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Duration: 11:47

Level: Beginner

In this lesson you will learn how to access the IB Global Bond Scanner and how to filter for bonds within a universe in order to locate fixed income products to match user-driven criteria. The material covered in this lesson can be applied to corporate bonds, US treasuries, US CDs, municipal bonds, agency bonds and non-US sovereigns.

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Study Notes:

Welcome to Traders’ Academy online courses. This is lesson three of Bonds and Fixed Income Trading
for TWS. This lesson will introduce the Global Bond Scanner and help you configure to restrict the result
to bonds of certain coupon, maturity or yield constraints.

To access the scanner, click the blue New Window button to the upper left of the Mosaic interface.
Under the Technical Analytics category, locate and click the Bond Scanner. This will open the scanner in
a separate window.

In the upper right corner of the scanner you will see the usual controls to minimize, maximize and close
the window, and you will see a chain link icon should you want to color-link to any other pages in
Mosaic. Finally, to the right of the pushpin icon, that will keep the window on top of other pages, you
will see a drop down menu linking to the User Guide. Click this to view general information on market
scanners in TWS.

In the center of the window the Global Bond Scanner lists all six bond types that can be used as your
universe to start filtering. This list is replicated to the upper left of the Bond Scanner in the Instrument
selection field. Click on Corporate Bonds. The scanner now displays several input panels containing
multiple filters. To the top left, the scanner is named according to the instrument type as well as how
the results will be displayed. Before we start filtering you can see that this shows the ranking will be by
Maturity Far to Near.

You may change the return results by selecting from the Sort by menu to its right. You can change to
Maturity Near-to-Far or choose from Coupon, Credit Rating or CUSIP. There are several financial ratios if
you want to use these to drive the results. The italicized choices indicate that I am missing data from
some exchange, which means my ranking might be incomplete.

To the right of this menu is an Auto Refresh field, which when checked will scan intermittently when you
scan is complete. Without this box checked, your results will not update again. Further to the right is a
Max Results dropdown selector from which you can limit the number of bonds that will be displayed
during the scanning process. You can leave this set to Auto or narrow the results to a specific few. There
is an icon to Save your scan when you create something you want to use frequently and a pushpin to
keep your Bond Scanner window on top of other open applications.

Market Data – Let’s start with a simple example of using the Bond Scanner to filter for bonds from a
single company. I will use IBM to begin with, and I will type the ticker into the Stock Symbol field.
Without using any other filter I will check the Search button at the top of the window. The Scan Results
appear in the main window and if you look above the first column (titled Bond) you can view the
number of results that the search returned. This display is configurable. Let me add a column to display
the bond maturity date with a right-click on the column header and choosing Insert Column and locate
Maturity from Financial Instrument Description. With this column added, you can easily see that my
universe of IBM bonds is indeed displayed by farthest to nearest maturity date.

Click the Edit button to the right of the Search button to reveal the set of filters again. Above the Stock
Symbol input field is a checkbox to Include bonds without quotes. Let’s check this box and when done
click the Search button once again. The number of bonds retrieved may have increased since some
issues may not have a live quote due to liquidity reasons.

Next to IBM there are two buttons with three white dots. The left of these will reset the input field. The
right of these will create an additional input field. I’ll click on the right button and in the resulting field
enter the ticker V for company Visa Inc. and then hit Search. The result now includes all outstanding
issues for both IBM and Visa. The total number of bonds retrieved increased and once again the list is
displayed by maturity from far to near.

Click Edit again. Let’s say we now want to restrict the results to a specific maturity range from 2028-
2035. I can do this by entering these dates in the Maturity Date input fields in the center of the filtering
area, using 01/2028 as the minimum and 12/2035 as the max. Note that I have to specify the month at
either date or else the filter will omit some data. When done, click Search to refresh with the new filter
in place and see how many bonds fit the criteria.

You can see how the results shrink when I add more useful filters. Remember to use Edit and Search
when you want to reset filters or add more. You can add additional ticker symbols if you wish, or
remove them altogether to scan the entire available universe. Let me remove the IBM and V symbols
and instead I will enter a minimum coupon rate of 4% and a maximum coupon rate of 7%. And I will
restrain this to those same maturity dates of January 2028 and December 2035. To narrow the universe,
click on the Search button.

This time my search retrieved many, many issues. Remember that you may change the resulting display
perhaps to yield – low to high or yield high to low using the Sort by dropdown menu. With so many
bonds returned, I may now want to restrict the result further by using another filter such as credit
rating. So let’s click the Edit button and locate the input field for Moody’s or S&P Ratings Agencies. I will
choose Moody’s in this example and click on the dropdown menu and select a minimum reading. And I’ll
do the same for the maximum rating, choosing the highest level in this case. When done click Search.
The number of retrieved items has decreased enormously, helping me decide which bonds I should take
a deeper look at. You could further lift the minimum rating requirement and continue restricting the
universe if you choose.

