Essentially, the exchange works by allowing a bank that is overexposed to a certain corporate sector to offer those loans on the DKB to another bank which has a much lower exposure. Such a deal is known in financial circles as a “true sale transaction”.
DKB, which is based in Munich, does not set prices for such transactions. Instead, these are agreed by the buyer and seller, as on any exchange. DKB said that, initially, trading of the loans would have to be done either in person or by telephone. From mid-2005, all transactions on DKB will be done electronically, the exchange said.
