Electronic Trading: A South African Entrepreneurial Perspective Raymond Ndlovu, CEO Noah Financial Innovation

AGENDA  FIX PROTOCOL – A UNIVERSAL LANGUAGE  THE ULTIMATE GOAL- EFFECTIVE COMMUNICATION  VOICES IN HARMONY  TOO MANY DIALECTS?  THE ACCENT ON RISING COSTS  LOST IN TRANSLATION – PROBLEMS WITH THE STATUS QUO  HOW TO “FIX” IT?- “CO-OPETITION”

FIX PROTOCOL – A UNIVERSAL LANGUAGE  TRANSPARENCY  COST- EFFECTIVENESS  EFFICIENCY & ECONOMIES OF SCALE  SUSTAINABILITY

THE ULTIMATE GOAL: EFFECTIVE COMMUNICATION STRAIGHT THROUGH PROCESSING STP Forum Initiative “The automation of activities in the securities industry from beginning to end, in order to enable cross organisation and cross system integration.”

THE ULTIMATE GOAL: EFFECTIVE COMMUNICATION

VOICES IN HARMONY ETI is divided into four high-level processes

VOICES IN HARMONY  INDUSTRY-WIDE GLOBAL STANDARD  FACILITATES INTER-OPERABILITY FOR CURRENT NETWORKS  ENABLES FLEXIBILTY TO ADAPT TO VARIOUS MARKETS AND TRANSACTION TYPES  ENSURES TRANSPARENT & TRACEABLE TRADES

TOO MANY DIALECTS? BROKER FUND MANAGER TRADING SYSTEM CLEARING HOUSE CSD TRANSFER SECRETARIES CSDP LENDING DESK LENDING REQUEST CONFIRMATION TRADE UPDATE SETTLEMENT ORDER INTIMATIONS CORP ACTIONS DEMAT COMMITS SETTLEMENT ORDERS INTIMATIONS LENDING ORDER CONFIRMATION OF SETTLEMENT AFFIRMATION ORDER IOI/FON CONTRACT NOTE AFFIRMATION ALLOCATION ETI ETC ETS REMAT

TOO MANY DIALECTS? CASE STUDY #1

TOO MANY DIALECTS? CASE STUDY #2

TOO MANY DIALECTS? CASE STUDY #3

THE ACCENT ON RISING COSTS BROKER CONNECTED DIRECTLY TO THE JSE ; NO OMS PER MONTHANNUAL TERMINALR R VWAPR6.305R GENERAL-LIVE INDICESR36.005R GENERAL-LIVE LEVEL 2 INDICES R R SENSR BACKUP TERMINALR R COST OF 5 TERMINALS R R

THE ACCENT ON RISING COSTS LOCAL BROKER COST –ELECTRONIC TRADING WITH OMS 5 TERMINALS CONNECTED TO 5 CLIENTS PER MONTHANNUAL IOIR JSE-SETS API SERVICE FEER VWAPR6.305R GENERAL-LIVE INDICESR36.005R GENERAL-LIVE LEVEL 2 INDICESR R SENSR BACKUP TERMINALR R OMS/EXECUTION ENGINER NETWORK CONNECTION –IF CLLIENT ON SAME NECTWORK3R NETWORK CONNECTION-CLIENT HAS DIFFERENT NETWORK PROVIDER5R ALLOCATION COSTSR MESSAGE COSTSR COST OF 5 TERMINALSR R

LOST IN TRANSLATION: PROBLEMS WITH THE STATUS QUO  MULTIPLICITY OF “ORIGINAL” SOLUTIONS  PLETHORA OF NETWORK & SOLUTION PROVIDER CHOICE…..  ……..WITHOUT THE REQUISITE FREEDOM!  COSTS ABOUND  WHO HAS THE DEEP POCKETS?  IS VALUE BEING DERIVED APTLY?

A POTENTIAL SOLUTION Other Stakeholders & Services There are many other connections to the JSE London Stock Exchange FTSE STRATE-Settlements Credit Checking Other Markets Brokers Access to JSE trading and services Critical to doing business An enabling technology Converge services over a single infrastructure Fund Managers Order Management System FIX connectivity Information Subscription Data download Information Providers Information distribution is the core business Adding value services in addition to the JSE Info Provider Fund Manager JSE JSE Member Settlement LSE FTSE Other Markets Managed Network SOURCE-JSE WEB SITE

HOW TO “FIX” IT?- “CO-OPETITION”  TAKE HEED OF WARNING SIGNS  CREATE TRUST AMONGST ROLE PLAYERS  ADOPT A SINGULAR, COMMON VISION  CREATE A MULTI-DISCIPLINARY INDUSTRY FORUM  MAKE THINGS HAPPEN!!!!!

DISCUSSION