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Trading / Trade Confirmation / Clearing / Settlement / Payments / Custody

Powered by Price Discovery, Instrument Trading, Trade Confirmation, Clearing, Settlement, Position Mananagement, Funds Transfer and Custody must be completed from everything such as overnight fed funds to long-term capital market securities issues. Every financial transaction needs to be recorded so that all parties perform as expected and that all parties are within regulatory compliance. Secondly, banks and non-bank financial institutions must also have a Payment System that provides interbank electronic access and funds credit / debit transfer services, clearing services, and settlement services. All of these systems are networks of servers, work stations, desktop monitors, software and dedicated, secure digital or telephonic communications links are combined into an ECN (Electronic Communications Network) that transfer data (not the actual money or securities) of financial transactions across the world. Trading systems are the hardware and software infrastructure (platforms) for the trading of commodities, securities, derivatives, foreign exchange, electrical power and carbon caps (and connect to midlle and back-end Clearing and Settlement Systems for trading and securities). Payment systems are the large central bank / interbank payment and messaging networks such as Fedwire Funds Service, TARGET, APACS, SWIFT, BOJ-NET and CHIPS. Electronic Funds Transfer networks are the hardware and software infrastructure (platforms) for ATM, debit card and credit card transaction processing. Credit Issue: Due to the diversity of market participants, the range of financial products, market globalization and the value and volume of transactions processed by payment and settlement systems, a failure of payment and settlement systems to function smoothly could have a widespread adverse impact on the overall economic activity. Trading systems must be secure, reliable and have very low latency so that there is confidence in order execution. Translate

Markets
A market is a location where a Seller and a Purchaser can come together to complete a transaction. In the past, a market has usually been a physical location where the actual goods being offered for sale were brought so that potential purchasers could examine and evaluate them for quality and quantity.

The pricing for any good or service is influenced by the abundance or scarcity of the commodity, which are a reflection of the conditions necessary to, and ability to, produce the commodity, and the need / demand (or even desire) for the commodity. The interaction of Sellers and Purchasers competing with each other to sell (offer) or evaluate and purchase (bid) a specific commodity essentially create the "market price" for the commodity. Price Discovery is the determination whether a commodity is abundant or scarce, and what the demand is for it: what one or many Sellers will sell the product for and just how much one or many Purchasers will pay for it (a Purchaser may immediately become a Seller after purchasing the commodity). In an "efficient market" there is no pre-existing relationship between the Seller and the Purchaser, and there is no fixed, minimum or maximum price for a commodity: the sales volume of a commodity will stall at a certain price and the abundance / volume of the commodity will be cleared at a certain price, essentially reaching a price equilibrium where Sellers and Purchasers are receiving and paying exactly what they want or what they need. The purpose of a financial market is to either promote trade, raise capital or transfer risk. The market transaction can be for either the immediate sale, purchase and delivery of the commodity (cash or spot price / market) or for the sale, purchase and delivery at a later date (futures contract / market). The transaction can be completed on an exchange, which has, and the participants agree to abide by, a formal set of rules and regulations that govern the quality, quantity, pricing, sale and delivery of the commodity or service (the exchange monitors and manages the transaction). The transaction can be "Over-the-Counter" (OTC), which is a semi-private transaction with some rules and regulations but much less oversight compared to a formal and managed exchange (usually the Seller and the Purchaser are the only market participants in the transaction). The formal and managed exchange can still be a physical location where non-professionals (cash market) or professionals (cash and futures market) stand face-to-face to complete a market transaction (market participants). The formal and managed exchange can also be an electronically-linked network where nonprofessional and professional market participants communicate information about the quality, quantity, pricing, sale and delivery of the commodity or service through telecommunications and/or computer-based network.

Please also see the separate page for Cash / Spot Price Markets

Exchanges
There are exchanges for the: Sale and purchase of stock / equities (capital market) Sale and purchase of debt securities / bonds (capital market) Sale and purchase of currencies (Forex market for futures and options; there is no exchange for spot transactions) Sale and purchase of bank loans Agricultural (soft) commodities (futures and options) Base metals and precious metals (hard) commodities (futures and options) Energy-related commodities (petroleum, refined petroleum, natural gas, coal, electricity) Plastics and polymers Financial insturments futures and options (derivatives market on stock prices, bond prices, exchange indices, currency rates, interest rates) (risk transfer) Weather or catastrophe risk

As indicated above, an exchange (market) can be either a physical location or a computer-based electronic network, and offer for sale and purchase either for immediate delivery or trade (sell) futures contracts and options. One must be a member of the exchange or has trading privileges on the exchange, or is employed by a company that is a member, or has an account with a company or individual who is a securities broker, futures commission merchant (FCM) or an introducing broker (IB) that is an exchange member in order to access the exchange. All exchanges are regulated entities, and exchange participants are regulated by the Securities & Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the National Futures Association (NFA); in the United Kingdom, the Financial Services Authority (FSA); in Japan, the Financial Services Agency (FSA).

Please also see the separate page for U.S. and International Commodities and Futures Market Exchanges Please also see the separate page for U.S. and International Stock Exchanges Please also see the separate page for U.S. and International Electric Power Exchanges

Electronic Communications Network (ECN)

