Suresh Agarwal and Amir Reza Khan Pakistan Singapore

Suresh Agarwal and Amir Reza Khan Pakistan, Singapore, UAE. . . 3 Dec 2007, Damascus, Syria

The Info. Tech Team • The Lahore Stock Exchange (LSE), the first automated stock exchange in the nation and KSE was the best performing Exchange globally in 2004. • LSE was the first stock exchange in the region to offer electronic trading, on-line trading and remote electronic floors. The same team who did this automation is here with us today. • INFOTECH, one of the largest IT companies in Pakistan, is premier capital market solution provider, System Integrator and e-Infrastructure provider. • One team of LSE, ISE, SECP, CDC, NCCPL, KSE, NCEL

Background • A vision brought into life by establishing the IT Department of LSE in 1994 • First Automated Trading System in 1996 • Remote Access to Trading System in 1997 • Successful launch of in-house developed indigenous Ultra Trade System in 2000 • Access to real-time electronic trading over the WAN in 2001 • Establishment of Remote Electronic Trading Floors in 2004 & 2005 • Implementing Unique idea of merging trading platforms of two stock exchanges in 2007

Transition from Outcry to Electronic Trading System • Objective was to increase the liquidity, volume and market depth • Acquisition and Installation of Electronic System • Training the traders on new system • Managing the resistance to change • Smooth transition from manual to automated matching system • Volume increased from 1 million to 14 million in 6 months • 15 symbols were traded on the outcry system while the automated system increased this count to 100 symbols gradually

IT Infrastructure • Local Area Network of 1000+ nodes • Data Centre - 25 IBM Racks and Blade Servers, Storage Area Network • Three Remote Electronic Trading Floors • State of the Art Wide Area Network equipped with Intrusion Prevention Systems and Failover Firewalls • Co-locations with multiple ISPs • A Team of highly skilled, dedicated IT professionals • Developer of Ultra Trade, Pakistan’s first indigenous Trading System • Solution provider for all three Stock Exchanges of Pakistan and over 45 Stock Brokers

LSE IT Services • Trading System: Ultra Trade System • View Only Terminals: VOT • Pre-Trade Risk Management Systems: TRF • Clearing & Settlement System: CHS • Dissemination/Reporting System: LSS • Corporate Information System: CIS • Accounting Systems: Acc. Sys • Broker’s Back Office System: SSS • Client Level Pre-Trade Margin Control: CTRF

LSE IT Services • High Speed Data Display and Feed: Tickers & Vendor Feed • Online Trading Solution: Broker. Net • Real-time Surveillance System • Gateway Interface for Straight Through Processing • Portfolio Reports for Investors over the website • Stock Buddy: Stock Quotes over the MSN • Remote Electronic Trading Floors: STF, FTF

Ultra Trade System • ULTRA TRADE™ is an electronic marketplace solution that caters to the needs of stock exchanges and new-generation marketplaces like ECNs • It can easily scale up to handle as many as hundred thousands (100, 000) trades per hour • Highly configurable – allows flexible market models to be setup • Supports industry-standard FIX protocol as the trading party and market data interface • Can support near real-time interface to back-office and clearing systems

Ultra Trade System Key features • Supports multiple order types – normal orders (limit order, market order etc. ), contingent orders (stop-loss, market if touch), special orders (undisclosed volume, fill or kill, hit, take etc. ) • Supports multiple markets (Regular, Odd, Squaring Up, Continuous Funding, derivatives, IPOs)

Ultra Trade System Key features • Pre trade Risk Management System for exchange and brokers based upon Va. R methodology • Pre Trade validation of Unique Identification Number • Internet enabled trading features is highly optimized for high availability and performance • Connectivity with remote electronic trading floors • Designed for continuous reliable operations and can operate 24/7 with a short maintenance window every day

Crash Recovery • Replaying the entire market up-to exact point in time after crash using the journal of trading engine • Can be used in disputes resolution by market reconstruction • Investigation of irregular market activities

Online & Real-Time Trading • Native Transport of Ultra Trade is optimized for Trading Over the Internet keeping in view low bandwidth issues • Multiple Fallback Server Proxies for each critical component • High Availability by supporting multiple ISP as fallback option • On-the-fly control of order routing or diversion • LSE is transacting 53% of its volume over the Internet which shows the maturity of the system over the Internet INFOTECH

Security Features • 128 -bit Microsoft Standard Encryption • Password, IP Address and MAC level authentication • RSA Two Factor Authentication, Digital Tokens

Web Trading Terminals • Access to trading system through Internet Browser • Latest version is automatically downloaded when available • It can be accessed from anywhere • most frequently used features are provided on the main screen • Provides a tape ticker sorted by the volume • User Friendly Interface for home users

Pre-Trade Risk Management System • Trade Risk Filter is a pre trade risk management system • Filters orders according to exchange regulations and permit brokers to trade with in the prescribed limits of exposure and losses • Value at Risk (Va. R) based margining regime according to International best practices • Client Level Netting, Cross Market Netting, Cross Settlement Netting • Trading Limit up to Net Capital Balance of Brokers • Real-time Monitoring and Privileged Control to the designated Exchange Staff

Client Level Pre-Trade Risk Management (Optional) • CTRF is an order filter between the Trading Work Station and Exchange. Orders driving the client’s position beyond the buying power are filtered according to rules defined by the Broker • On the fly enforce or remove pre-trade check at client level or branch level • Setting up margin symbol wise, client wise or branch wise • Allow or permit short sale • Keep audit trail of control functions • Restriction to trade in specific market or through designated terminal

Universal Identification Number System • Pre. Trade Verification of Investor Accounts against Universal Identification Number from the central database • Trading on behalf of only registered investors with central authority • Surveillance Controls to monitor account specific activities

Remote Electronic Trading Floors • Remote Trading Floors or branch offices can be connected through alternate links with the central trading system • Multiple Fallback Proxies at each trading floor • Ability to provide reports from the local servers and order matching at central place

Unified Trading System • A unique idea of merging trading platforms of two stock exchanges • Broker of each stock exchange can trade only symbols listed in their respective exchange, however cross exchange trading permissible in commonly listed symbols • Idea is to eliminate the fragmentations across medium stock exchanges of the country • Increasing the liquidity and retention of volume

Radio I S E Remote TWS S T F TWS Proxy A Fiber TWS Proxy B HRI Brain PIE HRI Ultra Trade System Cyber Brain. Net Internet Cyber. Net LAN HRI Local TWS Proposed UTS Network Topology PTCL DXX/ ISDN

Questions are Welcome…