Hot on the trail of U.S. and European markets, Canada is working on its e-platform for asset-backed and mortgaged-backed securities.
Focusing on the mortgage, consumer credit, securitization, and fixed income electronic marketplaces, Basis 100 Inc. will provide Internet-based business-to-business e-commerce solutions for institutional investors. The company was created to build an electronic commerce marketplace for the mortgage industry to really transact mortgages.
"This is not the consumer to business part, this is the back-end of the mortgage process," explained Gary Bartholomew, chairman and chief executive officer.
"The marketplace will link mortgage lenders to their service providers like appraisal networks, credit bureaus and their liquidity providers like Freddie Mac to their distribution channels. In this marketplace each participant will use our technology to define uniquely how they are going to automate their processes using our business rules and workflow engines."
The company is currently launching a fixed-income trading block that will include ABS. Basis 100 actually links these markets together.
"If a demand for ABS and MBS product occurs the securitizers and the primary issuers can actually watch the demand in real time and link into the origination channels, basically turning the knobs on the systems, saying These are the types of mortgages we need to buy today,'" explained Bartholomew.
Basis 100 will be providing the technology for the securitizations and offers it as a service to the principals in the industry.
In Canada, Basis 100 is currently processing about 20% of the mortgage market and is working to establish relationships in the U.S. Canada's mortgage market stands at $80 billion a year. Last year the company managed to captured $12 billion in the first four months.
"We're in the processing of defining our U.S partner strategy and how we are going to enter," said Bartholomew.
To help ease the transition, Basis 100 has been establishing strong relationships with companies such as Lehman Brothers and Freddie Mac.
In terms of mortgaged-backed securities, the company is handling investor allocation and pooling.
"We have not built the full automation in the securitization where we're looking into rating agencies yet, but that is ongoing," stated Bartholomew. "We expect fourth quarter this year to be trading ABS and MBS product. But this exchange of fixed-income will also be accessing the inventories of the large liquidity providers. We'll also be trading government corporate bonds and municipals."