Electronic Communications Network (ECN) are the secure computer network infrastructure over which trading is conducted either directly with / through the exchange by participants who are not physically located at the exchange (or the exchange has no floor trading and is electronic only in function and design), or with other interbank participants, or with other institutions such as bank trading departments, hedge funds, commodity pools, securities firms (any entity that has a trading department or capability). An ECN allows the trader to trade directly with market participants who are providing the actual price quotes in the market, there is no intermediary price markup. The ECN's book data allows one to see all the bids & asks on the associated ECNs order book. ECNS exist for equity and debt securities, forex, commodities, electricity and derivatives products (futures, options, swaps). ECNs developed to increase the speed and transparency of a financial transaction and to avoid the actual physical movement of cash and securities documents and certificates. The ECN structure also reduces the cost to trade because it eleiminates the need for real estate to house an exchange and matches buy and sell orders automatically without the intervention of a human broker or marketmaker. The key to this situation is that the system has low-latency: only mili-seconds difference between the actual quote on the exchange and the display on the participant's screen, and only mili-seconds between "clicking" a market order and acutal order execution. Payments are transferred and trades are settled and cleared electronically (securities ownership is completed by book-entry accounting system). Both ACH (Automated Clearing House) and EFT (Electronic Funds Transfer) networks are are also ECNs. As an example of the relationship between exchanges and ECNs, the CME Group, which is one of the largest commodities / derivatives exchange in the world, and includes the Chicago Mercantile Exchange, the Chicago Board of Trade, and NYMEX (along with its COMEX division) maintains floor trading / open outcry operations daily during business hours and electronic trading on its Globex ECN. Equity market ECNs are designed to eliminate the need for an intermediary broker, specialist or floor traders by allowing market makers (large institutions with sufficient capital to purchase and hold an inventory of shares) to directly deal with participants. For instance, there are several hundred market makers on NASDAQ. No ECN is outside the oversight of national and professional regulatory agencies and organizations.

Alternative Trading Systems (ATS)

ATS (Alternative Trading System) are non-traditional, electronic-based markets for professionals and institutions trading securities and derivatives, which matches buy and sell orders automatically without the intervention of a human broker or marketmaker, or by using one of the large exchanges. An ATS is essentially an ECN (as per SEC Rule 300a) and primarily associated with equities trading (sometimes often referred to as a Multilateral Trading Facility / MTF). Again these are trading platforms not accessed by retail shareholders but are utilized by institutional investors, and include: Alpha ATS (Canada) BATS Europe BATS Exchange (USA) Chi-X Europe (London) Burgundy (Sweden) Direct Edge Equiduct Trading (Brse Berlin) NYSE Euronext Arca Omega ATS (Canada) Quote MTF (Hungary) Xetra International (Deutsche Brse) These exchanges make markets in the most liquid of stocks listed on the large exchanges, execute orders faster, and have a lower overhead so they can compete on price compared to older, established exchanges. There are also a group of equity-related ATS known as Dark Pools (or dark liquidity pools).

Trading Systems / Trading Platforms

These are software and screen and keyboard-based electronic trading systems / trading platforms used to directly access exchanges and the inter-bank / institutional / corporate treasury (wholesale) market (market makers). There are also a number of companies who are primary market data vendors for the exchanges and provide intra-day and end-of-day data to subscribers and/or for integration into other software packages. Straight Through Processing (STP) refers to software pacakges that can handle pre-trade analytics / front-end to trade execution / position managment to back office (confirmation, clearing, settlement, portfolio accounting and reporting). In developing a straight through system an institution must make a "Buy or Build" software decision or an integration of both components, and make an investment in hardware such as dedicated T1 cable lines and UNIX, LINUX or Windows servers, with either J2EE or .NET environments. Software applications, which includes front-office trading applications, mid or back office systems and exchanges, need to be compliant with the industry-standard Financial Information eXchange (FIX) messaging protocol (versions 4.2, 4.3 and 4.4). There are trading platforms for the trading of equity and debt securities, forex (spot and futures), commodities, electricity and derivatives products (futures, options, swaps). All electronic communication networks / electronic trading systems are dependent upon third-party vendors for network, access / connectivity, trading platform access, market data distribution and back office reconciliation. The trading platform includes one or more software applications installed either on the server of the financial institution and / or the desktop computer at the employee's or trader's desk. The software application provides the front-end, graphic user interface (GUI) for the trader (usually multiwindow) and the coding that actually transfers the digital data. The application may be the only interface the trader uses (integrated platform) or they may use a web browser-based (MS Windowns Internet Explorer, Mozilla) to access the ECN exchange or the inter-bank market (a web browser-based trading platform is often used by unregistered and unlicensed retail traders; a web

browser-based trading platform is seconds slower than an ECN direct access integrated application however, it does not require downloading an application). The applicaion may also allow for dual / multi-monitor configurations. The trading platform provides real time quotes for the bid (purchase) and ask (sale) price for the product, and also should provide a data feed of information relevant to the market (previous pricing data, economic news releases and analysis). There are four sources for a front-end trading platform: Download an application provided by a broker, data center, proprietary trading group. Lease / license from an independent software vendor. Develop a proprietary application. Download an application provided by an exchange. There is a substantial difference between institutional ECN connection / trading platform and retail account connection / trading application (professionals / non-professionals who trade from a home office through a retail broker). The institution can afford the higher-quality hardware and direct access. The retail client is using an off-the-shelf desktop computer and an installed software application (download or disk), and usually accessing the market or exchange through an account that is accessed through a web browser. If the retail client does not have a broadband connection and a direct access ECN connection then they cannot effectively compete. In some instances, the retail client will actually just be trading with the broker and not actually with the exchange and / or marketmakers (although it will be an ECN-like environment).

Trading Platforms
Bloomberg SwapTrader is a multi-dealer swaps trading platform delivered via the Bloomberg Professional service. BT Radianz is an Internet Protocol (IP)-based network provider (connectivity and hosting) that links a number of market participants, trading platforms and exchanges. Calypso provides straight through processing products for interest rate derivatives, credit derivatives, risk analysis and back-office processing. CME Globex is the electronic platform for trading futures and options on the Chicago Mercatile Exchange (CME). Globex Trader is the front end trading application that connects a user either directly or via the Internet to CME Globex. COMTEX is a news consolidator that provides financial news from multiple sources and includes economic, corporate, and legislative, corporate announcements for US-based publically traded companies, Reuters, Dow Jones, and Associated Press news reports, SEC public company filing information. CQG Trader and CQG Integrated Client are 2 front-end trading platforms that routes orders to several of the the major futures and options exchanges. CQG Integrated Client provides more detailed market data, analytics, and order routing. CQG Trader is an order entry and account management interface without the analytics. Deutsche Bank dbFX is a platform for trading foreign exchange in more than 20 major currency pairs. FXSelect is a currency management platform. EBS / Electronic Broking Services trading platforms for foreign currency trading includes EBS Spot, EBS Prime and EBS Market Data. EBS Metals is a trading platform for trade execution for precious metals on the EBS Spot system. EBS was acquired by ICAP (see below) in 2006.

