Data Management Use Case
Apsys III Integration for Privatbank IHAG Christian Trnka ● Head of Consulting, AIM Software
The data management platform of AIM Software, the GAIN DataDesktop, was key for the Privatbank IHAG Zurich to migrate their existing security database to their new banking application APSYS III while additionally enriching the security master file with data of the Telekurs VDF. In July 2002, the Swiss Privatbank IHAG Zurich (IHAG) decided to implement the GAIN DataDesktop – the modular data management platform of AIM Software plc – with the goal of increasing the quality of its back office security management.
Bloomberg Data License
Timely, tested and true data page 7
sd&m Market Data Study
Processing Security Data: What lies ahead? page 10
Inside Asia “We chose the GAIN DataDesktop with the purpose to use corporate actions reports and pricing information in an existing environment without changing the software in use. Furthermore, in the future we will be able to move to an automated environment including the opening of new securities as well as to undertake further steps towards automated processing of security data.” states Daniel Albisser from IHAG. continued on page 3
www.aim-sw.com 104017_Yield0104_123.idd 1
Third Party Clearing Asia in Three Easy Lessons page13
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Content yield | Issue 2
“What was the feedback?” I am frequently being asked since Yield was published the first time. The feedback on the first issue of Yield was very encouraging. The circulation so far reached 1,500 copies, quite significant for a first time publication in this industry. We had to do a reprint of issue 1 to cope with the high demand from our partners and within AIM internally.
Data Management Use Case Apsys III Integration for Privatbank IHAG page 1
Editorial page 2
GAIN DataDesktop Release 3.5 Extending Data Management to the next level page 4
Bloomberg Data License Timely, tested and true data page 7
sd&m Market Data Study Processing Security Data: What lies ahead? page 10
Inside Asia Third Party Clearing Asia in Three Easy Lessons
It is certainly easy to do a one shot appealing piece of communication but the question is whether you can keep it up. We got very positive comments from people in the industry about the quality of the newsletter and would already have material to fill the next year. Nevertheless Yield will remain to be a balanced magazine that will not cover only one type of articles sacrificing another point of view. In this issue you will learn about a case study where APSYS III has been enriched with an automated interface for reference data management (p1). In addition we are happy to provide you with a summary of a satisfaction survey within banks about their current data management infrastructure, elaborated by our partner sd&m. In this issue you will furthermore read about product enhancements in the GAIN DataDesktop 3.5 (p4), will learn about data offerings of Bloomberg (p7) and ThirdParty Clearing efforts in Asia (p13) and can welcome some new partners to the AIM Network (p15) together with us. We are looking forward to your feedback again,
Martin Buchberger, Head of Marketing and Sales, AIM Software page 13
The AIM network page 15
yield suggests the following events …
www.aim-sw.com page 16
Founded in 1998, the software division of AIM Software specializes in data management and data analysis solutions for financial markets. Supported by the company’s experience in the areas of data and risk management, corporate actions processing and financial instrument pricing, the creation of user-oriented software and services is the cornerstone of AIM’s philosophy. AIM operates on an international scope and services the major financial centers together with its local service and solution partners.
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… continued from page 1 Two reasons for the decision to use the GAIN DataDesktop stood out: on the one hand IHAG intended to support the migration from their legacy banking system TOP Banking to their new banking package APSYS III of Sungard. On the other hand, because of the displacement of the old Telekurs data feed RBA, IHAG needed a bridge to the new Telekurs product VDF. Enhancement of the existing security database In the course of the migration, IHAG intended to increase the data quality by enhancing its security database with VDF information. The purpose of the GAIN DataDesktop was to download, convert and manage the VDF data which is delivered in EDIFACT format by Telekurs. The requested securities data was limited to those instruments that are active in the portfolio of IHAG. After the download, which is fully controlled by the GAIN DataDesktop, the security data is being processed preparing it for transfer into an Oracle database. ”A very strong advantage of the GAIN DataDesktop is the transparency of the data feed integration as well as of all processing steps. The desired fields can be analyzed and dealt with like in a relational database,“ states Mr. Albisser.
