Guidelines

03/12/04

GFOA YieldAdvantage Guidelines for Investors and Financial Institutions

Acknowledging Guidelines and Disclaimer:
Upon logging in to GFOA YieldAdvantage, Authorized Users acknowledge they have reviewed and accept the Guidelines and Disclaimer, which are accessible via the Guidelines and Disclaimer links on the GFOA YieldAdvantage Home Page. Anytime an amendment to the Guidelines and/or Disclaimer is posted, the date of that posting will be displayed next to the Guidelines and Disclaimer links.


Definitions

AON:
All-or-none, as distinct from maturity-by-maturity ("MBM").

Agency CPN:
Coupon securities issued by any of the following: (a) Federal Farm Credit Banks ("FFCB"), Federal Home Loan Banks ("FHLB"), Federal National Mortgage Association ("Fannie Mae"), Federal Home Loan Mortgage Corporation ("Freddie Mac"), Student Loan Marketing Association ("Sallie Mae"), or Tennessee Valley Authority ("TVA").

Agency DISC:
Discount securities issued by any of the following: (a) Federal Farm Credit Banks ("FFCB"), Federal Home Loan Banks ("FHLB"), Federal National Mortgage Association ("Fannie Mae"), Federal Home Loan Mortgage Corporation ("Freddie Mac"), Student Loan Marketing Association ("Sallie Mae"), or Tennessee Valley Authority ("TVA").

Agency INT:
Interest-bearing securities issued by Federal Farm Credit Banks ("FFCB"), which pay all interest at maturity.

Amount Provisions:
All amount inputs by Investors and Financial Institutions are either in millions (e.g. $50,000,000 is input as "50" or $50,123,456.78 is input as "50.12345678") or actual dollars (e.g. $50,000,000 is input as "50,000,000") as determined by the Investor and displayed on the Investor’s Solicitation Page and the Financial Institution’s Quote Page.

Approved Financial Institution:
Financial Institutions (banks, brokers, dealers, etc.) designated by the Investor to receive Solicitation Alerts and permitted by the Investor to provide quotes on the Investor’s solicitations.

Authorized Users:
Registered users who quote or solicit on behalf of Financial Institutions or Investors.

Financial Institutions:
Financial Institutions (banks, brokers, dealers, etc.) that submit quotes for investment Instruments which Investors want to purchase.

CD (Neg):
Negotiable certificates of deposit held in book-entry form at Depository Trust Company.

CD (Non-Neg):
Non-negotiable certificates of deposit.

CP:
Commercial paper.

Eligible Quotes:
Quotes submitted and verified by Financial Institutions that meet the guidelines (i.e., quotes eligible for acceptance by the Investor). 

IRR:
Internal rate of return. IRR is that rate at which future cash receipts from interest payments and maturity amounts discounted back to the settlement date equal the initial amount of the investment.

Increment:
Minimum Amount (or minimum multiple), by which Financial Institution’s quote amount may exceed the Minimum Quote, as designated by the Investor.

Instruments:
Means any of the following:

CD (Non-Neg),
CD (Neg),
Repo,
CP,
Agency DISC,
Agency CPN,
Agency INT,
T-Bill,
T-Note/Bond, or
STRIPS.

Investor:
State or local governments which, in the course of executing their fiduciary responsibilities for their cash and investment management programs, purchase investments on a competitive basis.

MBM:
Maturity-by-maturity, as distinct from all-or-none ("AON").

MMY:
Money market yield.

Maximum Amount:
Maximum amount Financial Institutions are permitted to submit, as designated by an Investor.

Minimum Quote:
The Minimum Amount for which Financial Institutions may submit a quote, as designated by the Investor. If the Investor specifies no Minimum Amount, the Minimum Quote is for $1,000.

Minimum Rate:
Minimum interest rate that Financial Institutions may submit, as designated by the Investor.

Open Auctions:
Solicitations in which Financial Institutions who submit quotes can see their Quote Status.

Price Provisions:
All price inputs by Financial Institutions should be expressed as a percentage, up to 1/100,000 of one percent (e.g., 99.12345%).

