Philip Enness – Global Solutions Manager, Financial Markets

August 2010

Financial Markets:
Front Office

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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
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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
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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
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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

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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

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Required functionality and capabilities

Automation

Visibility

Flexibility

Scalability

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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

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

Flexibility

Scalability

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

Flexibility

Scalability

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

Scalability

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IBM’s Financial Markets Framework

Automation Visibility

IBM’s
Financial
Markets
Framework

Scalability Flexibility

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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

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IBM’s Financial Markets Framework

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

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Deploying IBM Financial Markets Solutions

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