“A strong factor in our decision to award AIM Software with the project were the already existing interface of the GAIN DataDesktop to the APSYS III banking application.” Daniel Albisser, IHAG Zurich
After specifying the data, that needed to be integrated, a mapping between VDF codes and APSYS III codes was implemented. For this transcription around 200 VDF fields from the areas of basic data and corporate actions as well as of trading data were used. The 20 mapping tables needed for this can be easily administered with the GAIN DataDesktop. By consolidating the existing security data from the legacy system with the up-to-date VDF information, input errors could be detected and the data quality was significantly increased. In spite of this modern data management solution, some special fields remained to be processed in a non-automated way. After the completed data consolidation the improved data was imported into APSYS III. Improvement of the daily security management For the day-to-day security processing the timely delivery of the end-of-day prices as well as of changes to basic data and corporate actions are of paramount importance. “The GAIN DataDesktop achieved a smooth transition from the old Telekurs format RBA to the new VDF without changing the legacy system environment and with a minimum migration effort.
Contact ● Privatbank IHAG Zurich www.pbihag.ch The Privatbank IHAG Zurich is a Swiss private bank, established in 1949, and offers services to their clients in Private Banking, credit services and trading. Contact ● AIM Software Mr. Christian Trnka Head of Consulting Gonzagagasse 16 1010 Vienna Tel: +43 1 512 46 52 firstname.lastname@example.org
continued on page 4
Enrichment of APSYS III with VDF Data yield
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… continued from page 3
A strong factor in our decision to award AIM Software with the project was the already existing interfacing experience of the GAIN DataDesktop with the APSYS III banking application”, emphasizes Mr. Daniel Albisser. Currently the GAIN DataDesktop provides VDF end-ofday valuation prices, fiscal prices and end-of-year prices for IHAG. Moreover, back office employees receive daily reports for security events, such as dividends or splits. Those reports are both being printed and archived electronically so that the history of events can always be viewed on-screen. The daily processing of all relevant events is thereby ensured. As an add-on it is planned to use further features of the GAIN DataDesktop to implement a more extensive workflow management using routing and filtering options for messages. Automatic opening of new securities As a next phase, IHAG plans the automatic opening of new securities. APSYS III, like any other banking application, requires several basic data elements in order to set up new securities. This process is normally executed manually which consumes a lot of time. By using the “Adhoc” module of the GAIN DataDesktop, a request for VDF data for one or more securities can be executed instantaneously. Following that, the requested information is being imported into APSYS III directly or after a short check (of course, an analysis of the needed VDF fields is required before). Furthermore, an additional benefit is an increase in data quality as manual entry errors are avoided. APSYS community A part of AIM´s client portfolio consists of 9 APSYS clients including IHAG as well as Wegelin & Cie which have both APSYS and the GAIN DataDesktop in use. For all those APSYS banks, the automatic opening of new securities is of high interest to speed up their trading process. “We perceive AIM Software as a flexible company which meets the current and future back office needs and which is therefore a long-term partner in providing data management solutions for our banking IT environment”, concludes Mr. Albisser.
Gain Data Desktop Release 3.5
Extending Data Christian Trnka ● Head of Consulting, AIM Software
The new release of the flagship data management middleware of AIM Software introduces multi data feed support and extensive workflow management features. With facilities for security master file management and exception handling the GAIN DataDesktop eases day-to-day data management and brings down overall costs.