e-cbot is the electronic trading platform (LIFFE-CONNECT) for the Chicago Board of Trade (CBOT). Connectivity to the system is also available through Bloomberg, CQG, Inc., EasyScreen, eSpeed, FfastTrade, GL TRADE, NYFIX, Rolfe & Nolan, Townsend Analytics, Ltd., Trading Technologies, 7 Ticks, RTS Realtime Systems Group and Cunningham Trading System (CTS). eSignal provides Trade Manager and Account Manager. eSpeed is a multi-product (US treasuries, European government bonds, futures and foreign exchange) trading platform with middle and back office applications that support clearance, settlement, tracking and reporting of trades, and provide links to outside entities such as the Government Securities Clearance Corp., National Securities Clearance Corp., and most other global clearing organizations. Originally operated by Cantor Fitzgerald, eSpeed merged with BGC Partners (April 2008) which had separated from Cantor Fitzgerald in 2004. EuroLight is APX Groups trading platform for the APX Power NL / APX Gas NL and the APX Power UK / APX Gas UK energy exchanges. APX Translator will make EuroLight compatible with Trayport GlobalVision Trading Gateway. Genesis Securities, LLC, provides the front-end Laser trading platform for equities trading and displays all of the real-time Level I and Level II information for the quote, ECN books and Time & Sale Prints, together with tick charts and minute charts. The application provides direct order routing to all major ECNs, NASDAQ Super Montage and NYSE DOT. Order types include limit, market, reserve, stop market and stop limit. GL TRADE provides straight through processing products GL STREAM, GL WIN, GL RUBYX, GL CLEARSTREAM, GL SETTLE US, GL RIMS, GL TXPRESS for trading futures and options on a number of exchanges. ICAP is provides voice and electronic front-end trading of of inter-dealer OTC financial products and services in energy, foreign exchange, interest rates, credit and equity markets, as well as data, commentary and indices. Interactive Data Corporation (IDC) provides of financial market data and analytics on various securities. Operations include Interactive Data Pricing and Reference Data, Interactive Data RealTime Services, Interactive Data Fixed Income Analytics, and eSignal. Lava Trading, Inc. (owned by Citigroup), provides the LavaFX trading platform and sell side platforms (Lava ColorBook, Lava Trading Floor, Lava ColorPalette) and LavaX, a neutral, multibroker platform for the buyside. Marco Polo Network is a front-end platform for emerging markets listed equities and equities derivatives. Provides cross-border, direct market access (DMA) to linked axchanges. MetaTrader 4 from MetaQuotes Software Corp., provides a retail platform for futures, options and forex trading, and is used by several retail brokers including FXDD, ODL Securities, PFGBEST, UWC (United World Capital). Misys Opics Plus is a front-end platform for derivatives, fixed income, equity and treasury trades. Misys Summit is a multi-product, multi-function front-end to back-end platform that can trade treasury, derivative, fixed income and commercial loan products, perform trade confirmation and settlement, collateral management, and accounting and reporting. Murex provides straight through processing products as part of the MX.3 platform. NASDAQ PORTAL Market is used by broker-dealers, qualified institutional buyers (QIBs) and private and public companies from around the world to negotiate and trade 144A Securities (unregistered equity, derivative and debt securities).

NSC (Nouveau Systme de Cotation) is used by broker-dealers on Euronext. Numerix provides pricing and risk analytics for fixed income, credit, foreign exchange, hybrids, cross currency, inflation rate and equity derivatives. NYMEX ClearPort is the internet-based electronic platform for trading and clearing futures and options on the New York Mercantile Exchange (NYMEX) energy, metals and soft commodity contracts. Oak Systems OAK and OAK II are front-end live bid and offer price platforms for electronic trading (the OAK platform interfaces directly with the electronic order routing systems adopted by the futures and options exchanges) and will also route orders to a specific exchange for pit traded or open cry markets trades. Omgeo LLC (a joint venture of the Depository Trust & Clearing Corporation / DTCC and Thomson Financial) provides post-trade, pre-settlement products. OpenLink Financial provides a group of Straight Through Processing products such as Findur and Endur. Reuters Data Feeds, Work Station and DataScope products provide news and pricing information on various markets and products. Reuters 3000 Xtra is a high-speed, integrated information and transaction service. Reuters Kondor Trade Processing (KTP) provides back-office products for processing, delivery, confirmations, payments, collateralisation and accounting across all instruments. Reuters Trading for Foreign Exchange platform allows participants to trade FX from their Reuters terminal. Rolfe & Nolan provide Straight Through Processing platforms for futures and options trading. Frontend products include Edge (which can route orders to electronic and floor-based exchanges), QST, RANorder (which utilizes HTML and Windows front-end interfaces for order entry and account access). Middle office products include Fees Direct and Margin Direct. Back office products are RANsys or RISC. SmartStream Technologies provides middle and back office products. STAR, Sucden Financial's in-house developed futures and options trading platform, provides access to many of the world's major exchanges. Sucden FX Trader Pro and Currenex are desktop platforms for forex trading. SunGard provides an extensive group of Straight Through Processing products. Swapstream sPro and sDealer platforms are front-end trading systems specifically designed for medium- and long-term interest rate swaps. SwapsWire (owned by 21 major banks / investment banks) provides trade capture, broker confirmation and counterparty confirmation for multiple OTC derivatives products including interest rate swaps, forward rate agreements, overnight index swaps, caps, floors, swaptions, credit default swaps and equity options. TradeStation (TradeStation Securities) is a trading platofrm for stocks, options, futures or forex. The TradeStation Network delivers real-time (for an additional fee) and delayed (free) index, equity and equity options, forex, and futures and futures options data, as well as foreign market data, market news feeds and free fundamental data.