Quote Limits:
One or more of the following limits established by the Investor and displayed on the Financial Institution’s Quote Page: Minimum Rate, Maximum Amount, Minimum Quote and Increment.

Quote Status:
In an open auction, the status of a Financial Institution’s quote relative to other quotes during an auction in accordance with the prioritizing quotes section herein. The Quote Status may be expressed as either: 1) the amount such quote is "in the money," or 2) the rank order of such quote (i.e., 1st, 2nd, 3rd, 4th, etc.). Quote Status does not show rates or amounts submitted by other Financial Institutions, nor does it show identities of other Financial Institutions.

Rate Provisions:
All interest rate (and yield) inputs by Investors and Financial Institutions should be expressed as a percentage, up to 1/100,000 of one percent (e.g., 3.12345%).

Repo:
Repurchase Agreements.

Sealed Auctions:
Solicitations in which Financial Institutions that submit quotes cannot see their Quote Status.

Solicitation Alerts:
Electronic messages delivered to Approved Financial Institutions via e-mail or, for those logged into GFOA YieldAdvantage, via pop-up browser window, which contains summary information pertaining to particular solicitations and serves as an invitation to quote in response to the InvestorŐs solicitations.

STRIPS:
U.S. Treasury STRIPS (Separate Trading of Registered Interest and Principal of Securities).

T-Bill:
U. S. Treasury Bills.

T-Note/Bond:
U. S. Treasury Notes or Bonds.

Term Sheet:
An Investor’s official request for quotes from Financial Institutions, which sets forth the terms and conditions of the solicitation for a portfolio of securities.

Transaction Fee:
Annualized fee based on the principal amount of the investment made as a result of a solicitation on GFOA YieldAdvantage, payable to Grant Street Group, the auction administrator, and shared with the Government Finance Officers Association.


Steps for Executing Investment Transactions

  1. The Investor provides to Grant Street Group its list (or lists) of its Approved Financial Institutions to be entered on the GFOA YieldAdvantage site under the Investor’s unique ID. Once the lists are created, they can be used for any investment transaction through GFOA YieldAdvantage; they can also be revised at any time.
  2. The Investor prepares and submits a solicitation for quotes to selected Approved Financial Institutions.
  3. Financial Institutions prepare and submit quotes to the Investor.
  4. GFOA YieldAdvantage prioritizes quotes according to parameters selected by the Investor.
  5. The Investor accepts or rejects quotes.
  6. The Investor notifies winning Financial Institution(s) of accepted quote(s).
  7. The transaction is completed and awarded to the winning Financial Institution(s).
  8. The Investor settles the trade with the winning Financial Institution on settlement day.

Step 1 - Approved Financial Institution List

Creating Approved Financial Institution List:
To create an Approved Financial Institution list, the Investor provides Grant Street Group with their general list of its approved banks and broker dealers. From this general list, the Investor may create one or multiple Approved Financial Institution lists and may add or remove selected Approved Financial Institutions from their Approved Financial Institution list(s) at any time. Investors are solely responsible for maintaining Approved Financial Institution lists.

Step 2 - Solicitation for Quotes

Creating General Solicitations:
Investors may solicit quotes by creating a solicitation on their Solicitation Page. The Investor designates the number of maturities to solicit, whether the auction is to be open or sealed, the solicitation period, the Minimum Rate (optional), the amount solicited (in accordance with Amount Provisions), the Minimum Quote (optional), the settlement date, the maturity date, the type(s) of Instruments, and approved list of Financial Institutions. Grant Street Group is available to assist the Investor with creating solicitations on their behalf. Investors are solely responsible for the accuracy of the terms of their solicitations.

Starting, Modifying and Canceling Solicitations:
Solicitations start in accordance with solicitation periods established by Investors when creating solicitations. Investors may modify solicitations up to the time the solicitation period begins; or, in the case of portfolio solicitations, Investors may modify solicitations up to the time the quote submission period begins. Investors may cancel solicitations up to the time the solicitation period ends.

