THE FIA IT DIVISION PRESENTS REDUCING TRADING COSTS

THE FIA IT DIVISION PRESENTS REDUCING TRADING COSTS A PANEL DISCUSSION Moderated By: 2003 FIA Expo Tellefsen Consulting Group, Inc. 1

AGENDA I. III. IV. Purpose and Scope of the Discussion About Our Panelists FIA IT STP Committee Initiatives What Our Panelists Think… 2

I. PURPOSE AND SCOPE OF THE DISCUSSION 1. Purpose To discuss areas within the Futures industry where Straight-Through Processing (STP) improvements can be realized, as a result of recent and forthcoming initiatives by the Chicago and New York exchanges and clearing houses. 3

Purpose And Scope … 2. Scope Our panelists will discuss the new system initiatives, post-trade processing standards, the availability of more real time clearance and settlement information and the overall impact on reducing trading costs. 4

II. ABOUT OUR PANELISTS Dick Baker Director of Business Development and IT Liaison, The Clearing Corp. Sam Gaer Chief Information Officer, New York Mercantile Exchange Inna Gelin Senior Vice President, Wachovia Securities Ed Gogol Vice President Clearing Systems Development, Chicago Mercantile Exchange George F. Haase, Jr. President, New York Clearing Corp. Angela Krug U. S. Regional Manager, Futures & Options Technology, Deutsche Bank Securities John Munro Senior Vice President, Product Design, Rolfe & Nolan Thomas Mac. Leay Senior Vice President, Strategic Development, Sungard Futures John Rapa President/Chief Executive Officer, Tellefsen Consulting Group, Inc. 5

III. FIA IT STP COMMITTEE INITIATIVES § The IT Division STP Committee was constituted earlier this year to identify the state of STP initiatives in the Futures industry. § The Committee was chaired by Inna Gelin and Rob Schroeder, both from Prudential Securities. § The Committee analyzed the state of automation and recommended areas of changes to processes that impede STP. 6

FIA IT STP COMMITTEE INITIATIVES … § The Committee assessed six major processes involved in domestic Futures trading: – – – Trade Entry Product Set Up Trade Correction Give-Up Processing Deliveries, Options Exercise and Assignment Post-Execution Processing § They identified and discussed detailed functions for each of the above 6 areas. § Processes were analyzed and STP status was assessed, based on manual, semi-automated or fully automated processing criteria. § Charts were created that reflect the state of automation by process (June 2003). 7

FIA IT STP COMMITTEE INITIATIVES … § Charts of STP capabilities were developed for: – – CBOT CME NYBOT NYMEX/COMEX § Three main areas for improvement were prioritized: – – – More real time information from the New York exchanges Increase the frequency of intra-day SPAN files Automate new product set-ups § The Committee was to address these and define a plan to pursue changes with the respective exchanges and clearing houses. 8

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IV. WHAT OUR PANELISTS THINK 13

1. What are the Top Priority STP Enhancements Recommended by the Committee? 14

2. How Will Your Clearing System Initiatives Address the Above STP Enhancements? 15

3. How Are the Futures Exchanges and Clearing Houses Progressing, Relative to Providing Modern, Industry Standard Interfaces for Clearance and Settlement Information? 16

4. Will These New Clearing Initiatives and STP Capabilities Increase or Decrease Your Firm’s Technology Costs? 17

5. How Will These Initiatives Benefit FCM’s and Back Office System Vendors’ Processing Environments? 18

6. Does Your Firm Anticipate Quantifiable Cost Savings from Common Clearing Processing? If So, in What Areas, How Much, When, etc. ? 19

7. How Will Exchange Cost Structures Change as a Result of These New Systems and STP Initiatives? 20

8. How Much More Real Time Information Will These Systems Provide and What Specific Information Will be Real Time That Has Not Been Up to Now? 21

9. If There Were to be One Standard for C&S Interfaces to Exchanges and Clearing Houses, What Should it be and Why ? 22

10. What Has Your Involvement Been with the CBOT/CME Common Clearing Initiative? 23

Thanks to Our Panelists ! 24