ETRADING SYSTEMS UPDATE November 2003

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E-TRADING SYSTEMS UPDATENovember 2003

• THE FIA IT DIVISION
• PRESENTS

FIA Expo Conference
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AGENDA

• Introduction
• Our Panelists
• Setting The Stage
• Lets Ask The Experts

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INTRODUCTION

• 1. PURPOSE
• To discuss the near-term and potential future
  technological evolution of Electronic Trading
  Systems (ETS) and better understand how they are
  geared to global markets.

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INTRODUCTION Continued

• 2. SCOPE
• A moderated discussion with technology leaders
  from domestic and international exchanges,
  interspersed with questions from the audience.
• Immediately followed by informal conversations
  with our distinguished panelists at the FIA IT
  Division reception today (545).

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II. ABOUT OUR PANELISTS

• Bryan Durkin, Senior Vice President, Chicago
  Board of Trade
• Sam Gaer, Chief Information Officer, New York
  Mercantile Exchange
• Mark Hemsley, Managing Director, Euronext.liffe
  Market Solutions
• Scott Johnston, Managing Director and Chief
  Information Officer, Chicago Mercantile Exchange
• Juerg Spillman, Deputy Chief Executive Officer,
  Eurex
• Jan Tilfors, Product Strategy, OM Technology
• Moderated By Gerald Tellefsen, Chairman,
  Tellefsen Consulting Group and Secretary, FIA
  Information Technology Division

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III. SETTING THE STAGE

• Internationally, many exchanges have been
  electronic for many years with the U.S. rapidly
  beginning to catch up.
• Some exchanges build their ETS, others buy it

• BUILD
• NYMEX
• CME
• TSX
• EUREX
• Archipelago
• ICE

• BUY
• NYMEX
• CME
• CBOT
• KCBT
• Euronext.Liffe

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SETTING THE STAGE Continued

• Most non-domestic exchanges are all electronic,
  while numerous U.S. exchanges are a combination
  of open outcry and ETS.
• Some U.S. markets already have more than half
  their volume traded electronically.
• Other markets (e.g., ags) do not appear to fit
  easily into an electronic trading environment.
• Believe it or not, the NYSE has been
  electronically trading odd lot equities and
  corporate bonds for decades.

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WHERE IS THE BUSINESS?
For Futures, it used to mainly be in the U.S.A.
but not any more!
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SETTING THE STAGE Continued

• The Philadelphia Stock Exchange will launch PHLX
  XL, a hybrid ETS. Market makers will deliver
  streaming quotes, allowing easier access to PHLX
  markets and leveraging of open outcry markets.
• Boston Stock Exchange to launch the BOX
  electronic options exchange after SEC approval.
• e-CBOT to begin launch at the Chicago Board of
  Trade in November, 2003, to be fully rolled out
  by February, 2004.
• New York Stock Exchange is being challenged

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SETTING THE STAGE Continued

• ETS acceptance can be stressful traders on the
  floor of London IPE have staged a revolt and are
  refusing to use electronic trading screens that
  they say will cost them their jobs
• LIFFE CONNECT to replace the CBOT a/c/e platform
  by November, 2003.
• EUREX U.S. scheduled to begin trading U.S.
  markets internationally in February 2004.
• The NYMEX acquires the TradinGear ETS in early
  2003.
• CME e-mini products are a huge success.
• ISE captures market share lead in equity options
  in two years.

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TO SUM IT UP

• THERE IS A LOT GOING ON!

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• IV. LETS ASK THE EXPERTS!

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Bryan MarkWhat are your major concerns
involving the conversion to e-CBOT?
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SAMWhat is on your drawing board for the NYMEX
ACCESS upgrade or replacement?
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JUERGHow will the Eurex U.S. ETS differ from
the a/c/e platform used by the CBOT?
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JANOM has probably installed more trading
systems than any other organization, what is your
next generation ETS going to look like?
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SCOTTHow easy or difficult would it be for
GLOBEX to handle multiple non-futures products
and how would you do it?
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For all exchangesWhat is your ETS user
connectivity strategy?
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Is there much more functionality you can add to
your ETS or is it generally, fixed?
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How do you monitor capacity planning and
implement capacity upgrades as your ETS volumes
have increased?
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What is the current size of your IT staff
dedicated to the development/ maintenance and
operation of your ETS?
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How can new technologies decrease (or increase)
the time and costs required to build and maintain
your ETS?
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How does your ETS differentiate your exchange
from others?