TradeWeb is a fixed-income securities and deriviatives trading platform that provides live auction pricing / quotes and trade execution. (indirect subsidiary of Thomson Financial) Traiana (owned by ICAP) provides the back office Harmony system (for foreign exchange electronic trading). NetLink is also a post trade netting service for the foreign exchange market. Trayport GlobalVision Exchange Trading System and Trading Gateway are front end products for futures and options and will connect to existing mid and back office platforms to facilitate STP using XML-based APIs. Trepp CMBS Analytics on Bloomberg provides a trading platform for the CMBS secondary market. Vision Financial Markets provides the Vision Advantage (powered by Rolfe & Nolan) and the Vision Xpress front-end, futures trading platforms.

Securities Identification Protocols

ISO Standards International Securities Identification Number (ISIN) (ISO 6166); was devised by Association of National Numbering Agencies (ANNA) and is a 12 character code (2 character alphabetical country code, 9 digit National Securities Identification Number, 1 digit Check Digit) that is issued by the local National Numbering Agency (NNA) to identify securities issued internationally. BIC (ISO 9632) Market Identifier Code (MIC) (ISO 10383); code consists of four contiguous characters, which identifies stock markets / commofities & derivatives exchanges . The first character should be an X. CFI (ISO 10692); a six digit code maintained by the ANA used to describe financial instruments by Category (equity, fixed income), Group (shares, preferred shares), and Attributes (voting rights). SEDOL is a 7 character alphanumeric code administered by the London Stock Exchange and incorporates MIC / ISO 10383 to identify securities (similar to CUSIP). CUSIP is a 9 digit identification code for securities (debt and equity) issued in the United States administered by Standard & Poor's who is responsible for the compilation and publication of the CUSIP Directory; CINS (CUSIP International Numbering System) number are for international securities. The International Securities Association for Institutional Trade Communication (ISITC), an industry association, facilitates straight-through processing and other electronic trade and communications procedures / standards among custodian banks, investment managers, and broker/dealers. The ISO20022 Working Group provides the financial industry with a common platform for the development of messages in a standardized XML syntax.

Clearing and Settlement

Clearing is the transfer and confirmation of information between the payer (sending financial institution) and payee (receiving financial institution). Settlement is the actual transfer of funds between the payers financial institution and the payees financial institution.

 Settlement discharges the obligation of the payer financial institution to the payee financial institution with respect to the payment order. Final settlement is irrevocable and unconditional. Clearing Houses are normally affiliated with a particular exchange and are authorized to settle the contracts of that exchange. Normally, the two parties to a trade are members of the exchange and its affiliated clearing operation. The two members enter into a contract and enter the details into the electronic trading system so that the trade can be matched between the two parties. The clearing house assumes a contractual obligation in the transaction by functioning as the intermediary between the transaction: the clearing house assumes financial risk by functioning the counterparty for both parties. In this manner each party is protected from the default of either party as the clearing house functions as the buyer and seller of the contract. In order to cover its obligations the clearing house maintains its own capital base, bank facility guarantees, and collects member margin payments. Settlement of an exchange monitored or OTC transaction irrevocable cash payment for a currency, commodity, security or derivative contract premium may be conducted several ways (Bond and Repo clearing is slightly different process): One-way cash payment, made electronically or physically Payment of one currency for the receipt of another currency Delivery vs payment, or the simultaneous exchange of cash for a security Settlement Instructions must at a minimum include: Name of Institution Name of clearing bank and ABA routing Number (if applicable) Account Number SWIFT Address Multilateral Netting Settlement System allows 2 counterparties with numerous transactions between them to sum the total due to eachother and settle through a single payment / receipt by just paying the difference between the two amounts to the party that has the net due amount. This situation requires that the 2 parties execute a bilateral Netting Agreement prior to entering into any transactions. <>

ACT
The Automated Confirmation Transaction (ACT) service is the clearing and reconcilliation electronic system for trades completed through NASDAQ trading services and the OTC Bulletin Board.

CDCC
Canadian Derivatives Clearing Corporation (CDCC) is the issuer, clearinghouse, and guarantor of equity, index and interest rate financial derivative contracts traded on the Montral Exchange. CDCC also provides clearing, settlement and administrative services to the Winnipeg Commodity Exchange and the WCE Clearing Corporation. Bourse de Montral Inc. is the sole holder of the shares of CDCC. In order to align itself to the change to a for-profit status of its parent company, CDCC has received regulatory approval of amendments to its by-laws that allow it to also become a for-profit organization. It is the only clearinghouse to offer clearing services on both options and futures products.

Clearing & Depository Services (CDS)

The Clearing & Depository Services (CDS) is Canada's national securities depository, clearing (domestic Canada and international) and settlement operation, and the CDS supports Canada's equity, fixed income and money markets. The CDS is owned by major Canadian banks and the members of the Toronto Stock Exchange and the Investment Dealers Association of Canada (IDA) (who utilize the CDS's clearing and depository services). The CDS provides its customers with custody and movement of securities, record-keeping, the processing of post-trade transactions, and the collection and distribution of entitlements relating to the securities that have been deposited by customers. The CDS also provides customers with physical and electronic facilities to deposit and withdraw depository-eligible securities and manage their related ledger positions (securities accounts).

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Clearstram
Clearstram (formerly known as CEDEL / Centrale de Livraison de Valeurs Mobilieres, which was merged with Deutsche Brse Clearing in January 2000) is a wholly-owned by Deutsche Brse and provides securities clearing and settlement, and post-trading services.

Depository Trust Clearing Corporation (DTCC)

The Depository Trust Clearing Corporation (DTCC; established in 1999) is the holding company parent of its 2 wholly-owned subsidiaries, which are the Depository Trust Company (DTC) and the National Securities Clearing Corporation (NSCC). The DTC (established in 1973) is the largest depository and clearinghouse in the world for securities trading settlement. The NSCC (established in 1976) provides clearance and settlement services primarily for broker-to-broker securities transactions. Combined, the DTC and the NSCC conduct most of the daily clearance, settlement and custody services for equity, corporate debt and municipal bond transactions in the United States. The customers of both entities include boker / dealers, securities exchanges, issuers, banks, paying agents, mututal fund companies and insurance companies. Again, combined, the DTC and NSCC settle millions of transactions every day valued in trillions of dollars annually. In addition, the DTCC is also the parent corporation of the Fixed Income Clearing Corporation (FICC, which was created by the merger of the MBS Clearing Corporation / MBSCC and the Government Securities Clearing Corporation / GSCC), and the Emerging Markets Clearing Corporation (EMCC).

