Electronic Trading and International Trends Sebastien Jaouen: Managing Director, GL Trade South Africa Philippe Carré: Executive Vice President, Global Client Services GL Trade

MARKET TRENDS BEST EXECUTION BUY SIDE & SOLUTIONS SUMMARY  Introduction & Market Trends  A challenging environment  BEST EXECUTION Solutions  BUY-SIDE Solutions  Conclusion

MARKET TRENDS BEST EXECUTION BUY SIDE & SOLUTIONS GL TRADE Introduction MARKET TRENDS 1,200+ Employees 26 Offices Clients  Founded in 1987  110+ markets connected  179MEuro turn-over in 2005 One solution to achieve Best Execution

MARKET TRENDS BEST EXECUTION BUY SIDE & SOLUTIONS GL TRADE South Africa A local partner  Our Mission: be customer-focused  Distribute & market locally the GL TRADE offering  Support day-to-day implementation, customization and maintenance of GL TRADE solutions  Consolidate local demands and trends to report to GL TRADE headquarters for a pro active product strategy  Opened in 2002, we proudly support MARKET TRENDS

BEST EXECUTION BUY SIDE & SOLUTIONS Market Trends Regulatory changes and best execution issues are changing the way Investment Managers want to trade MARKET TRENDS Drivers for change:  Disguise order flow  Increase prices transparency  Reduce direct cost of trading Resulting changes  Spending on trading is segmented  Buy Side traders want direct access to electronic markets  Orders chopped in small packets, often using brokers’ strategies for algorithmic trading Brokers responses:  “low touch” or quasi automated DMA services  Broker’s advanced strategies  Always larger range of connectivity options

MARKET TRENDS BEST EXECUTION BUY SIDE & SOLUTIONS Market Trends Changes in the mix of DMA & EDA orders Hedge funds and Buy Side traders looking for more control over their order flow by using execution strategies and choosing between EDA & DMA, depending on the complexity & volume of the execution they want to achieve  Already 2% of Asset Managers process between 20% & 50% of their trading volume in DMA.  More than 66% of them have the intention to increase their DMA volume over the coming years. (Edhec Risk Advisory 2003) MARKET TRENDS

BEST EXECUTION BUY SIDE & SOLUTIONS Market Trends Interest in implementing algorithmic trading Buy Side traders use execution strategies to conceal their trades, boost productivity and measure their trade performance against benchmark  Algorithmic trading is set to rise 144% by 2006 (Tabb)  58% of Investment Managers process between 5% & 50% of their trading volumes through algorithmic trading programs (Edhec) MARKET TRENDS

BEST EXECUTION BUY SIDE & SOLUTIONS SUMMARY  Introduction & Market Trends  BEST EXECUTION Solutions  Expect the Best  BUY-SIDE Solutions  Conclusion

MARKET TRENDS BEST EXECUTION BUY SIDE & SOLUTIONS Why Best Execution needs a central platform? ORDER MANAGEMENT SOLUTION GLOBAL EXECUTION CONTROL Best Execution requires end-to- end execution process monitoring ORDER FLOW AT A GLANCE External and internal data centralization Global Order Book is more than ever needed A UNIQUE PLATFORM ! CLIENT DIFFERENTIATION different rules according to client status, impacting the order characteristics and routing rules ONE EXECUTION CONSOLE BOARD No unilateral client routing rules. Client Account Management has to be managed from a single console board. CLIENT REPORTING Information to be treated increases. Collecting, formatting and dissemination are different between regulators, clients and internal departments. DATA CENTRALIZATION & MANAGEMENT Data management includes all the process to follow a client order lifecycle, including allocation, bulking, … BEST EXECUTION

MARKET TRENDS BEST EXECUTION BUY SIDE & SOLUTIONS Typical order flow to achieve Best Execution INVESTOR Retail institutional CLIENT ORDERS Best Execution Engine MiFID routing, publication and reporting rules (such as SMS, order type, etc..) ORDER WORKING Algorithmic program Trading ORDER ROUTING Global cost analysis Execution venue choice Order working STATES AUTHORITIES TCATCA CLIENT REPORTING MARKET ORDERS Audit trail & reporting Multiple Internalization Engine Post-trade & Middle Office audit Transaction reporting Order Management central platform Price Aggregation TRADING ARCHITECTURE TRADING SPECIALISTS  Mandatory by new Regulation (MiFID …) - Transparency & reporting - Audit Trail all over the flow - Justify Best Execution  Opportunities - Cost Savings - Trade optimization - Buy-Side relationship