The previous issue of our newsletter mentioned the new features of the GAIN DataDesktop 3.5 – the data management middleware of AIM Software – very briefly. This article gives you a more detailed overview of the new and extensive possibilities within the GAIN DataDesktop 3.5 which brings you up to the next level of data management. More data feeds One of the specialties of AIM Software is the comprehensive integration of data feeds. Therefore it is almost “natural” that this new release offers additional connectors for further data feeds: ● SWIFT (ISO 15022): GAIN can process the new delivery format ISO 15022. In addition to the previous version of GAIN, where only the SWIFT messages 564–568 (Corporate Actions) were taken into account, now all fields of SWIFT ISO 15022 can be processed. A useful application could be the combination of SWIFT messages with other data feed data. ● WM (Wertpapiermitteilungen): The backoffice data feed of the German provider WM. ● XML: Any XML feed can be integrated, only the corresponding XML scheme is needed. ● Customer data feed: Own data feeds can be defined and integrated. All functionalities of the GAIN DataDesktop can be applied then to this data. Reconciliation, Data Cleansing and Scrubbing Since the previous version, the GAIN DataDesktop is based on a multi-data-feed architecture which means
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Management to the next level
(continued from yield Issue 1)
that all types of providers can be matched not only for price comparison, but also for reference data and corporate actions. The new release adds comprehensive possibilities for reconciling and cleansing of data (Data Scrubbing). From now on it is possible to compare prices from various data suppliers (all comparison rules are being defined with the “rule editor” of the software). One of the essential features for data scrubbing is to appoint a preferred supplier in case of certain deviations. A hierarchical matrix can be defined, ranking the suppliers by preference (combinations of more criteria are possible to e.g. prioritize stock exchanges, countries, currencies etc.). The software (GAIN DataDesktop) will check the constraints for each supplier and if they are infringed will move on to the next supplier. AIM will provide the necessary scripts as part of the project. Once set up those scripts can be easily maintained by the client himself. GAIN enables to execute filters defined by the user. For example, a user can have the system disregard certain values or prices if these are off a given margin enabling the system to return reports accordingly. Exception rules can be based on the data of more than one feed, enabling conditional scrubbing, i.e. executing workflows only if specific rules are being violated. Furthermore, in the GAIN DataDesktop it is possible to correct data fields manually, though to guarantee data consistence this can be done in “overlay” tables that can be merged with the feed data again. In this way the original data will not be lost and the overlay can be switched on and off on demand. There is basically no limit of rules, since together with available scripting languages and stored procedure calls, if necessary, almost any logic can be implemented.
Intuitive Scrubbing and Exception Handling for multiple feeds Multiple Mappings A mapping is needed if, for instance, a data source with a given coding should be transformed into codes used within the clients´ applications. With the new advanced mapping conventional mappings can now be extended to a multiple mapping scheme, mapping for example continued on page 6
GAIN DataDesktop General Information y Data management middleware Areas of application y Supports 15+ different data feed products y Out of the box workflow management and reporting y Fully graphical definition of data flows and reports y Security master file (SMF) management y Cleansing, exception handling and reconciliation of data y Filter criteria and date management for corporate events
Further features y Reports and requests can be combined with internal data and archived y Clients for the on-screen display of messages are available y Calculation methods for deriving data y Easy mapping of codes and structure y Multilingual user interface
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Supported data feeds
Supported export formats
y Bloomberg Data License y Per Security + Backoffice y Capco y FIX y Financial Times Interactive Data y FTS ExShare + ExBond y SIRS (MDDL) y ComStock y Reuters y RMDS y SWIFT (ISO 15022) y Telekurs y Valor Data Feed (VDF) y FIMS y Wertpapiermitteilungen y VF1 y FOF y Wind y XML, MDDL, VRXML y Client specific formats y DB y TXT y XML
Text formats y XML, RBA, ASCII, CSV, HTML, Excel, text drivers, etc.
ground of each processing and therefore analyses of undesired results can be done more effectively.
DBMS formats y DB2, Oracle, MS-SQL, InterBase, Informix, Sybase, Access, etc. y In addition: ODBC databases
Almost any logging information can be filtered and exported or be associated with workflows to inform the responsible employee. The GAIN DataDesktop produces clearly categorized audit trails that enable the administrator to filter out specific messages and to connect events to these occasions. On demand all mapping tasks are stored separately in log files and log tables (recording all data changes within transactional and static data).
