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What Standards Can Do For You
FIA IT Standards Working Group
December 10, 2002
Panel MembersJohn Munro SVP Product Design, Rolfe and Nolan
Chairman, FIA IT Standards Working Group
Angela Krug VP Deutsche Bank New YorkU.S. Regional Manager, F & O TechnologyVice Chairman, FIA IT Standards Working Group
Jim Northey Chairman, Fix Global Derivatives Committee
Tom McCabe Vice President, Floor Operations, CBOTChris Bennett Senior Vice President-Technology and Data
Products, CBOTChris ToczyckiDirector, Information Technology, BOTCCMark Baumgardner Vice President of Business Development, OCCEd Gogol Systems Development Director, CMEMatt Simpson Senior Systems Analyst, CME
FIA IT Standards Working Group
Formed in June of 2002Membership 7 U.S. exchanges & clearing houses FCMs Vendors Standards Group
Mission: review exchange-back office links for standardization potentialNot: Order entry & confirmation – already moving to FIX Communications methodologies
Technical Development – Post-Trade Processing
Punched cards Tapes, diskettesTransmission BSCA, RJE - fixed record length LU 6.2 - expanded record length MQM - variable length messages w/ fixed blocks
What next?
Current Status of Interfaces
Survey - all U.S. F & O exchanges & OCCOf the 12 different interfaces for trades/management, the only commonalities were: SPAN for all except OCC 3 exchanges using TREX 3 exchanges using FIX variants for order entry 2 exchanges using a common Large Trader format
In the last year and a half: NYBOT - TIPS format change NYMEX – negative prices and strikes BOTCC – GAPI changesSecurity Futures CME – TREX, trade register changes NqLX trade feed OCC - Trade files and GPA’s SIAC – Large trader
Flat files Raw data that must be formatted at either end Changes must be made simultaneously at both
ends Can only be read by programs Typically fixed-length : the punched-card legacy
*...+....1....+....2....+....3....+....4....+....5....+....6....+....7....+
TRX 12140200 0184A12000032016 123 1ED 20020900
TRX 15015400 0184A12000030316 123 1ED 20020900
TRX 15101000 0184A12000030316 123 1ED 20020900
TRX 17120900 0184A12000030916 996 1ED 20080300C00009500
TRX 17135000 0184A12000031016 996 2NK 20070400C00140000
1 01171800F252017 0338A32002083001 252 L T 117 20020900 00000000
1 01171900F252017 0338A32002083001 252 L T 117 20020900 00000000
1 01381800F252017 0438A32002083001 252 M T D 217 20020900 00000000
1 01381800F252017 0438A32002083001 252 M T D 117 20020900 00000000
GSA101381900F252017 0333A32002083001 252 M T D 217 20020900 00000000
GAC101381900F252017 0360A32002083001 252 M T D 117 20020900 00000000
Data base files Format is defined within a database Can be read by another data base or a program Can be read by SQL or Query utilities over the data
base Lacks portability to another data base
....+....1....+....2....+....3....+....4....+....5....+....6....+....7....
TMSGID TMSGVR TMSGTM TUSRID TMSGLN TACTCD TTRDRT TTRDDT
TRX 12,140,200 184 A 1 20000320
TRX 15,015,400 184 A 1 20000303
TRX 15,101,000 184 A 1 20000303
TRX 17,120,900 184 A 1 20000309
TRX 17,135,000 184 A 1 20000310
1 1,171,800 F252017 338 A 3 20020830
1 1,171,900 F252017 338 A 3 20020830
1 1,381,800 F252017 438 A 3 20020830
1 1,381,800 F252017 438 A 3 20020830
GSA 1 1,381,900 F252017 333 A 3 20020830
GAC 1 1,381,900 F252017 360 A 3 20020830
XML files Flexible format Data and its definition included in the same place DTD’s or schemas used to define the data and edit it
on transmission or reception Portability across platforms
<Instrument>
<Symbol/>
<Product Value=‘1’/>
<SecurityID>ED</SecurityID>
<MaturityDate>2002-12</MaturityDate>
<CFICode>OCAXXS</CFICode>
<SecurityExchange>XCME</SecurityExchange>
<StrikePrice>92</StrikePrice>
<InstrumentLegList>
<InstrumentLegGroup>
<InstrumentLeg>
The Value of Standards
Record increases in volume
Many changes in the industry
Supporting open outcry and electronic trading
Need for more efficient and competitive business practices
Today’s Challenges
Standards will enable our industry to grow and respond to change while controlling costs.
