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Philip Enness – Global Solutions Manager, Financial Markets

August 2010

Financial Markets:
Front Office

© 2010 IBM Corporation


Building a smarter planet

Significant growth in global assets is expected

The value of global assets will quadruple


$1,264 reaching $1,264 trillion by 2025.1

Beyond the recent crisis,


there is an unprecedented
opportunity for the
financial services industry
to intermediate and
manage the enormous
global growth of capital
and creation of wealth.

2 1 – IBV; Assets are deposits, equity and fixed income © 2010 IBM Corporation
Building a smarter planet

Global Financial System is Highly Interconnected

 Massively interconnected
Financial
 Evolving organically institutions

 Intersection points increased Compliance Surveillance


and monitoring
14x in 20 years Soundness
Regulators Stability Supervisors
 Moves more than $74T
around the world each day Laws and
rules
Standards

 25 billion market data Policy makers


messages travel across
global trading systems
every day

1 – Rethinking the Financial Network, Andrew Haldane, Executive Director, Financial Stability, Bank of England
3 © 2010 IBM Corporation
Building a smarter planet

Explosive Growth in Trade & Volumes Continues


Focus on Client centricity and Risk are High Priorities
 Trade and volume growth  Regulatory directives and
have grown exponentially in risk mitigation policies are
the last few years and are driving IT spend
forecast to continue to grow
at ever faster rates, once
economies return to health.

Source: Aite Group, survey of 30 Global


Source: NYSE Euronext, Aite Group estimates, April 2009 capital markets CIOs, Oct & Nov 2009
4 © 2010 IBM Corporation
Building a smarter planet

Electronic and Algorithmic Trading Trends

 Use of Electronic Trading  Use of Algorithmic Trading


is becoming predominant is most common in the U.S.,
across all asset classes but is growing in all regions
and across all asset classes

Global Adoption of Algorithmic Algorithmic Trading Adoption by Asset Class


Trading

United States Europe Asia


Equities Futures FX Options Fixed Income

5 Source:: Aite Group, June 2010 © 2010 IBM Corporation


Building a smarter planet

Winners will focus on three key imperatives

Reinvent the Develop new Integrate risk


business model intelligence management

Drive a simplified Develop enterprise Achieve compliance


and streamlined wide capabilities to objectives while
agile enterprise enable informed mitigating
that balances judgment, client- operational risk,
growth, efficiency centricity and fighting crime and
and business profitable growth optimizing financial
resiliency returns

6 © 2010 IBM Corporation


Building a smarter planet

Required functionality and capabilities

Automation

Visibility

Flexibility

Scalability

7 © 2010 IBM Corporation


Building a smarter planet

Automation
 Unified integration framework
 Qualitative context based decision engine Automation
 Standardization of inputs and human
intervention for dynamic algorithm creation
 Inherent cross asset and cross market Visibility
support
Flexibility

Scalability

8 © 2010 IBM Corporation


Building a smarter planet

Visibility
 Strategic guidance control
methodology
Automation
 Embedded proactive safety
measures
 Full transparency of actions and Visibility
decisions

Flexibility

Scalability

9 © 2010 IBM Corporation


Building a smarter planet

Flexibility
 Short implementation time
 Caters by design for continuously Automation
changing needs
 Easily incorporate existing functionality
 Unlimited extendibility Visibility

Flexibility

Scalability

10 © 2010 IBM Corporation


Building a smarter planet

Scalability
 Ultra fast framework
 Unmatched performance by Automation
parallelization and prioritization
 Dynamic by nature
 Embedded self optimizing and Visibility
healing characteristics
Flexibility

Scalability

11 © 2010 IBM Corporation


Building a smarter planet

IBM’s Financial Markets Framework

Automation Visibility

IBM’s
Financial
Markets
Framework

Scalability Flexibility

12 © 2010 IBM Corporation


Building a smarter planet

IBM’s approach to the Financial Markets


Framework
 Provide an agnostic framework to
support the trading life cycle Automation
 Enable integration with existing business
processes through a flexible infrastructure
Visibility
 Innovate to meet the growing market
data and trade execution needs
 Partner with Customers to enhance Flexibility
the Financial Markets Framework
 Develop an Ecosystem
 Support Open Standards initiatives Scalability

13 © 2010 IBM Corporation


Building a smarter planet

IBM’s Financial Markets Framework


Financial Markets Solution
Buy Side and Sell Side Exchanges
 Market Data Solution (FO)  Next-Generation Trading Infrastructure
 Algorithmic Trading Platform (FO)  Market Surveillance and Trade Monitoring
 Securities Processing (M/BO)  Settlement Risk Management

 Market Data Solution


High performance market data solution with an attractive cost structure
 Algorithmic Trading Platform
Scalable solution for automated trading
 Next Generation Trading Infrastructure
Ultra High Performance transaction infrastructure with superior reliability
 Market Surveillance and Trade Monitoring
High performance surveillance and monitoring system to meet changing
risk management and compliance needs
 Settlement Risk Management
Measure and monitor risk associated with unsettled trades
 Securities Processing
Settlement and Clearing solution with support for Swift and ISO 20022
14 © 2010 IBM Corporation
Building a smarter planet

IBM’s Financial Markets Framework

Market Visualisation

External
Gateways

Internal
Gateways InfoSphere Streams
PE
Sink

Market Data Source


PE PE PE
Sink

Analytics PE Sink
Source PE

PE

Market
History &
Order Book Processing Processing Processing Processing Processing
Element Element Element Element Element
Container Container Container Container Container
InfoSphere Streams Data Fabric
TCP-IP
Transport - / Ethernet
MWLLM
Informi
x Business Events
Monitoring & Reporting

Other Apps. Pricing Quoting Risk Trade © 2009Hedging


IBM Corporation
15 Execution

© 2010 IBM Corporation


Building a smarter planet

Deploying IBM Financial Markets Solutions

16 © 2010 IBM Corporation