Supplied systems y AMIS, APSYS, AVALOQ, GLOBUS, OLYMPIC, SAP etc. y Supply of proprietary systems Supported GAIN modules y Risk management y Instrument pricing y Benchmarking + Limit analyses Supported scripting languages y SQL as standard y Optional: VBScript, JScript, Perl, Python, Delphi Script
… continued from page 5 from A to B and then to C (combination of security types, instrument group and domicile to cover specific categories needed in the target applications). Conditional workflow management supports exception handling With the workflow editor, conditional workflows can be defined graphically to implement decision trees for handling options in the data and to control processes and jobs within the system. Rules can be defined down to the field level (e.g. bond data can be routed to another department than equity data). The system can evaluate decision trees (if/then/ else statements) that enable conditional workflow management. Additional commands for an extensive exception handling are available again. In addition triggers and alarms can be set for specific conditions in the data triggering workflows and notifying users about such an occurrence (e.g. by e-Mail). GAIN DataDesktop goes ORACLE GAIN DataDesktop now also runs natively with ORACLE and therefore all known ORACLE functionalities can be applied. Another advantage is the potential usage of PL/ SQL commands in GAIN DataDesktop. Extended logging In general, the logging module records all processing steps of the GAIN DataDesktop. This results in a more precise documentation of what happens in the back-
Dynamic import of external databases External database tables can be dragged and dropped into the query builder, the central user interface for creating data queries, and be kept up-to-date by script. This dynamic import of external databases enables the perfect combination of data feeds with internal data or internal data feeds on an automatic basis. Additional languages After extending French and Spanish translations significantly as well as adding Polish and Italian, the following application languages are now available: ● English ● German ● French ● Italian ● Spanish ● Polish Use data in a content management system The GAIN content management system that allows for web publishing of data contents and the definition of HTML based forms and edit functions, includes a fully fledged web server for distributing the processed messages.
The new release adds comprehensive possibilities for reconciling and cleansing of data (Data Scrubbing).
It is possible for other applications to send HTTP requests to the GAIN server. By these means a user can e.g. link his own applications or intranet pages easily with GAIN DataDesktop functions. Web-based user workspaces can then be defined for processing exceptions and messages or to link GAIN workflows with intranet services (e.g. users can run intra-day requests by simply pressing a button associated to a new instrument ID). Data messages like corporate events can then be searched for instruments, domiciles, currencies or any other desired criterion and if there are errors in the delivered data, the editing and correction of such messages down to the field level is possible.
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Bloomberg Data License
Timely, tested and true data The major advantage of the BLOOMBERG Data License is the benefit of having high-level quality data available. Bloomberg has over 4 million securities, 200,000 users, 24-hours a day, checking their databases.
The BLOOMBERG Terminal clients use the Bloomberg system to price their securities, process trades, confirm the terms, conditions of securities, and manage the characteristics and parameters of their portfolios maintained on the BLOOMBERG Professional Terminal. Clients can leverage the data collection efforts of 927 Bloomberg data specialists in Bloomberg’s Princeton, New Jersey facilities, 1,000 data specialists located in overseas offices, and 170 specialists dedicated to Quality Assurance. The primary goal of all these data specialists is maintaining the accuracy, timeliness and comprehensiveness of BLOOMBERG data. As part of Bloomberg’s aggressive quality control efforts, response time for corrections and confirmation is as close to real time as possible. Data License Products The BLOOMBERG Data License offers several products, the Per Security, the Back Office, Extended, and Full Product Universe. Depending on how many securities you might want to download, actual data-fields desired, and frequency of updates, BLOOMBERG will be able to determine which is the most cost efficient product for your firm’s needs. continued on page 9
As part of Bloomberg’s aggressive quality control efforts, response time for corrections and confirmation is as close to real time as possible.
Bloomberg Data License Below are some of the many features offered through the Data License product. Features y Complete Bloomberg Databases of Mortgages, Futures, Convertibles, Company Financials, Corporates Bonds, Currencies, Governments, Treasuries, Preferreds, Indices, Municipals, Equities, Mutual Funds, Warrants, Futures and Options. y Timely New Issues and Corporate Action information entered worldwide y Complete Descriptive Information of a Security y Historical Prices and Time & Series Quotes y Bloomberg Calculated (Derived Data) y Bloomberg Unique Identifier Assigned to each Security Industry Classifications y Company and Parent Identifiers across products y Coverage of more than 120 Countries and 125 Exchanges y Bloomberg Generic and Bloomberg Fair Value Prices benefiting from over 150 Price Contributors y Coverage of Identifiers i.e Cusip, SEDOl, ISIN etc
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SUCHEN SIE EINE BANK, DIE EINFACH ALLES MACHT? ODER EINE, DIE ALLES EINFACH MACHT?
Wir nehmen Ihr Vermรถgen persรถnlich. Telefon + 41 1 205 11 11, www.pbihag.ch
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Data License Access and Delivery The methods of delivering data for Data License: y “Send File” via BLOOMBERG Professional y “DLDL” via BLOOMBERG Professional y FTP 64kb Router & Dedicated Lease-line y FTP Internet - Output Files are Encrypted
… continued from page 7 ●
Per Security Product The Data License Front Office or Per Security Product is designed to provide a flexible and economical way for clients to nourish their own applications e.g. Front, Middle and Back-Office systems, Research and Risk management models.
