HomeMy WebLinkAboutLease Renewal Bloomberg Services - Electronic Securities Trading Terminal_T --D
CITY OF PALM DESERT
OFFICE OF THE CITY TREASURER
STAFF REPORT
REQUEST: Authorization to renew a lease with Bloomberg Services in 2005 for
an electronic securities trading terminal.
APPLICANT: N/A
CASE NOS. N/A
DATE: 28 April 2005
CONTENTS: N/A
Recommendation:
By minute motion: That the City Council authorize the City Treasurer to renew a
lease with Bloomberg Services in 2005 for an electronic
securities trading terminal.
Background:
The City of Palm Desert ("City") Finance Department has leased an electronic securities
trading terminal from Bloomberg Services for the past five years. The City Treasurer's
Office uses this terminal to execute trade transactions, and to conduct securities
research for the purposes of evaluating risk and pricing municipal bonds. Public
agencies with investment portfolios in excess of $100 million typically use Bloomberg
Services. The City's aggregate investment portfolio is currently $305 million (par value).
The City and the Palm Desert Redevelopment Agency ("RDA") have jointly split the
annual cost of Bloomberg Services since they both benefit from it. With the annual cost
($20,400) approaching the $25,000 threshold, City Council approval would be
appropriate for contract renewal.
Staff Report
Authorization for Bloomberg Services
28 April 2005
Page 2 of 2
The Bloomberg trading terminal affords the City and the RDA the following advantages:
• Pricing Municipal Bonds. The City uses Bloomberg to do research for the RDA on
how other California municipalities are pricing their bond offerings, so that the RDA
can competitively price its bond offerings.
• Pricing Commercial Paper. Pursuant to GASB 31, the City is required to estimate
the month -end market value of each security that it holds. The City does this by
downloading end -of -month market prices from Interactive Data Services ("IDS").
IDS, however, does not provide market prices for commercial paper. Staff uses
Bloomberg to impute a market price for the commercial paper that the City and the
RDA hold.
• Authorized Corporate Issuer Lists. The City uses Bloomberg to access the latest
news and credit ratings on corporations that it wishes to qualify for or remove from
the City's authorized buy list.
• Trade Tickets. The City uses Bloomberg to buy and sell securities electronically.
This is the most efficient method of trade execution, and minimizes errors.
• On -Line Access to Broker Inventories. The City uses Bloomberg to access the
securities inventories of its brokers in order to see what is available, as opposed to
seeing only what the brokers choose to show.
In summary, without Bloomberg, the City and the RDA would have difficulty gathering
large amounts of market information on securities pricing. The City would also assume
more risk in its securities purchases since credit information would not be as readily
available.
Submitted By:
aa,-(
aul S. Gibson, C.C.M.T., City Treasurer
Approved By:
Carlos L. Ort a, City Manager