Depository Trust Company (DTC) The company's primary role is transferring ownership of securities between participants by bookentry form and also through physical delivery (custody and safekeeping). The company also provides tax services (reclamation of taxes on dividends withheld on foreign securities), processing of IPOs, and has oversight of dividend and interest payments. The DTC also provides custody and clearing services for securities from many nations in addition to U.S. issued securities (the DTC can settle in several currencies). The DTC is a member of the Federal Reserve System. <>

ELX (Electronic Liquidity Exchange)

Investors in this start-up include banks including Bank of America, Barclays Capital, Citigroup, Credit Suisse, Deutsche Bank Securities, JPMorgan, Merrill Lynch and Royal Bank of Scotland; nonbank investors include Chicago-based market making firms Getco, Peak 6 and hedge fund Citadel Investment Group LLC.

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Euroclear
Euroclear, which is primarily owned by its user members, provides clearing and settlement of domestic and international securities transactions (Euroclear Bank SA/NV). The Euroclear group also acts as the Central Securities Depository (CSD) for Belgian (Euroclear Belgium), Dutch (Euroclear Nederland), French (Euroclear France SA), Irish and UK securities (Euroclear UK & Ireland Limited). On 1 January 2007, EMXCo also became part of the Euroclear group. The EMX Message System is the de facto standard for fund order routing in the UK and provides order-routing services throughout Europe. Euroclear UK & Ireland Limited is the former CRESTCo, Ltd. CREST originally commenced operations on July 15, 1996, by replacing the old paper-based Talisman equity share settlement system of the London Stock Exchange and converted the old share registrar custody format to an electronic format (also replaced the Taurus electronic system that had failed to be implemented in March 1993).

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Fedwire Securities Service

Fedwire Securities Service is a book-entry securities transfer system that provides participants costeffective safekeeping, transfer and delivery-versus-payment settlement services with flexible account structures and automated claim adjustment features. www.frbservices.org/fedwire/index.html

Fimat / Newedge
Fimat (Fimat International Banque S.A.) is a wholly owned subsidiary of Socit Gnrale Group, and offers straight through clearing and execution services on listed or OTC derivatives and cash products such as fixed income, tangible commodities, forex, financial Futures & Options and equities. Fimat is a clearing member of all of the major dirivatives exchanges around the world. Please Note: On August 8, 2007, Calyon and Socit Gnrale signed a joint agreement to combine their respective global brokerage activities which currently comprise the Fimat and Calyon Financial groups. The closing of the merger was January 2, 2008, and the new entity will be called Newedge. At Closing, Socit Gnrale and Calyon will each own 50% of Newedge Group. Effective January 2, 2008, Fimat USA, LLC changed its name to Newedge USA, LLC.

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Goldman Sachs Derivatives Clearing Services (DCS)

Derivatives Clearing Services (DCS) commenced operations in July 2010, and provides Goldman Sachs' clients with derivatives clearing services.

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International Derivatives Clearing Group, LLC (IDCG)

Through its subsidiary International Derivatives Clearinghouse, LLC, participants can clear and settle new and existing OTC U.S. dollar denominated interest rate swap contracts traded bilaterally with dealers. The IDCG is a subsidiary of the NASDAQ OMX Group. The Bank of New York Mellon owns a minority investment in the IDCG, and provides margin and collateral management services to the IDCG.

Japan Bond Settlement Network

The Japan Bond Settlement Network Co., Ltd. (JB Net) operates an online network system which links participants (investors and dealers), registrars and the Bank of Japan for funds transfers, thereby facilitating the transfer of corporate and other registered bonds, including corporate bonds, government-guaranteed bonds and municipal bonds. JB Net functions as the intermediary in this online network system. JB Net was established by financial institutions including banks, securities companies, investment companies and insurance companies.

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LCH.Clearnet
LCH.Clearnet Group was formed following the merger of the London Clearing House and Clearnet SA in 2003. The London Clearing House clears contracts for the IPE (International Petroleum Exchange, now known as IntercontinentalExchange / ICE Futures), LIFFE (now know as NYSE Liffe) and the LME (London Metals Exchange). Banque Centrale de Compensation SA, which traded as Clearnet, was formed in 1969 to clear contracts traded in Paris commodity markets. LCH.Clearnet also clears for ICAP Electronic Brokering Services (EBS), eSpeed, SwapsWire, EDX London. In the 1st Quarter 2010, LCH.Clearnet cleared its first credit default swap index contract.

Monte Titoli
Monte Titoli (part of Gruppo Borsa Italiana) was founded in 1978 and since 1986 has been the Italian Central Securities Depository for all Italian financial instruments (including Italian Government bonds). SWIFTNet provider.

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National Securities Clearing Corporation (NSCC)

The National Securities Clearing Corporation (NSCC) is a wholly owned subsidiary of The Depository Trust & Clearing Corporation (DTCC). The company's primary role is transferring ownership of securities (equities, corporate debt, municipal bonds and unit investment trusts) between broker / dealers. It is also the primary provider of settlement services to mututal fund companies and insurance / annuity transactions.

Omego OASYS
Many investment managers use the OASYS and OASYS Global (cross-border) trade allocation and confirmation service (an Electronic Trade Confirmation / ETC) to exchange trade details and allocations automatically with broker / dealers following trade execution of equity, fixed-income and

foreign exchange transactions (known as trade through or process straight through). The ETC systems allows the broker to avoid the time delay of either mailing the client a confirmation letter or sending a fax confirmation, and allows for T+1 and T+0 settlement. Additional ETCs include Salerio ETC, Sungard Transaction Network, SmartStream. OASYS is owned and operated by Omego (former Thomson Financial ESG).

