FEAS Yearbook FEAS Yearbook 2006 | Page 26

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) PAGE 24 ‘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