Financial Markets Solutions: Addressing Challenges within the Evolving Marketplace

© 2010 IBM Corporation

Financial Markets:Front Office

Philip Enness – Global Solutions Manager, Financial Markets August 2010

© 2010 IBM Corporation1 – IBV; Assets are deposits, equity and fixed income

Significant growth in global assets is expected

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.

The value of global assets will quadruple reaching $1,264 trillion by 2025.1

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Building a smarter planet

$1,264


Global Financial System is Highly Interconnected

Massively interconnected

Evolving organically

Intersection points increased 14x in 20 years

Moves more than $74T around the world each day

25 billion market data messages travel across global trading systems every day

1 – Rethinking the Financial Network, Andrew Haldane, Executive Director, Financial Stability, Bank of England

Policy makers

Regulators Supervisors

Financialinstitutions

Compliance

Laws andrules

Surveillance and monitoring

Standards

SoundnessStability

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http://www.bankofengland.co.uk/publications/speeches/2009/speech386.pdf


Explosive Growth in Trade & Volumes Continues Focus on Client centricity and Risk are High Priorities

Trade and volume growth have grown exponentially in the last few years and are forecast to continue to grow at ever faster rates, once economies return to health.

Regulatory directives and risk mitigation policies are driving IT spend

Source: Aite Group, survey of 30 Global capital markets CIOs, Oct & Nov 2009Source: NYSE Euronext, Aite Group estimates, April 2009

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Electronic and Algorithmic Trading Trends

Use of Electronic Trading is becoming predominant across all asset classes

Use of Algorithmic Trading is most common in the U.S., but is growing in all regions and across all asset classes

Global Adoption of Algorithmic Trading

United States Europe Asia

Algorithmic Trading Adoption by Asset Class

Equities Futures FX Options Fixed Income

Source:: Aite Group, June 20105



Winners will focus on three key imperatives

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Develop enterprise wide capabilities to enable informed judgment, client- centricity and profitable growth

Achieve compliance objectives while mitigating operational risk, fighting crime and optimizing financial returns

Drive a simplified and streamlined agile enterprise that balances growth, efficiency and business resiliency

Integrate risk management

Develop new intelligence

Reinvent the business model


Required functionality and capabilities

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Automation

Visibility

Flexibility

Scalability


Automation

Unified integration frameworkQualitative context based decision engineStandardization of inputs and human

intervention for dynamic algorithm creation Inherent cross asset and cross market

support

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Automation

Visibility

Flexibility

Scalability


Visibility

Strategic guidance control methodologyEmbedded proactive safety

measures Full transparency of actions and

decisions

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Automation

Visibility

Flexibility

Scalability


Flexibility

Short implementation timeCaters by design for continuously

changing needsEasily incorporate existing functionalityUnlimited extendibility

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Automation

Visibility

Flexibility

Scalability


Scalability

Ultra fast frameworkUnmatched performance by

parallelization and prioritizationDynamic by natureEmbedded self optimizing and

healing characteristics

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Automation

Visibility

Flexibility

Scalability


IBM’s Financial Markets Framework

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IBM’sFinancial Markets

Framework

Automation

Flexibility

Visibility

Scalability


Provide an agnostic framework to support the trading life cycleEnable integration with existing business

processes through a flexible infrastructure Innovate to meet the growing market

data and trade execution needsPartner with Customers to enhance

the Financial Markets FrameworkDevelop an EcosystemSupport Open Standards initiatives

IBM’s approach to the Financial Markets Framework

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Automation

Visibility

Flexibility

Scalability



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

Exchanges

Next-Generation Trading Infrastructure

Market Surveillance and Trade Monitoring

Settlement Risk Management

Buy Side and Sell Side

Market Data Solution (FO)

Algorithmic Trading Platform (FO)

Securities Processing (M/BO)

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Financial Markets Solution




TCP-IP / EthernetTransport - MWLLM

InfoSphere Streams Data Fabric

Processing Element Container





PEPE PEPE

Sink

Source

SourcePEPE

PEPE

PEPE PEPE

Sink

PEPE

Sink

InfoSphere Streams

External Gateways

InternalGateways

Market Visualisation

Market DataAnalytics

Market History & Order Book

Informi x Business Events

Monitoring & Reporting

HedgingRiskPricing Trade Execution

QuotingOther Apps.15



Deploying IBM Financial Markets Solutions

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Financial Markets Solutions: Addressing Challenges within the Evolving Marketplace

Economy & Finance

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