SWIFT (Society for Worldwide Interbank Financial Telecommunications)

SWIFT (Society for Worldwide Interbank Financial Telecommunications) is an on-line system that uses standardized message formats in order for counterparties to send settlement instructions. SWIFT is also used to electronically transfer trade confirmation notices. SWIFT PDS (Payment Delivery System) utilizes a Real Time Gross Settlement (RTGS) platform for continuous funds transfer without netting for large vlaue payments. The processing chain for payments, securities processing, treasury operations and real-time gross settlement is handled via SWIFTNet FIN messages. SWIFT's annual technology conference is SIBOS (SWIFT International Banking Operations Seminar).

The Clearing Corporation (TCC)

Founded in 1925 as the Board of Trade Clearing Corporation, The Clearing Corporation was acquired by ICE on March 6, 2009.

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Clearing Houses
Other exchange / professional / national clearing and settlement operations include: Bombay Stock Exchange Clearing House INTERBOLSA (Sociedade Gestora de Sistemas de Liquidao e de Sistemas Centralizados de Valores Mobilirios, S.A. (Portugal, in cooperation with LCH.Clearnet, SA) Hong Kong Exchanges and Clearing Limited KELER (Central Clearing House and Depository (Budapest) Ltd. Kansas City Board of Trade Clearing Corp. Merrill Lynch Professional Clearing Corp.'s PEACE Clearing system (clearing agents for professional trading accounts both on floor market makersand off floor hedge funds) Norwegian Futures and Options Clearinghouse (NOS Clearing ASA) SFE Clearing Corporation Pty. Limited, functions as a central counterparty clearing organization. SFE Austraclear provides depository, clearing and settlement systems, and registry services of a range of over-the-counter (OTC) products. Japan Securities Clearing Corporation. <>

ConfirmHub, LLC
ConfirmHub provides confirmation processing of brokered, exchange-traded, and bilateral transactions in the energy trading markets. ConfirmHub allows energy traders and back offices to receive their NYMEX brokered and bilateral OTC cleared trades, as well as their futures and OTC trades, on a single confirmation platform.

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Swiss Emissions Trading Registry

The Swiss Emissions Trading Registry is operated and managed by the Federal Office for the Environment (FOEN) in Switzerland and is an online accounting system, which ensures that the issuance, holding, transfer, acquisition, cancellation and surrender of emission credits are accurately recorded. The credits exist only in an electronic form. Every Registry transaction is verified and approved by a central authority (Climate Change Secretariat, UNFCCC) via the International Transaction Log (ITL). www.national-registry.ch/

Payment Systems
Payment Services are provided by various kinds of institutions including banks and non-bank financial institutions. All interbank obligations resulting from retail payment such as checks and electronic funds transfers are cleared on a multilateral net basis by the ACH (Automated Clearing House). The payment and settlement arrangements have been changing significantly in recent years. Payment arrangements previously based almost exclusively on cash and paper-based payment instruments have been changing to electronic payment arrangements at a rapid rate.

Fedwire Funds Service

Fedwire is the U.S. Federal Reserve System's nationwide real-time gross settlement (RTGS) system for the United States (large-value, domestic, funds transfer payment orders; Fedwire also provides safekeeping and transfer services for U.S. government and agency securities, and mortgage-backed securities). All banks / financial institutions approved to participate in the system have a specific identification number and maintain an account with a Reserve Bank. Fedwire is a credit transfer system, and each funds transfer is settled individually against an institutions reserve or clearing account on the books of the Federal Reserve as it is processed and is considered a final and irrevocable payment. www.frbservices.org/fedwire/index.html The Fedwire Funds Service operates 21.5 hours each business day from 9:00 p.m. EST on the preceding calendar day to 6:30 p.m. EST.

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National Settlement Service

The National Settlement Service is a multilateral settlement service owned and operated by the U.S. Federal Reserve Banks. The service is offered to depository institutions that settle for participants in clearinghouses, financial exchanges and other clearing and settlement groups.

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Federal Reserve Banks Check Services

National electronic and paper check processing service. www.frbservices.org/check/index.html

CHIPS (Clearing House Interbank Payment System)

CHIPS (Clearing House Interbank Payment System) is a privately owned on-line system used in New York to settle forex spot transactions that are required to settle within two business days.

Bank of Japan Financial Network System (BOJ-NET)

Bank of Japan Financial Network System (BOJ-NET) is the Bank of Japan's real-time gross settlement (RTGS) system for payments and for transferring Japanese government securities (includes a delivery-versus-payment mechanism for securities). Within Japan, there are two major private-sector payment systems used for settling the yen leg of foreign exchange transactions: FXYCS and the Continuous Linked Settlement (CLS). FXYCS is operated by the Tokyo Bankers Association (TBA) and processes yen payments resulting from cross-border financial transactions, including foreign exchange transactions. CLS is a multicurrency settlement system that settles the two legs of a foreign exchange transaction on a payment-versus-payment basis. The Zengin Data Telecommunication System (Zengin System) is an interbank clearing system for retail credit transfers, operated by the Tokyo Bankers Aassociation. The Tokyo Clearing House (TCH) is the largest bill and check clearing system in Japan. interbank ATM network systems such as the Banks Cash Service (BANCS) and the Multi Integrated Cash Service (MICS) are also managed by the TBA (the largest of Japans 72 regional bankers associations). www.boj.or.jp/en/theme/psys_seibi/index.htm

TARGET (Trans-European Automated Real-time Gross settlement Express Transfer system)

