FEDERATION OF EURO-ASIAN STOCK EXCHANGES
SEMI ANNUAL REPORT OCTOBER 2006
TATA CONSULTING SERVICES
S. Ramadorai
CEO and Managing Director
With decades of experience of providing IT
solutions behind us, we specialize in
consulting, developing financial systems
that are customized and adaptable to
changing landscape of securities markets.
OUR OFFERINGS 1. Trading
Over the last couple of years, the securities
markets industry worldwide is undergoing
unprecedented changes leading to redefining
of business models. Introduction of new
products and value added services,
regulatory changes, diversification needs,
pressures of demutualization, competition
from new players are some of the key
challenges for the capital market infrastructure
institutions of this generation. The exchanges
are actively pursuing the path of consolidation
within and across the national boundaries
through formal mergers as well as cross
border alliances. In the coming years, we will
see many interconnected, trans-national
markets in different regions in addition to a
few truly global exchanges. After witnessing the electronification of the
traditionally open outcry trading, exchanges
are currently have the next challenge of
coping with the growing volumes and
changes in product mix and trading
methodologies. This is evident in the case of
emerging economies looking to attract local
as well as international trading communities.
Exchanges are expected to offer trading
platforms for a variety of financial instruments.
Regulatory changes affecting the trading
business are expected to be implemented
harmoniously with minimum impact.
Exchange trading systems must be flexible,
scalable, reliable and high performance to
meet these business and technological
challenges.
Driven by quantum leaps in technology, the
role of technology providers has also evolved
from a traditional solution provider & system
integrator to providing the value added
products and services. Today technology has
become the core of the capital markets and
the technology vendors are partners in
progress for the markets. TCS’ trading system product – TradeX offers
these things. TradeX is readily available for roll
out in the market. TradeX components have
been already deployed at different client
installations. We present TradeX capabilities
using 4 key concepts of trading:
1. ‘What’ - Instruments available for trading
2. ‘Where’ - Trading segments, markets
3. ‘Who’ - Trading participants and user
hierarchy
4. ‘How’ - Trading rules
Extensive experience gained in executing
various mission critical solutions for
exchanges and clearing and settlement
organizations, continuous research and
analysis of the best practices in securities
industry has helped TCS in assessing the
current and future needs of the marketplace.
Marketplaces of the future would require
flexible, versatile and scalable product based
solutions to quickly respond to market
requirements and achieve a competitive
advantage.
TCS CAPITAL MARKET
SOLUTIONS
TCS solutions in the financial services space
addresses the 3 key aspects of the exchange
marketplace and the challenges – both
business and technological, posed in them.
These 3 aspects are-
1. Trading (exchanges)
2. Post-trading (clearing, settlement,
depository organizations)
3. Broker-dealer operations (large brokerage
houses / market intermediaries)
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‘What’
TradeX supports trading in equities, equity
derivatives, fixed income instruments,
commodities, commodity derivatives and also
offers a flexible framework to manage these
diverse financial instruments.
‘Where’
The configurable market hierarchy set up in
TradeX enables introduction of new trading
segments, markets and trading sessions.
Trading sessions can be run multiple times
and can be extended. TradeX offers variety of
trading models like order driven matching,
true quote driven trading model for market
markers, hybrid matching and negotiated
trade reporting. TradeX also offers variety in
matching algorithms and priority of matching.
‘Who’
TradeX provides for the flexible multi-level
user hierarchy wherein user categories and
hierarchies can be configured as well as
extended based on market needs, regulatory
conformance and prevalent business
practices in the markets.
‘How’
TradeX works as per the trading parameters
set by the Market operations staff which can
be changed to quickly adapt to changing
business requirements such as changes in
circuit filter levels, and changes in trading tick
size.
TradeX provides for basic risk management
features such as limits and warning alerts
based on order value, turnover value and
exposure value. It also automatically triggers
various disciplinary actions in case of
violations. Circuit filter freezes can be defined
at instrument level for pro-active market
monitoring and surveillance.
For exchanges running multiple market
segments, it is essential to avoid duplication
of their infrastructure, hardware, maintenance
costs and operations staff and have an
integrated view of the market – both from the
business and the technology side. TradeX
provides traders to have a single trading
terminal for trading in all market segments.
On the technology side, the acid test of the
exchange trading systems is in checking their
ability to provide high performance and quick
response to transactions. Using TradeX
architecture, we have demonstrated high
performance requirements such as-
• Peak up to 8000 orders/second in single
security
• Peak of 20000 orders/second
• Order response time to be < 1 second for
95% of orders
TradeX architecture is layered, componential,
platform independent and scalable. It also
provides facilities to connect through different
channels.
2. Post-Trading
Today the exchanges, clearing houses and
settlement organizations are witnessing a
variety of business models. An exchange
would like to provide both trading and
clearing services while settlement is provided
by another agency. Alternatively clearing and
settlement services can be provided by a
single organization. In short, post-trading
infrastructure needs to be geared up for
changes in the combination of its business
model in either of the directions. Further to
stay competitive and cost-effective, the
clearing and settlement (CSD) organizations