Data License Support and Training 1. 24 Hour Technical Support 2. Dedicated Data License Support Group 3. Customer Training at No Additional Cost
The flexibility of Data License allows you to choose the type of data you require, for the number of securities you are interested in to send a customized data request file and have it processed immediately. Users are billed in arrear’s, consequently the monthly invoice reflects actual usage over the month period (bar monthly minimum). ●
Back Office Product (“Bulk”) This is a derivative of the Data License product, designed to meet the data needs of the Back-Office operations and provide the best in quality, coverage and timeliness that BLOOMBERG has to offer. The Back-office feed is subscribed to per Asset Class – Global Equities, Global Equity Options, Global Warrants, Global Mutual Funds, Global Commodities and Commodity Options, Global Convertibles, Global Preferred, Global Corporates, Global Governments/ Agencies, Mortgage Pools, CMOs, ABS, North America Company Financials and International Company Financials. The client receives an ASCII text pipe delimited formatted file, containing all securities available in the BLOOMBERG database. The data elements included in the feed are the key elements necessary for trading, processing and settling a securities transaction. In addition, a daily corporate actions file is created and available for subscribing clients to download. Regional descriptive (.out) and pricing (.px) files are delivered for each product and updates are made through .dif files. The cost for the Back-Office product is a flat annual fee. All new issue data is automatically included and delivered at the end of each day. Most new issue instruments are entered on the BLOOMBERG before they begin trading.
Benefits or Consider these Scenarios: ● You want to receive your data at a time that suits your business. – Data License gives you the flexibility to schedule and automate fully the delivery of your data at anytime that suits. ●
Your internal systems run on CUSIPS, but your feed provider requires SEDOL. – Data License gives you the choice of identifiers from any of the market standard identifiers; you can even vary the identifiers with instrument type.
You pick up prices but all Corporate Events are dealt with manually. – Data License covers Corporate Events globally and provides the information electronically, increasing the productivity of your backoffice personnel.
You would like to change the data vendor but are concerned about interfacing. – Data License has a very simple ASCII text, pipe delimited file structure, which makes the file easy to read.
In addition, Bloomberg is quite prepared to work with customers and software houses like AIM Software in developing any required interface; sample files, file formats and full technical specifications are available. Contact ● Mr. Philip Curtis-Evans, Tel. +44 207 330 7575
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sd&m Market Data Study
Processing Security Data: What lies ahead? Steffen Rodig and Robert Gebel â—? sd&m Schweiz AG
In 2003, sd&m asked banks and financial institutions in Switzerland, Austria and Germany about their satisfaction with financial data providers and their in-house processes for security data. We found that the need to reconcile multiple data feeds persists and discovered trends towards automated processing of corporate actions and in/outsourcing of data maintenance.
Improving the STP rate (Straight Through Processing) is currently a challenge for many companies in the financial sector. According to a world-wide poll of the Tower Group, the vast majority claim that they have not achieved their STP objectives because of inconsistent and incomplete reference data. To get a clear understanding of the market situation and the anticipated developments in the area of security master data (which is the most important part of reference data in the financial sector), in 2003 sd&m decided to distribute a questionnaire amongst banks and investment trusts in Germany, Switzerland and Austria. sd&m evaluated the answers and published the results in a comprehensive study. Some core findings are discussed below. Multiple data feeds necessary Wertpapier-Mitteilungen (WM) and Telekurs have the strongest positions in the German, Austrian and Swiss data provider markets. Virtually none of the financial institutions in the study relies solely on one of these providers, though. Most participants subscribe to several additional data feeds to eventually dispose of a complete and highquality data set. The most important additional data providers are Reuters, Bloomberg and stock exchanges for domestic and the custodians for foreign securities. Having to deal with more than three data providers per institution on average indicates that the necessary reconciliation between complementary data feeds will
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Diagram 1: Number of data sources used
Most participants subscribe to several data feeds to ensure that they ultimately obtain a complete, high-quality data set.
become more important in the future. Our project experience shows that there are software products available on the market today which can form a basis for a customized data import solution and ease this reconciliation challenge.