TARGET is the interbank RTGS payments system (real-time gross settlement system) for the euro, offered by the decentralized payment system of Eurosystem and It is used for the settlement of central bank operations, large-value euro interbank transfers as well as other euro payments.TARGET consists of fifteen national RTGS systems and the payment mechanism (EPM) of the European Central Bank (ECB), all of which are interlinked. The RTGS systems of nonparticipating member states may also connect to TARGET as long as those non-member RTGS systems comply with the minimum common features of the system. www.ecb.int/ecb/legal/pdf/l_01820060123en00010017.pdf (.pdf format) ARTIS (Austrian Real-Time Interbank Settlement system) - Oesterreichische Nationalbank RTGSplus - Deutsche Bundesbank ELLIPS (Electronic Large-value Interbank Payment System) - Nationale Bank van Belgi/Banque Nationale de Belgique KRONOS - Danmarks Nationalbank BoF-RTGS (Bank of Finland Interbank Funds Transfer System) - Suomen Pankki Finlands Bank POPS (Pankkien On-line Pikasiirrot ja Sekit-jrjestelm) - Suomen Pankki Finlands Bank SLBE (Servicio de Liquidacin del Banco de Espaa) - Banco de Espaa SPI (Servicio de Pagos Interbancarios) - Banco de Espaa TBF (Transferts Banque de France) - Banque de France PNS - Banque de France IRIS (Irish Real-time Interbank Settlement system) - Central Bank and Financial Services Authority of Ireland HERMES (Hellenic Real-time Money transfer Express System) - Bank of Greece LIPS-Gross (Luxembourg Interbank Payment System/Gross settlement) - Banque centrale du Luxembourg BIREL (Banca dItalia Regolamento Lordo / Sistema di regolamento lordo) - Banca dItalia TOP - De Nederlandsche Bank SPGT (Sistema de Pagamentos de Grandes Transaccoes) - Banco de Portugal RIX - Sveriges Riksbank

euro CHAPS (Clearing House Automated Payment System) - Bank of England EPM (European Payment Mechanism) - European Central Bank As of November 17, 2007, TARGET was replaced by TARGET2, characterized by a single technical platform called the Single Shared Platform (SSP), which is an attempt to harmonize the different, national RTGS systems. http://www.dnb.nl/dnb/home/file/EN_GUI_tcm47-155886.pdf (.pdf format) TARGET / Euro Large-Value Payaments Systems statistics www.ecb.int/stats/payments/payments/html/index.en.html

APACS (Association for Payment Clearing Services)

APACS manages the main clearing networks in the United Kingdom, which allow UK banks and building societies to exchange payments.

BACS
BACS is a not-for-profit payment system in the United Kingdom and is owned by 13 banks and building societies (UK and European). The company's two principal electronic payment systems are Direct Debit and Bacs Direct Credit. Ownership financial institutions include: Abbey Alliance & Leicester Commercial Bank Bank of England Barclays Bank Coutts & Co Clydesdale Danske Bank HBOS (Halifax and Bank of Scotland) HSBC Bank plc Lloyds TSB Bank Nationwide Building Society NatWest Northern Rock The Co-operative Bank The Royal Bank of Scotland

CHAPS (Clearing House Automated Payments System)

CHAPS provide same day settlement (RTGS) between financial institutions (interbank) for low volume, high value Sterling and Euro transactions within the United Kingdom.

VocaLink
VocaLink (owns the Faster Payments service, which is a GBP / only system) processes payments for the UKs BACS clearing system.

IBOS (International Banking - One solution / Inter-Bank Online System)

IBOS is a global payments system between member / participating banks that is provided primarily for corporate customers who have daily, real-time, multi-currency payment requirements. Member bank / country coverage is primarily within Western Europe, Central Europe and North America (including the Caribbean region). IBOS was originally a for-profit joint-venture between the Royal Bank of Scotland and Banco Santander.

ACH (Automated Clearing House)

The ACH (Automated Clearing House) is a nationwide electronic payments system among authorized participants that processes electronically originated batches of credit and debit transfers. ACH is utilized for pre-authorized, repetitive payments such as direct deposit of payroll, U.S. government payments such as Social Security and IRS tax refunds. ACH debit transfers include direct debits of consumer and business accounts for the payment of mortgages, bills, and tax obligations. More recently, the ACH network is being used to convert check payments into ACH debit transfers. The Federal Reserve Banks are collectively the nation's largest automated clearinghouse operator and process commercial interbank ACH transactions through their FedACH Service to depository institutions. ACH regulation regarding federal government participation (31 CFR 208 and 210). www.frbservices.org/fedach/index.html U.S. Treasury, Guide to Federal ACH Payments and Collections (Green Book) www.fms.treas.gov/greenbook/ Federal Reserve E-Payments Routing Directory www.fededirectory.frb.org/ The Electronic Payments Network (EPN) is the only private-sector ACH operator. EPN processes payments for approximately 1,500 financial institutions (commercial banks, savings bank, savings & loan, credit unions). There are also 19 regional payments associations in the United States, which provide businesses and financial institutions around the country with ACH information and resources. NACHA, the National Automated Clearing House Association, is a not-for-profit association that represents financial institutions through direct memberships in the network of regional payments associations, and develops operating rules and business practices for the Automated Clearing House (ACH) Network and for electronic payments in the areas of Internet commerce, electronic bill and invoice presentment and payment (EBPP, EIPP), e-checks, financial electronic data interchange (EDI), international payments, and electronic benefits services (EBS). www.nacha.org/

Electronic Funds Transfer (EFT)

Electronic Funds Transfer (EFT) refers to the movement of funds from one bank account to another by means of electronically communicated payment instructions (for instance through an ATM network and credit / debit card point of sales systems). To initiate EFT, a company must enter into an agreement with a financial institution capable of originating these transactions. The company needs to obtain written authorization from its customers and suppliers allowing for deposits or charges to their accounts. Initiated through electronic terminal, automated teller machine, computer terminal, and the WWW. Functionally, EFTs include two principal categories: credit transfers and debit transfers. A credit transfer is one in which the originator instructs its bank (via a payment order) to transfer funds belonging to the originator for credit to the beneficiarys account i.e., the instruction to pay is given by the person making the payment. A debit transfer is one in which the originator instructs its bank (via a payment order) to collect funds on behalf of the originator by debiting another partys account at the other partys bank i.e., the instruction is given by the person receiving payment. Please see the separate page on Credit Card, Debit Card and ATM Network operations.

