From the Collaborative Bond and Money Market Data Portal
Definition: A Certificate of Deposit is a short term negotiable debt instrument that promises to pay the bearer or registered owner an amount or a number of amounts in the future.
Historically CDs are issued by bank type borrowers, who have a license to take deposits, however these type of borrowers also issue Commercial Paper, Notes and MTNs, that can have the same characteristic as Certificate of Deposit. Traditionally the instrument is coupon bearing, not issued at discount and maturing at par (100%). However, some Certificate of Deposit programmes also allow the issuance of zero coupon issued at discount and floating rate instruments. Typically the instrument is short term, up to one year, but can be longer, for example in some domestic markets can easily be up to 30 years.
As permitted by applicable securities laws, this instrument entitling the owner to one or more future cash flows, can be bought and sold to anyone. This negotiability distinguishes the instrument from a bilateral loan, where in theory you cannot sell the future cash-flows without the permission of payer.
The term Certifcate of Deposit typically means that the instrument was issued under the legal terms and conditions of a Certifcate of Deposit or a combined Certifcate of Deposit and Commercial Paper Programme. In some markets, like for example the Sterling market, bank issuers can issue Certificates of Deposit without the existance of a programme.
Data Model: In the Collaborative Bond and Money Market Data Model, the Commercial Paper classification appears within the field Security Type which is part of the universe of Bond and Money Market Instruments.
Analysis: In capital market data analysis it is therefore recommendable to look beyond the segmentation of markets by mere security type and instead focus on the actual term and structure of the instrument. However, a distinction between CP, CD and Bills as instruments of the below 1 year money markets and Bonds, Notes and MTNs as instruments of the over 1 year bond markets seems fair.
For information on issues in the Certifcate of Deposit market, please use the Instrument search tool.
For information on the current size of the Certifcate of Deposit market, please use the data sheet tool.
For information on the composition of the Certifcate of Deposit market, please use the issuer search tool.
For information on active dealers in the Certifcate of Deposit market, please use the dealer search tool.
For information on active investors in the Certifcate of Deposit market, please use the fund search tool.