Diagram 2: Degree of automation of individual event
Another way to deal with the mentioned complexity would be to reduce the number of data providers. However, not one of the participating institutions views this as a solution, which suggests that neither provider is believed to be able to cover the entire market. Data quality for price data best Austrian participants rate the data quality by the Ă–sterreichische Wertpapierdaten Service GmbH (Ă–WS) highest, in Germany and Switzerland the feedback is more heterogeneous, but still tends towards the positive. One criticism to the data providers is the data quality and coverage for foreign securities, particularly coming from Eastern Europe, Asia, Near East, the USA and South America. However, the participants acknowledge the difficulties acquiring data in these specific markets. continued on page 12 yield
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Diagram 3: Are you considering any of the following in the future?
For financial institutions that are considering automating their processes, the simple structure of price data makes this a good place to start.
â€Ś continued from page 11 The best ratings for data quality and timeliness were given for price data. The most important providers are Telekurs, Reuters, Bloomberg and the Deutsche BĂśrse. If financial institutions consider automating their processes, the simple structure of price data makes this a good place to start. Automation and outsourcing trends The participants face the need to invest: A major part of the institutions plans to better automate the processing of event data. This statement even holds for dividend and interest payments, which today are already processed automatically to a large extent because of the high data volume and the underlying financial risks. The trend towards outsourcing continues for the administration of security master data and for the entire process of security transactions. Particularly Swiss financial companies are willing to outsource the data administration responsibility. This demand is faced by a matching supply of institutions offering this complex process as a service. In Germany, however, the study results suggest that in- and outsourcing of the data administration is not a major issue today. For the transaction process the picture is quite asymmetric: we found a significant readiness to offer this process as a service, but participants not yet having outsourced this process in the past are reluctant to accept these offers. Contact â—? sd&m Schweiz AG Robert Gebel, email@example.com Steffen Rodig, firstname.lastname@example.org
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Third-Party Clearing Asia in Three Easy Lessons Miroslav Janjic ● Senior Consultant, Data-Reference Consulting (Singapore)
In Europe, the business of processing and settlement by someone other than the originating broker is becoming more and more popular. In the US, this kind of arrangement is fast becoming the standard. However, in Asia, third-party clearing has failed to catch on and is being resisted outright by some brokers.
Empirical evidence, though, only exists for Australia and Singapore, the only two markets where it is allowed. HK can’t decide on an appropriate structure and the regulatory leadership, in Japan it is being discussed endlessly, but not yet in the market. Lesson#1: Is Third-Party clearing a misunderstood proposition? An excellent question – how much do we know about it? Consider following definition(s): Third-party clearing means that the third party takes on the principal risk of transaction; once it leaves the broker, the broker no longer is responsible for the trade. There are also various “lite” versions of it, from agency clearing, where the third party handles settlement but does not take ownership
of it, down to simple outsourcing, where bits and pieces of the clearing process are done for a fee. What’s the catch? A broker wants to take orders and make trades, not process them. By contracting that work to others, he can concentrate on what he presumably does best, leaving the rest to those, who specialize in handling orders post-trade. Furthermore, clearing requires infrastructure and people, and a lot of the asso-
After I’m dead, I’d rather have people ask why I have no monument than why I have one. Cato the elder
ciated expenses remain, regardless of trading volumes. If business drops, much of the hardware and other assets stay, physically on the books. Third-party clearing transforms the cost of clearing into a per-unit expense that fluctuates with business – fewer trades, lower costs. Importantly, third-party clearing strengthens a brokerage’s balance sheet. It no longer has to commit capital to covering the risk of clearing and can commit that money to its core business. continued on page 14 yield
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… continued from page 13
Glossary: ● GLC: Government linked
Company ● Nets: Network for
For brokers in Asia, the case is particularly compelling these days. The markets here are strong for much longer than most optimists had hoped for. However, the markets are still volatile, with stock prices fluctuating, and deregulation is forcing down towards US discount levels. Now, that markets are booming and rates are flexible, costs are still a big concern and efficiency matters. There is probably no better a time to promote something that saves money and capital and allows a company to focus its efforts on something it is good at.
massive investments in advanced information technology and that technology must be upgraded continually. By offloading the work to others, those investments are handled by someone else and much of the cost can be spread among many customers. The systems and structures of employed by TPCs are scalable. Third-party clearing also brings benefits to the market as a whole. It leads to increased efficiencies. These are not trivial matters in Asia, since the regional markets have long been criticized for the high cost of trading in them.