By now you should have an excellent idea of how these filters work. Not all of them need explanation
and you need to know where to either enter stock symbols or not enter them at all. You can filter
according to the size of a company, how much outstanding debt it has on its books or by several book
value ratios.

In the series of filters to the right you can also include or exclude bonds with specific characteristics,
such as those that have previously defaulted, are trading flat, are callable or exchange listed.
The final column allows users to determine which economic sector the Bond Scanner adopts or drops
from its search. For example, you may only want to hunt for bonds in the Energy sector. Or if you want
to exclude the Utility sector from your bond search check the relevant include or exclude box before
running your Search.

So far I have explained to you how to use any of the available filters to narrow your bond search for
corporates. Using the scanner allows you to search by a single company or a narrow list. You can search
within a sector or you can eliminate a sector. You may also look for specific maturity dates or seek bonds
of specific quality from high risk to low risk and you can display the results in high to low fashion by
maturity or by yield. Finally, note that as you add and remove various filters the Scanner Name lists the
conditions you have used. To reset the Scanner look all the way to the right of the page to see the red
icon with white bar. Click this icon to wipe out prior filters.

Let’s look at how the filters differ when we look at other types of bonds.

US CDs – For US certificates of deposit, or CDs for short, the simplified Bond Scanning filters reflect the
nature of this instrument. The easiest approach is to perhaps create a list of available CDs so that you
can see the type of company that issues them. To do this I will enter min and max maturity dates in the
input fields, remembering again to use the format month-forward slash-year. When done I will hit
search and you can see thousands of CDs have been retrieved in the scan results. You can see the
various companies that issue the instrument and you could resort the results by highest or lowest yield.
If you want to check out all CDs from a single entity, enter the name in the issuer input field above and
create a new search. Don’t forget that I currently have a maturity range as part of my search.
Type Ally to reduce results from 3500 to 175.

US Agency Bonds – The Agency Bond Scanner is very similar to that for CDs just described. However,
Interactive Brokers currently supports only a small selection of agency bonds.

US Treasuries – Like CDS, the treasury bond scanner is very straightforward. Note that to the right of the
page, the T-bill box seems to be checked by default. Ensure that when you scan for any bonds to ensure
that you have checked the appropriate notes and bonds checkbox. Once again, if I enter a min and max
maturity date range, check notes and bonds and then click Search, you will see the array of instruments
to research.

US Municipal Bonds – On the muni bond scanner there are additional filters that often define muni
bond issues. You will see that you can include or exclude General Obligation bonds, Revenue bonds or
those Exempt from Federal Tax for example. In order to locate bonds available to you as a resident of a
specific state, use the dropdown menu to select a state. The default universe is for ALL states and so you
may want to select one from the list. I will choose Connecticut and without refining a maturity date
range, click Search. You will see more than 1,000 issues returned. Click on any column header to sort the
page or use the Edit button to return to the Bond Scanner for additional filtering.

Non-US Sovereign Bonds – You may be searching for government debt issued by other countries. The
best shortcuts using the available filters are the Currency input field and the Issuer Country listing. If I
select Austria as the Issuer country as an example and click on the Search button, you can see 21 items
are retrieved by the search. Next, I’d like to know how many of these issues are made in euro currency.
From the currency selector choose EUR for euros and then Search. You will see that the same number of
bonds is returned, meaning that none is denominated in any other currency.

If you are not seeing Market Data, it could be that either the local market is closed or that you do not
currently have market data permission for the exchange where those bonds trade.

Once I have selected a currency, I lose the ability, when making changes, to display the default ALL
currencies selection. In other words I now have to choose a currency. To remedy this and return to the
default display of ALL bonds, simply use the Clear icon in the top right corner – the red and white button
– and you will see that the item ANY is again available in the Currency listing.

This ends lesson three of Bonds and Fixed Income Trading for TWS. You will now know where to locate
the Global Bond Scanner in TWS. And you will now be able to navigate between the six available
scanners for different instrument types. We also taught you several useful shortcuts that enable you to
locate bonds by a single or multiple issuer. We showed you how to refine the scan according to a
maturity range and how to find bonds within an economic sector.

Disclosure: Interactive Brokers

The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

Supporting documentation for any claims and statistical information will be provided upon request.

Any stock, options or futures symbols displayed are for illustrative purposes only and are not intended to portray recommendations.

Disclosure: Stock Symbols

Any stock, options or futures symbols displayed are for illustrative purposes only and are not intended to portray recommendations.

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