Why Standards?
Costly Increased support costs for multiple formats Many additional components needed between systems Cost to run the business are high and growth opportunities
suffer
Lack of Competitive Advantages Changes in data or functionality require significant time for
analysis, design, programming, testing and delivery Speed and quality of information limited by translation
components between disparate systems Limited technology options
Maintaining the Status Quo
Post Trade Process
Exchange ClearingSystem
ServiceBureau
FirmBookeeping
System
ClientBookeeping
System
FirmInternalSystemTREX FLAT FILES PROPRIETARY BACK
OFFICE SYSTEM
FirmInternalSystem
FLAT FILES
PROPRIETARY SYSTEM
No Standards
STANDARD
StandardsClient
Bookeeping
System
FirmInternalSystem
XML
Exchange ClearingSystem
STANDARD
Service Bureau
ONE TO MANYTRANSLATOR
FLAT FILES
Firm InternalSystem
PROPRIETARY SYSTEM
STANDARD
Firm BookeepingSystem
Trade Process
STANDARD
API 1Client FrontEnd System
VISUAL BASIC
No Standards
API 2
ExchangeTrade System
Proprietary OrderRouting System
Firm FrontEnd System
Exchange TradingSystem
Client Front EndSystem
STANDARD
Firm Front EndSystem
STANDARD
Exchange TradingSystem
Standards
STANDARD
Exchange TradeSystem
Barriers to Integration Current messaging technologies are not common across the
financial industry No common technologies used between trading, post trade
and client processes Limited resources and tools
The Future? Current messaging technologies have reached their
functionality limits Costs are high to build and maintain outdated technologies
so new initiatives may fail
Maintaining the Status Quo
Savings Reduction of support and new development costs
associated with multiple formats Scalability and reuse increase More options available in the industry
Competitive Edge Ability to deliver more timely, accurate data Shorter development, deployment and integration
cycles Increased ability to adopt advanced technologies and
business practices
The Benefits of Standards
Post Trade Process
Exchange ClearingSystem
ServiceBureau
FirmBookeeping
System
ClientBookeeping
System
FirmInternalSystemTREX FLAT FILES PROPRIETARY BACK
OFFICE SYSTEM
FirmInternalSystem
FLAT FILES
PROPRIETARY SYSTEM
No Standards
STANDARD
StandardsClient
Bookeeping
System
FirmInternalSystem
XML
Exchange ClearingSystem
STANDARD
Service Bureau
ONE TO MANYTRANSLATOR
FLAT FILES
Firm InternalSystem
PROPRIETARY SYSTEM
STANDARD
Firm BookeepingSystem
Trade Process
STANDARD
API 1Client FrontEnd System
VISUAL BASIC
No Standards
API 2
ExchangeTrade System
Proprietary OrderRouting System
Firm FrontEnd System
Exchange TradingSystem
Client Front EndSystem
STANDARD
Firm Front EndSystem
STANDARD
Exchange TradingSystem
Standards
STANDARD
Exchange TradeSystem
Compatibility Increased opportunity for integration across the financial
industry Better integration with internal and external systems More technology options and industry knowledge
Opportunities for the Future STP New exchanges and products Increase efficiency and productivity of existing resources
The Benefits of Standards
Commitment to participateBuild knowledge/ Agree on standardProvide interfaces that conform to the standard Phased approachInitial investment for long term gain
What is it going to take?
Reduction of current costs
Respond to change
Growth while controlling costs
The Value of Standards