Lesson#2: What can the regulator do? Hong Kong Stock envisioned and Singapore implemented a very similar system, with two new classes of exchange membership – Direct Clearing Participants and General Clearing Participants, the latter being allowed to settle trades for others. However, TPC hasn’t yet started in HK and crashed in Singapore last year with the withdrawal of Asia Converge, a joint venture among SGX, DBS Vickers Securities and OCBC Securities. Admittedly, in the case of Asia Converge, the regulator could not be blamed for lack of support to this venture. Nevertheless, new business attempts have shied away from the obligation of setting up a guarantee fund. Tax issues are still thorny and matters of principal risk have to be resolved to the satisfaction of the brokerage community. Principal risk meaning that the third party needs to implicitly take on the obligations of the broker.
Ironically, with stock prices having fallen a great deal from 1997 to 2003, risk is a big issue for markets. Leaving clearing in the hands of brokers potentially can be the source of problems, particularly if those brokers are small, undercapitalized and lack experience. In Singapore, DBS Vickers was the first to offer TPC – to its TD Waterhouse. Our market research has noted that others have expressed interest in offering third-party clearing. Notably, a large American custodian, Bank of New York, and a GLC, called NETS Pte Ltd. Though both do not lack the financial power to set up the substantial infrastructure, the example of Asia Converge still looms as a good example going wrong over their ambitions. “Our board is of the opinion that we should kive this project for the time being as the general feel out there, is that the memories of AC is still very vivid,” says Benny Tan, NETS’ Business Development Manager. Although the MAS, the Monetary Authority of Singapore, is encouraging such ventures with substantial financial incentives, no foreign or local institution has dared yet to respond to interested brokers like Philip Securities.
The standard organisational approach in this situation is to hire a consultant and introduce an overall model that satisfies prospective third parties and the broker community. The promising economic situation for this year should encourage regulators to supply the Asian financial markets with the necessary legal fundamentals.
Contact ● Data-Reference Miroslav Janjic email@example.com
Lesson#3: What is driving the business? The arguments for third-party clearing become more convincing each day. While the clearing business has never been cheap, it is now particularly costly. It requires
The business case is there, however, it looks like that everybody is waiting for the governments to signal cooperation across national borders in order to offer a truly regional integrated clearing solution. The good news, according to John Cheng from Bank of China International in Hong Kong, is that good market conditions and high turnover in most Asian markets will give birth, eventually, to a new Asia Converge.
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The AIM network
EUROPE ● Austria AIM Software GmbH Gonzagagasse 16/5 1010 Vienna www.aim-sw.com T: +43 1 512 46 52 F: +43 1 512 46 52 0 firstname.lastname@example.org y Sales email@example.com y Technical Questions firstname.lastname@example.org y Partnership Management email@example.com ● Italy
Sintea Servizi Informatici s.r.l. Via Perugia 56 10152 Torino www.sintea.com Roberto Lanza firstname.lastname@example.org T: +39 011 2470 111 F: +39 011 2871 550 ● Luxemburg Datagate (Luxembourg) SA 124, route d´Arlon 1150 Luxembourg www.datagate.lu Marc Staudt email@example.com T: +352 44 78 69 F: +352 29 94 96 ● Switzerland APSoft SA Via Motta 42 6900 Lugano www.apsoftsa.com Antonio Lo Priore firstname.lastname@example.org T: +41 91 922 27118 F: +41 91 923 3812
Avaloq Evolution AG Allmendstraße 140 8027 Zürich www.avaloq.com Christian Bieri email@example.com T: +41 1 488 68 88 F: +41 1 488 68 68