Customer Information Transfer systems

ACATS (Automated Customer Account Transfer System)
ACATS (Automated Customer Account Transfer System) is the system managed by the NSCC (National Securities Clearing Corporation) to allow for the timely transfer of a customer account information between brokerage firms when the customer decides to close out the account / relationship with a broker and request the opening of an account with the new, competing firm. The advising client provides the new brokerage with basic information: Account Number (with the existing broker to be transferred) Tax ID or Social Security Number Account Registration (name of the beneficial owner or owners) Type of account (cash, margin) The system is designed to allow for the transfer of both cash and securities (so the securities portfolio does not have to be liquidated). At the start of the process, the new brokerage requests the transfer of assets and the old brokerage calculates the net asset value of the cash and securities portfolio and transfers the cash surrender value (less any fees owed by the customer) to the new brokerage. Once the actual securities are transferred the new brokerage returns the cash equivalent of the value of the securities back to the old brokerage. These transfer transactions are settled through the NSCC's Continuous Net Settlement (CNS) system (as long as the asset is CNS eligible; open-end mutual fund assets are settled through ACATS Fund/SERV).

Markets in Financial Instruments Directive (MiFID)

MiFID was authorized European Commission and adopted within the EU in order to bring greater transparency to regulated markets, which includes exchange traded and OTC traded transactions, broker/dealers, investment banks, portfolio managers, corporate finance operations, retail banks. The set of regulations became effective November 1, 2007. MiFID is a major part of the European Unions Financial Services Action Plan (FSAP), which is designed to help integrate Europe's financial markets. MiFID updates the Investment Services Directive (ISD). MiFID requires that firms executing orders, or who place orders with other entities for execution when providing the service of portfolio management, or who transmit orders to other entities for execution when providing the service of reception and transmission of orders, must have arrangements in place to take all reasonable steps to obtain the 'best possible result' for their clients. The best possible result should be determined with regard to the following execution factors: price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of an order. (MiFID Level 1 Directive , Article 21; Level 2 Directive, Articles 44, 45 and 46).

On Demand Market and General News Aggregators & Search (Data Vendors & Databases)
These entities provide breaking market news and international news to desktop screens on either a proprietary basis or by subscription to the service. These entities include ACN Newswire, Action Economics, Acquire Media, AP Financial News, Atos Origin, Bloomberg, Bridge, Business Wire, CEP News Pro, Comtex, Dialog Proquest, Dow Jones Newswire, Ecovision, Factiva (Dow Jones & Reuters), Factset, Fides, Financial Content, Financial Times Global Service, Fininfo, Genios, GIN Global Information Network, GlobeNewswire, Grab Networks (Voxant), Hugin, Infobolsa, Investnet,

JCN Network, LexisNexis, LexisNexis ABIX, MarketWatch, Markit, Newstex Finance Newsfeed, Newstex Public Companies Newsfeed, Proquest, Relegence, Reuters, Telerate, TrackData, Thomson Gale, Thomson Financial, YellowBrix.

Trading, Clearing & Settlement Information Resources

Association for Payment Clearing Services (APACS) Australian Payments Clearing Association (APCA) Canadian Depository for Securities Canadian Derivatives Clearing corp. www.cds.ca/ www.cdcc.ca/index_pc.php www.cdnpay.ca/ www.apacs.org.uk/

www.apca.com.au/

Canadian Payments Association (CPA / lAssociation canadienne des paiements) (Franais / English) Clearing Corporation www.clearingcorp.com/ www.chips.org

Clearing House Interbank Payments System (CHIPS) Clearstream www.clearstream.com/ Settlement and custody for the Deutsche Brse. CLS (Continuing Linked Settlement) Bank

www.cls-services.com/ www.cblc.com.br/cblc/Default.asp

Companhia Brasileira de Liquidao e Custdia / CBLC (Brazil) (Portugus / English) Depository Trust Company www.dtc.org/ www.dtcc.com/

Depository Trust & Clearing Corporation

Electronic Clearing House (ECHO) www.echo-inc.com/ (Originally an interbank FX settlement system, now provides commercial credit/debit card, paper check and bank payment processing services) Electronic Payment Services (Hong Kong) Emerging Markets Clearing Corporation www.eps.com.hk/

www.e-m-c-c.com/

EUREX www.eurexchange.com/ Clears EURO denominated derivative contracts (interest rate, equity, equity index) for the Deutsche Brse and the Swiss Exchange (SWX). Euroclear www.euroclear.com/ www.ecsda.com/

European Central Securities Depositories Association European Commodity Clearing AG (ECC)

www.ecc.de/ www.ficc.com/

Fixed Income Clearing Corporation (FICC / DTCC)

Global Banking & Securities Transactions (GBST / Australia) Hong Kong Exchange and Clearing, Ltd. www.hkex.com.hk/

www.gbst.com/

IberClear (El Depositario Central de Valores de Espaa) IBOS (Inter-Bank Online Systems) www.ibosassociation.com/ www.idcg.com/ (Korean / English)

International Derivatives Clearing Group, LLC (IDCG) Korea Securities Depository

www.ksd.or.kr/Eng/index.jsp

LCH.Clearnet www.lchclearnet.com/ (Formed by the merger of the London Clearing House and Clearnet SA); Clears contracts (financial, equities, energy, non-ferrous metals and commodities) for the International Petroleum Exchange (IPE), Euronext / LIFFE, London Metal Exchange (LME), The London Stock Exchange (LSE), Endex, virt-x, Powernext. Monte Titoli www.montetitoli.it/ nacha.org/

National Automated Clearing House Association (NACHA) National Securities Clearing Corporation OASYS / OASYS Global / ALERT (Omego) Options Clearing Corp. (OCC) SFE Clearing / Australclear SIS SegaInterSettle AG www.nscc.com/

http://www.omgeo.com/

www.optionsclearing.com/

www.sfe.com.au/

www.sec.sisclear.com/sec/cm/index.htm www.swift.com/

Society for Worldwide Interbank Financial Telecommunications (SWIFT) Swiss Interbank Clearing www.sic.ch/

UN/CEFACT United Nations Centre for Trade Facilitation and Electronic Business finance.org/ Verbrfaskrning slands (Icelandic Securities Depository) www.vbsi.is/

www.tbg5-

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