SMARTS Market Integrity Platform

Commercial in Confidence

Outline
Introductions Quick summary about the Smarts Group Smarts Group Service Offerings Product demonstration SMARTS Online/Onsite/Managed

Commercial in Confidence

Company Overview

Company Objective: to improve market integrity by providing technology solutions and services to Exchanges, Regulators and Market Participants We are the world s leading supplier of worlds market surveillance and market abuse detection platforms

Commercial in Confidence

Smarts Group International

Leading global supplier of market integrity & insight solutions for market surveillance, control and abuse detection Single and focused mission to improve market integrity by providing technology & services to Exchanges, Regulators and Market Participants Experienced staff and unique real-time products here today Origins in research centre at University of Sydney in 1994 No other competitor comes close to Smarts Group in terms of market coverage & domain expertise

Commercial in Confidence

Smarts Group: Strategic values

6 key attributes of SMARTS that will enable your business objectives regarding market monitoring, supervision and regulation:
Proven software assets and services which significantly reduce project risk, cost and implementation timeframes Competitive time to market High performance architecture to meet the most demanding capacity and availability requirements Flexible customisation by users to address future needs A proven team with local and international market experience and expertise linking the customer into a global surveillance community A long-term commitment to Research and Development in the Market Integrity area

Commercial in Confidence

Exchange and Regulator clients

Regulators
UAE SCA

Russia

Hong Kong

Singapore

Nigeria

India Malaysia

Exchanges

Indonesia

Hong Kong

Singapore

Copenhagen

Iceland

Australia

Newcastle

Thailand

London

London Micex - Russia Oslo Stockholm Abu Dhabi Saudi Arabia New Zealand Helsinki Switzerland Tallinn
Dubai Financial Market

Tokyo

London

Riga

Vilnius

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007
6

Commercial in Confidence

SMARTS Clients
Moscow Inter-bank Currency Exchange Russian Central Bank Jakarta Stock Exchange Hong Kong Stock Exchange Securities and Futures Commission of Hong Kong Oslo Brs Singapore Exchange Monetary Authority of Singapore New Zealand Stock Exchange Stockholmsbrsen Copenhagen Exchange Helsinki Exchange Iceland Stock Exchange Nigerian Securities Commission Australian Stock Exchange Tokyo Commodity Exchange Swiss Exchange virt-x Stock Exchange of Thailand Securities and Exchange Board of India Abu Dhabi Securities Markets 1996 (bills, bonds ,equities) 1996 (bills, bonds ,equities) 1997 (equities) 1999 (equities, warrants) 1999 (equities) 1999 (equities, warrants, options) 2001 (equities, 2005 derivatives) 2001 (equities) 2002 (equities) 2002 (equities, warrants, options) 2002 (equities, warrants) 2002 (equities, warrants) 2004 (equities) 2004 (equities) 2004 (equities, options, futures) 2004 (commodities) 2005 (equities, warrants, options, bonds) 2005 (equities, warrants) 2006 (equities, bonds) 2006 (equities, bond, options, futures) 2006 (equities)

Malaysian Securities Commission Saudi Arabia Stock Exchange (Tadawul)

London Stock Exchange UAE Securities & Commodities Authorities (SCA) Dubai Financial Market Plus Markets Group 2 new clients (to be announced shortly)
Commercial in Confidence

2006 (equities) 2006 (equities, bonds)

2006 (equities) 2006 (equities) 2006 (equities) 2007 (equities) 2007 (equities)
7

Broker Footprint (50+ across 7 countries)

Commercial in Confidence

Product Evolution
Bonds , FX, Equities capabilities Migration from UNIX environment to Windows Clients Cross- market functionality enabled Derivatives handling capabilities proven Commodities & Futures capabilities proven * Reuters linkage for top markets coverage New Modules: ARC & Eagleeye Cross-market capabilities enhanced * Compliance Explorer tool for brokers delivered via web (CMSS)

Performance Capacity further boosted; proven at 30,000 transactions /second * R&D partner CMCRC awarded for Health Insurance Fraud Detection Tool (Dtecht) at CRC Awards 2005

Enhanced Functionality: Case Management Comprehensive Analysis * Compliance Explorer Tool awarded Top Innovation at CRC Awards 2006

1996 1997 1998 1999

2000 2001

2002 2003

2004

2005

2006 2007

RCB MICEX JSX

HKEX SFC OSE

SGX MAS

NZX OMX HEX Copenhagen NSC

ASX ASX-DT ICEX TOCOM SWX virt-x

BSE NASDAQ

RS Canada TOCOM

FSA SWX SSE

SGX-DT SEBI SET Abu Dhabi MSEC LSE Tadawul & CMA PLUS TLX SpA
9

Commercial in Confidence

SMARTS Functional Architecture

10

Commercial in Confidence

The Surveillance Process (a typical analysts workflow)

Gather Additional Information Analyse Alerts Manage Alerts Define and Create Benchmarks and Alerts Understand the Market ALDIT METRICS
Alice Language Facts Language
11

SPREAD REPLAY ALMAS

REPORT ARC INFORM FACTS EAGLEYE

Commercial in Confidence

Metrics - Purpose

Understanding the market identifying patterns of trading within days. identifying patterns of trading across days. studying the relationship between variables/metrics. Facilitating benchmark creation distinguish between normal and abnormal/aberrant behaviour.

12

Commercial in Confidence

Alice

4th Generation Programming Language Does not need to be compiled Made up of regular English language terms typically used in the finance industry such as trade, volume, value, etc.. Designed specifically for the manipulation of financial data Automates many common finance tasks. E.g. Option valuation, CAPM Financial data types E.g. Price, Volume, Security It is impossible to crash the system from within ALICE.
13

Commercial in Confidence

SMARTS Alerts

Customised and calibrated for the market Capable of handling very high transaction rates Logic is separated from the core software Extensive experience in designing and implementing all surveillance scenarios across a large variety of market structures

14

Commercial in Confidence

ALMAS The Control Room

Provide analysts with a tool for:

Identifying and managing the alerts generated Preventing work duplication and sharing analysis Querying security or suspect historys Tracking abnormal behaviour

Provide management with a tool for:

Performance evaluation Work load management

15

Commercial in Confidence

SPREAD

Visualise trading activity in time-series Instantly gives the analyst all the information needed Allows quick decisions on how to proceed

16

Commercial in Confidence

REPLAY
Visualise trading at one point in time Replay a market transaction by transaction at any desirable speed.

Assists: analysts in understanding the sequence of events culminating in an alert. teachers in explaining the dynamics of a financial market. researchers in interrogating data at a much deeper level.

17

Commercial in Confidence

Getting More Information

ARC
Customised Intelligent Alerts Uses the ALICE language

REPORT
Form based database query tool

INFORM
Information announcements Audit events

18

Commercial in Confidence

Solution Offerings
SMARTSOnsite SMARTS Managed Service SMARTSOnline

Client-specific location Daily operations managed & monitored by clients IT SMARTS provides support 2/3rd line

Hosted solution in data centre Managed service delivery Daily operations managed & monitored by Smarts SMARTS provides all levels of support , including outsourced services Maintenance of gateway/Alice & Core software by Smarts Primarily used by new or emerging exchange/regulator; business looking to outsource IT License fee is annualised
19

Maintenance of gateway/Alice is variable Maintenance of Core software by SMARTS Primarily used by tier 1 exchange/regulator License fee is paid upfront across term of contract

Commercial in Confidence