TELLEFSEN AND COMPANY, L.L.C. Execution Management Systems and Order Management Systems – Evolution and Growth December 2010 Proprietary and Confidential

Tellefsen and Company, L.L.C. Proprietary and Confidential Background3 Evolution of OMS and EMS4 EMS Functionality6 Potential EMS Market Segment and Focus7 Conclusions8 Table of Contents Page Number:

Tellefsen and Company, L.L.C. Proprietary and Confidential Order Management Systems (OMS) have been utilized by both buy-side and sell-side firms since the early 1990s. Execution Management Systems (EMS) came to market as traders needed more specialized OMS technologies to support the enormous amounts of data and market data traffic with negligible latency. As a result of market fragmentation following the introduction of S.E.C. Regulation NMS (Reg. NMS), there are more trading destination choices for traders to choose from (Internalization engines, DMA, dark pools, exchanges, ECNs etc.) A heavy reliance on EMS systems has evolved to support more- complex trading strategies, high-frequency trading (HFT), intra- day arbitrage strategies, as fast moving markets and razor-thin spreads make it impossible to do this manually. Background

Tellefsen and Company, L.L.C. Proprietary and Confidential OMS systems have been used by buy-side and sell-side firms to document trades, re-balance portfolios, conduct pre-trade compliance and post-trade allocations. OMS systems continue to be the cornerstone of investment management firms front office infrastructure. OMS have been tightly integrated into the investment decision making, trading, compliance and post-trade processes. There have been workflow issues that require the use /migration to EMS: – –No straight-through-processing (STP) capabilities – –No interfaces to post-trade systems and vendors – –Messaging latency issues Evolution of OMS and EMS

Tellefsen and Company, L.L.C. Proprietary and Confidential EMS solutions - differentiators: – –Smart order routing – –Depth of their infrastructure/connectivity to many trading destinations – –Proximity hosting/co-location capabilities – –Integrated market data and real-time pricing – –Pre-trade transaction cost analysis – –Custom algorithms – –Commission management – –Post-trade allocations EMS systems continue to evolve their offerings and there is a growing demand from buy-side firms. EMS providers today are either broker-owned or independent software vendors(ISVs). In the last few years, there has been consolidation among EMS providers and more is expected (i.e., market share). Evolution of OMS and EMS (Contd) …

Tellefsen and Company, L.L.C. Proprietary and Confidential EMS systems typically support U.S. listed and NASDAQ equities and U.S. equity options – –Other asset class differentiators can include support for futures, fixed income and foreign exchange products Major features and functional differentiators can include: – –Integrated depth of book functionality – –Single order and program trading capabilities – –Spread trading functionality – –Smart order routing – –Direct Market Access (DMA) connectivity/ low latency messaging – –Intra-day position management – –Order staging blotter – –Access to multiple algorithms – –Integrated best bid-best offer capabilities – –Risk management functionality – –Real time charting and news – –Post-trade allocations – –P&L calculators – –Straight-through-processing EMS Functionality

Tellefsen and Company, L.L.C. Proprietary and Confidential Traditional asset managers will use an OMS to take advantage of broader trade support (portfolio staging, compliance and post- trade support). Asset managers that trade infrequently are less concerned with speed of execution and will be well-served by OMS systems. Active asset managers that engage in basket trading, spread trading and pairs trading and require cross asset class trading capabilities will likely implement one or more EMS systems. Mid-size or large asset managers will likely deploy one or more EMS to placate traders with individual preferences, access to broader span of broker liquidity. Small hedge funds are more likely to use an EMS for the need for a fast execution. Large hedge funds will likely deploy multiple EMS offerings, as well as an OMS. Firm culture and EMS product offering nuances will influence EMS selection / trading software strategies. Potential OMS / EMS Market Segment and Focus

Tellefsen and Company, L.L.C. Proprietary and Confidential EMS offerings continue to evolve and there is a growing demand from the buy-side. As of June 2009, ~20% of EMS client firms were traditional buy- side firms and ~80% were hedge funds, broker-dealers and proprietary trading firms. Global expansion by buy-side and sell-side firms into Latin America and Asian markets will drag these solutions into those markets. A more robust, well-integrated EMS-OMS hybrid will evolve. Conclusions

Tellefsen and Company, L.L.C. Proprietary and Confidential Please contact: John Rapa President / CEO Tellefsen and Company, L.L.C For More Information