Sending Solicitation Alerts:
Creating, starting and modifying solicitations will automatically send Solicitation Alerts to an Investor’s Approved Financial Institutions.

Creating Portfolio Solicitations:
Investors may solicit quotes for a portfolio of securities by creating a solicitation on their Solicitation Page. Investors may solicit quotes on an AON and/or MBM basis. For a portfolio, Investors designate the number of maturities, whether the auction is to be open or sealed auction, the solicitation and quote submission periods, the total proceeds, the settlement date, acceptable Instruments, and the approved list of Financial Institutions. For each maturity, Investors designate the amount solicited (in accordance with Amount Provisions) and the maturity date. Grant Street Group is available to assist the Investor with creating solicitations on their behalf. Investors are solely responsible for the accuracy of the terms of their solicitations.

Term Sheet for Portfolio Solicitation:
Investors may provide Grant Street Group with a Term Sheet for posting to the GFOA YieldAdvantage web site. Investors are solely responsible for the accuracy of the Term Sheet.

Financial Institutions are obligated to read and abide by the provisions of a posted Term Sheet.

Saving and Submitting Quotes in Portfolio Solicitations:
An Investor may designate two phases for a portfolio solicitation period: (1) a first phase in which the Financial Institutions’ quotes may be saved only, and (2) a second phase in which Financial Institutions may save or submit quotes (the "quote submission period"). Financial Institutions may save quotes without completing all inputs required for a submitted quote. On the Solicitation Page, the Investor may view saved quotes; however, saved quotes are not Eligible Quotes and Financial Institutions are not obligated to submit saved quotes. To submit a quote, Financial Institutions must input quotes in accordance with the "preparing and submitting quotes" section below.

Step 3 - Submitting Quotes

Preparing and Submitting Quotes:
Financial Institutions must complete the required inputs displayed on the Quote Page and must input quotes in accordance with Amount Provisions, Rate Provisions, Price Provisions and Quote Limits in order to submit quotes. For certain solicitations, Financial Institutions are permitted to select a maturity date other than the one designated by the Investor.

Verifying Quotes:
Financial Institutions submitting quotes will have an opportunity to verify the terms of their quotes and the Transaction Fee. Quotes submitted in accordance with the guidelines herein become Eligible Quotes. Financial Institutions are obligated to honor submitted quotes if accepted by the Investor, except as provided in the award/acknowledge time limits section herein.

Converting Quote Inputs:
To prioritize quotes on an Investor’s Solicitation Page, Financial Institutions’ rate inputs may be converted to another rate reflecting a common basis of comparison.

Instruments Solicited

Converted Rate

Any Instrument or combination of Instruments, excluding Agency CPN and T-Note/Bond/STRIPS

MMY

Agency CPN or T-Note/Bond/STRIPS in combination with any other Instrument or Instruments

IRR

Verifying CP Ratings:
Investors and Financial Institutions are solely responsible for verifying ratings of CP issues. Neither the Government Finance Officers Association nor Grant Street Group makes representation regarding the accuracy of ratings of any CP issue displayed on GFOA YieldAdvantage.

Number of Quotes:
In Sealed Auctions, Financial Institutions may submit any number of better and/or worse quotes. In Open Auctions, Financial Institutions may submit better quotes only, as provided in prioritizing quotes section herein.

Step 4 - Reviewing and Prioritizing Quotes

Prioritizing Quotes:
Quotes will be prioritized and Quote Status will be determined in one of two ways, as designated by the Investor: (1) by highest rate; that being equal, then by greatest amount; those both being equal, then by first quote received, or (2) by highest rate; that being equal, then by first quote received; those both being equal, then by amount.

Step 5 - Accepting or Rejecting Quotes

Accepting or Rejecting Quotes:
Investors may elect to make automatic or discretionary awards. In either case, Investors reserve the right to reject any or all quotes at their sole discretion.

 Automatic Awards:

Automatic awards are made to Financial Institutions (in full or in part) based on Quote Status immediately after the solicitation period ends.

