FDIC insurance and that might
not be available. So that’s why we have the Bond Store, and in the Bond Store we have-
at any given time- at least thirty thousand different bonds and
CDs. I mean, at the Bond Store, there are corporate bonds,
there are municipal bonds ,there are US Treasuries, there are US Agencies, there are high yield
bonds, there are International bonds, there are about
every kind of bond that you could possibly imagine.
>>Jacqueline Davies: Tell us a little bit more about how the Bond Store works.
>>David Hemingway: Well, the Bond Store is really a search engine where you can go to
our site and go to the Bond Store and you will put in some criteria
as to what you want. Do you want a municipal bond or a corporate
bond? what maturity do you want? Do you want five years? Do you want ten years? Do you
want one year? You put in some basic criteria and then you search,
and the search engine will bring up all the bonds that meet
that criteria. And again, on any given day, there are at least thirty thousand different
offerings in the Bond Store.
>>Jacqueline Davies: Is this something that is available exclusively to Zions clients?
>>David Hemingway: Well, the ability to search is available to everybody. You do not have
to be a Zions client to go to the Bond Store and search
for a bond, but of course if you want to actually buy
that bond, then you would need to open an account.
>>Jacqueline Davies: Now you say that it's the platform is coming from dealers across
the country, so how does one deal with mark-ups that are
involved with that?
>>David Hemingway: You are right. The inventory in the Bond Store is not all Zions'. In fact
it’s hardly any of it's Zions'. It’s from all dealers
across the United States that have municipal bonds or
corporate bonds to offer- they would put them in the Bond Store. And normally, a bond dealer
would buy bonds at one price and mark them up to another price,
and that’s how they would be paid. What I am happy to tell
you is that in Bond Store, Zions Direct has not put any mark-ups onto the bonds. The prices
that you see are exactly the same prices that are being
offered to Zions by the dealers across the country. What
Zions charges is a flat fee of ten dollars and ninety-five cents per trade. So, if you
buy the bonds you will get the bonds at exactly the same price that
the dealer that owns the bonds is offering them to other dealers.
>>Jacqueline Davies: Now, what is exclusive about the auction site is if I have price
in mind that I want to go in and bid on these auctions, I know what
price I want to pay for the bonds. Now, with the Bond Store, is there
a way for me to set the price that I want to pay?
>>David Hemingway: There is. Many of the dealers that offer their bonds through the Bond Store
are willing to accept a bid. In other words,they're willing
to accept a different price. Let me give you an example, they may be
offering these bonds at one hundred cents on the dollar- at par- but you might decide
well, I really like these bonds but I don’t want to pay par, I would
like to get a little higher yield, I would be willing to pay ninety-nine
cents on the dollar. So in the Bond Store, you have the ability to change the price and
offer ninety-nine cents on the dollar, rather than par. Now of course
the owner of the bonds has the choice as to whether accept or
reject your bid. I can tell you that in about 20% of the cases where people offer a lower
price, they actually get bonds at the lower price.
>>Jacqueline Davies: Thank you so much for joining us today, David.
>>David Hemingway: Thank you.
>>Jacqueline Davies: To see more videos like this, subscribe to the Zions Direct YouTube
channel.
Direct, and I'm here today with David Hemingway, Senior
Investment Officer for Zions Bancorporation and
Chairman of the Board for Zions Direct. David has worked for the Bank for nearly four decades,
holding many senior positions, and today we're talking about the Bond Store. Thank you so
much for joining us today, David.
>>David Hemingway: Thank you, I am happy to be here with you.
>>Jacqueline Davies: Last time we talked about the auctions and let's say that I am searching
for a bond of some kind, a corporate or municipal
bond, and I don’t see it on Auction site. What other
sources are available to me?
>>David Hemingway: Well thank you, Jacqueline, that’s a great question. As you'd recall,
we did talk about the auctions last time I was here
and if you go to the Auction site, you're correct there
may only be 50 or 60 live auctions going on and the bonds you want or the security you
want may not be on the auction platform at that point
in time. For example, you may want a municipal bond
from the State of Colorado, for example, and there might not be any Colorado bonds there,
or you might want an FDIC-Insured CD from a different bank
so that you can get more FDIC insurance and that might
not be available. So that’s why we have the Bond Store, and in the Bond Store we have-
at any given time- at least thirty thousand different bonds and
CDs. I mean, at the Bond Store, there are corporate bonds,
there are municipal bonds ,there are US Treasuries, there are US Agencies, there are high yield
bonds, there are International bonds, there are about
every kind of bond that you could possibly imagine.
>>Jacqueline Davies: Tell us a little bit more about how the Bond Store works.
>>David Hemingway: Well, the Bond Store is really a search engine where you can go to
our site and go to the Bond Store and you will put in some criteria
as to what you want. Do you want a municipal bond or a corporate
bond? what maturity do you want? Do you want five years? Do you want ten years? Do you
want one year? You put in some basic criteria and then you search,
and the search engine will bring up all the bonds that meet
that criteria. And again, on any given day, there are at least thirty thousand different
offerings in the Bond Store.
>>Jacqueline Davies: Is this something that is available exclusively to Zions clients?
>>David Hemingway: Well, the ability to search is available to everybody. You do not have
to be a Zions client to go to the Bond Store and search
for a bond, but of course if you want to actually buy
that bond, then you would need to open an account.
>>Jacqueline Davies: Now you say that it's the platform is coming from dealers across
the country, so how does one deal with mark-ups that are
involved with that?
>>David Hemingway: You are right. The inventory in the Bond Store is not all Zions'. In fact
it’s hardly any of it's Zions'. It’s from all dealers
across the United States that have municipal bonds or
corporate bonds to offer- they would put them in the Bond Store. And normally, a bond dealer
would buy bonds at one price and mark them up to another price,
and that’s how they would be paid. What I am happy to tell
you is that in Bond Store, Zions Direct has not put any mark-ups onto the bonds. The prices
that you see are exactly the same prices that are being
offered to Zions by the dealers across the country. What
Zions charges is a flat fee of ten dollars and ninety-five cents per trade. So, if you
buy the bonds you will get the bonds at exactly the same price that
the dealer that owns the bonds is offering them to other dealers.
>>Jacqueline Davies: Now, what is exclusive about the auction site is if I have price
in mind that I want to go in and bid on these auctions, I know what
price I want to pay for the bonds. Now, with the Bond Store, is there
a way for me to set the price that I want to pay?
>>David Hemingway: There is. Many of the dealers that offer their bonds through the Bond Store
are willing to accept a bid. In other words,they're willing
to accept a different price. Let me give you an example, they may be
offering these bonds at one hundred cents on the dollar- at par- but you might decide
well, I really like these bonds but I don’t want to pay par, I would
like to get a little higher yield, I would be willing to pay ninety-nine
cents on the dollar. So in the Bond Store, you have the ability to change the price and
offer ninety-nine cents on the dollar, rather than par. Now of course
the owner of the bonds has the choice as to whether accept or
reject your bid. I can tell you that in about 20% of the cases where people offer a lower
price, they actually get bonds at the lower price.
>>Jacqueline Davies: Thank you so much for joining us today, David.
>>David Hemingway: Thank you.
>>Jacqueline Davies: To see more videos like this, subscribe to the Zions Direct YouTube
channel.