Fin-log AG Zürichstrasse 107 8123 Ebmatingen Frank Müller-Erkelenz firstname.lastname@example.org T: +41 43 366 21 10
Informatik für Banken AG Buckhauserstrasse 24 8048 Zürich www.ifb.ch Fredi Studer email@example.com T: +41 1 405 72 72 F: +41 1 405 72 82
● United States AIM Software plc 67 Wall Street Suite 2211 NYC 11005 www.aim-sw.com Richard Bertossa firstname.lastname@example.org T: +1 212 859 3498
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20.07.2004, 16:13:58 Uhr
Yield suggests the following events … Date from
Name of the event
Type of the event
Derivatives & Securities World- London Chinasoft 2004
5/7/04 6/7/04 6/7/04
6/7/04 9/7/04 9/7/04
Mainz London Monaco
D UK F
Prozessmanagement in der Fondsindustrie Corporate Credit Risk Analysis Fund Forum
Conference Seminar Forum
8/7/04 12/7/04 12/7/04
Bangkok New York Johannesburg New York Bangkok
TH US ZA
SODEC: Software Development Expo & Conference Asian Finance & Capital Markets 2004 Corporate Credit Risk Analysis Credit Management. A Guide to Best Practices
Exhibition + Conference Conference Seminar Traninig
EuroEvents Standard&Poors marcus evans
www.euro-events.com on request www.standardandpoors.com USD 3.500 www.marcusevans.com on request
FX . Week 4th Asian Finance and Capital Markets
on request on request
Effective Currency Risk Management
Risk Waters Euro Events Management Co Ltd marcus evans
US US US
Six Sigma for Financial Service and Banking Business & Technology Solutions Show Annual Finance and Operations Conference
Conference Exhibitions Conference
marcus evans Illinois CPA Society California Bankers Association
www.marcusevans.com www.btshow.org www.calbankers.com
on request up to USD 230 USD 595 – USD 850
Liquidity Risk Management Risk Management in Leasing
marcus evans marcus evans
on request on request
FiTech Summit 2004
3rd Annual: Covered Bonds. Analysing crucial market, issuance and investment potential Financial institutions regulatory compliance summit STP Harmonising Corporate Actions Event
Insight Information Co. www.insightinfo.com
STP Information Services Ltd, UK Unicore marcus evans
Financial Services Exhibition Conference
Insight Information Co. www.insightinfo.com
www.standardandpoors.com GBP 2.495 www.financetrainer.com on request
13/7/04 15/7/04 27/7/04
17/8/04 24/8/04 25/8/04
18/8/04 25/8/04 27/8/04
Johannesburg New York Rosemont Rancho Mirage, California London Amsterdam Amelia Island London
Amsterdam Geneva London
14/9/04 15/9/04 15/9/04 16/9/04
UNICORE - 6ieme Journée Solutions Bancaires Clearing and Settlement. Driving Down Costs within a Rapidly Changing Infrastructure Screen Event Amsterdam 2004 Best Risk Management Practices for the Fund Management Industry Successful IPOs
on request USD 60 – USD 1.000 marcus evans www.marcusevans.com on request Standard&Poors www.standardandpoors.com GBP 2.495 ICBI/UK www.swift.com GBP 799 – GBP 3.397 Reed Exhibitions Japan www.sodec.jp/en on request
4th Annual Retail Banking Forum in Enlarging Europe 2004 Corporate Credit Risk Analysis 18 Alpbacher Finanzsymposium
C.R.E.D.I.T. 2004. Validation of Credit Risk Models Conference
Standard&Poors Finance Trainer International GmbH GRETA Associati
New Orleans 11/10/04 15/10/04 Atlanta
10th Annual Financial Services Technology Forum Corporate Credit Risk Analysis
Presentation + marcus evans Conference Conference Thomson
12/10/04 15/10/04 Frankfurt 12/10/04 13/10/04 London
USD 107 – USD 1.599 USD 595 – USD 895 on request on request
on request USD 107 – USD 1.385 on request
EUR 50 – EUR 500 USD 600 – USD 2.200 on request
USD 895 – USD 1.595 www.standardandpoors.com USD 2.800
Corporate Credit Risk Analysis Credit Risk Summit Europe 2004
Standard&Poors Risk Waters
Imprint: Publisher: AIM Software GmbH, Gonzagagasse 16/5, 1010 Vienna, Austria. Design & Production: Egger & Lerch, www.egger-lerch.at Printing: Druckservice Styrian GmbH
EUR 2.600 – EUR 2.750 www.standardandpoors.com USD 3.500 www.riskwatersevents.com on request