 Discretionary Awards:

For discretionary awards, the Investor must promptly accept or reject quotes once the solicitation period ends. An Investor may accept quotes in full or in part (subject to Minimum Quote Limits), at their discretion. Investors are not obligated to accept quotes with the highest rates and, except as provided in the paragraph below, they cannot accept an amount from any Financial Institution greater than that Financial Institution’s quote amount.

For certain discretionary awards, an Investor may accept amounts from a Financial Institution greater than their quote amounts, but not amounts greater than $1 million. In such solicitations, Financial Institutions will be notified of this possibility before they submit quote.

For certain discretionary awards, an Investor may be subject to a time limit for accepting or rejecting quotes, as provided in the award/acknowledge time limits section herein.

Acknowledging or Withdrawing Quotes:
In Sealed Auctions only, Financial Institutions may withdraw their quotes during the solicitation period.

Step 6 - Notification of Winning Quotes

Award/Acknowledge Time Limits:
Investors and Financial Institutions may be subject to a time limit, whereby Investors have a specific amount of time to accept or reject quotes (the "award period") and Financial Institutions have a specific amount of time to acknowledge or withdraw quotes (the "acknowledge period"). The particular period (i.e., award period or acknowledge period) and time remaining will be disclosed to Investors on their Solicitation Page and to Financial Institutions on their Quote Page.

Open and Sealed Auctions:

INVESTOR'S

Financial Institution'S

AWARD PERIOD

ACKNOWLEDGE PERIOD

 

 

The Investor can accept

If the Investor accepts during

or reject.

the award period,

 

Financial Institutions can acknowledge or withdraw

The Financial Institution cannot withdraw.

during the acknowledge period.

 

 

If the Investor rejects or allows the award period

If the Investor accepts during the award period, and the

to expire, there is no trade.

Financial Institution

 

allows acknowledge period

 

to expire (or withdraws),

 

there is no trade.

When Investors accept quotes during the award period, the award period immediately ends and the acknowledge period begins.

Step 7 - Transaction Completed

In sealed and Open Auctions, once the solicitation period ends and upon the Investor’s acceptance of quotes, Financial Institutions must acknowledge their quotes, unless Financial Institutions are subject to a time limit for acknowledging or withdrawing quotes, as provided in the award/acknowledge time limits section herein. After Financial Institutions acknowledge their quotes, they may enter or revise their settlement instructions via the settlement link.

Step 8 - Settlement of Trade

Settlement:
Investors and Financial Institutions are responsible for settlement of transactions conducted on GFOA YieldAdvantage. Settlement information is provided on the Settlement Page and is accessible via the Settlement link. Investors and Financial Institutions are responsible for promptly providing settlement instructions and/or verifying the accuracy of such data on the Settlement Page. Grant Street Group assumes no responsibility for inaccuracies in settlement instructions.

Disclosing Results:
Financial Institutions who submit quotes or, in particular solicitations, Financial Institutions who formally pass on solicitations, may see auction results via the Results Archive link on their Quote Page. Results will be accessible after either (a) an Investor rejects the quotes, or (b) Financial Institutions acknowledge the quotes.

The Investor determines how much information they wish to release regarding results.

An Investor may elect to disclose to all Financial Institutions the identities of the Financial Institutions who submitted quotes or passed.

Transaction Fee Disclosure and Payment:
Financial Institutions awarded funds on GFOA YieldAdvantage will be charged a Transaction Fee. The Transaction Fee will be displayed to Financial Institutions on the Verification Page (before their quote is transmitted to an Investor) and on the Settlement Page (after they have received an award).

Transaction Fees will be paid via Automated Clearing House ("ACH") debit two business days following the trade date. Completion of the ACH Debit Authorization on the Settlement Page represents the Financial Institution’s authorization to debit their account. Under certain circumstances, alternative payment arrangements can be made with the permission of Grant Street Group.

Go to: Login

For assistance, call (412) 391-4050 or Email Auction Support. Powered by Grant Street Group