Future Trends in Processing Security-Related Derivatives Converging Systems Future Trends in Processing Security-Related Derivatives

Current State of Affairs Futures Processing Securities Processing Transaction Registration/ Reconciliation Matched Trade Clearing Payments Position Keeping/Marking Margining Delivery Dividends/Interest Corporate Actions Transaction Registration/ Reconciliation Matched Trade Clearing Payments Position Keeping/Marking Margining Delivery Dividends/Interest Corporate Actions Where Function Handled

Panelists Leslie R. Sutphen, President, Financial Markets Consulting, Inc. Stephen P. Auerbach, President, SunGard Futures Systems James Birney, Chief Financial Officer, Rolfe & Nolan Eric Wicart, Global Head of Sales, Ubitrade Leonard Musso, First Vice President, Lehmann Brothers

Eric Wicart: The European Experience

Lenny Musso: Likely Customers Hedge Funds CTA’s Retail Clients

Integrated Processing Solution Futures Engine Securities System OCC Customer Physical Cash and option position Futures Clients Security Clients Portfolio Repository Margin Engine Trade Rec and Settlement Margin Calc OCC Customer Statements SEG SIPC

Steve Auerbach: Margining Across Asset Classes Legal Perspective: What am I allowed to do? Operational Perspective: What can I do? Business Strategy Perspective: What do my customers want?

Margining Across Asset Classes Algorithm favors equities European/Asian experience show listed derivatives win

Key: Know Your Customer Daytrader would favor futures treatment Position trader would favor equity treatment

Jim Birney: Handling Physical Delivery

General Discussion What unique delivery problems are presented by narrow based index products?

General Discussion Where is equity derivative processing headed?

General Discussion What problems do lack of product fungibility present?

General Discussion What do “securities only” firms do to process security futures?

General Discussion Will securities futures processing impact other financial futures?