MARKET TRENDS BEST EXECUTION BUY SIDE & SOLUTIONS  GL Order Management Solution ­ A turn-key solution for order management ­ Offering client order management, execution slicing and supervision functions ­ Complete management of the sales to dealer relationship ­ Powerful rule-based order routing ­ A full audit trail for reporting SELL SIDE Solutions GL STREAM TM Order Management Solution BEST EXECUTION

MARKET TRENDS BEST EXECUTION BUY SIDE & SOLUTIONS Best Execution Solutions Program and Algorythmic trading  Program & Algo trading reduce market impact  part of BEST EXECUTION ENGINE  GL TACTICS send on all cash and derivatives markets advanced trading strategies and order types  GL PROGRAM TRADER is a waving & scheduling system dedicated to basket & single stock trading activities.  Increasingly, trading algorithms are being implemented to make both buy-side and sell- side trading operations that much more efficient.  It improves human trading capacity thanks to automation on single orders or baskets. You can benchmark the execution! BEST EXECUTION

MARKET TRENDS BEST EXECUTION BUY SIDE & SOLUTIONS SUMMARY  Introduction & Market Trends  BEST EXECUTION Solutions  BUY-SIDE Solutions  A full STP relationship  Conclusion

MARKET TRENDS BEST EXECUTION BUY SIDE & SOLUTIONS CLIENT CONNECTIVITY Leveraging from the Standard  GL TRADE Solutions are fully FIX compliant From FIX 4.0 to FIX 4.4  Support FIX implementations Extensive experience on FIX connectivity, worldwide and locally  GL TRADE is Premier Member of the FIX Protocol Organization and active in the various working groups BUY-SIDE SOLUTIONS

MARKET TRENDS BEST EXECUTION BUY SIDE & SOLUTIONS GL FAST The Buy-side dedicated Business Line  FOCUS ON GL WINWAY -Screen with advanced trading features -Easy & speedy deployment -Flexible & competitive business model BUY SIDE COMMUNIT Y SELL SIDE COMMUNIT Y BUY-SIDE SOLUTIONS

MARKET TRENDS BEST EXECUTION BUY SIDE & SOLUTIONS  1 screen for Buy Side traders: GL WINWAY  DMA, Algo, Excel plug-in on all listed asset classes  2 solutions: GL WINWAY ASP & GL WINWAY Enterprise GL FAST A dedicated solution for Buy-Sides – GL WINWAY BUY-SIDE SOLUTIONS

MARKET TRENDS BEST EXECUTION BUY SIDE & SOLUTIONS GL WINWAY XLS module Trade from MS Excel  Not an API but a true application  no Excel programming knowledge required  Deep layer integration relieves MS Excel from real time management, thus maximizing the spreadsheet performance and flexibility – no frozen frame problem  Open to multiple data sources: GL, Bloomberg, Reuters…  no need to replace installed workstations  Enable double click trading from MS Excel straight into the market, for all types of orders  Allows you to follow the complete trading life cycle on your spreadsheet and draw up full pre and post-trade analyses BUY-SIDE SOLUTIONS

MARKET TRENDS BEST EXECUTION BUY SIDE & SOLUTIONS GL WINWAY XLS module Trade from MS Excel BUY-SIDE SOLUTIONS

MARKET TRENDS BEST EXECUTION BUY SIDE & SOLUTIONS Why choose GL WINWAY?  Broker-neutral market connectivity: - Multi broker connectivity (300+) & multi instrument capability (more than 100 markets in DMA) - Integrated algorithmic trading -Access to GL TACTICS - Choose your connectivity type between DMA, BSA, EDA order types: BUY-SIDE SOLUTIONS

MARKET TRENDS BEST EXECUTION BUY SIDE & SOLUTIONS - No hardware but a PC– ASP offering instant access - Connectivity: Internet, Leased line, VPN - GL NET : Private & dedicated order routing network - Brokers: 300 brokers already connected DMABSAEDA 3rd party Buy Side Software BUY-SIDE SOLUTIONS GL WINWAY Implementation A Simple architecture

MARKET TRENDS BEST EXECUTION BUY SIDE & SOLUTIONS GL TRADE - Conclusion The Best Partner for your Best Executions Projects  Brokers and Exchanges Neutral  One of the Best Trading Network, GL NET  A global liquidity access expertise -Worldwide: more than 100 exchanges, ECNs and markets -Remote Membership facilities -18 years of Market access development experience  GL STREAM TM, a Front to Back solution for trading & order Management  A global actor locally involved -Knowledge of local specificities -Experience in multiple liquidity pools environment

MARKET TRENDS BEST EXECUTION BUY SIDE & SOLUTIONS Thanks for your attention  If your need more information … Visit us at Booth #3 Contact And give the keyword “Best Execution” !  If you want to know how to upgrade your architecture in a fully Best Execution platform Do not hesitate to contact us for a one-to-one meeting or product demo on the Best Execution solutions