E-TRADING SYSTEMS UPDATE November 2003 THE FIA IT DIVISION THE FIA IT DIVISIONPRESENTS FIA Expo Conference FIA Expo Conference

AGENDA I.Introduction II.Our Panelists III.Setting The Stage … IV.Let’s Ask The Experts

I.INTRODUCTION 1.PURPOSE To discuss the near-term and potential future technological evolution of Electronic Trading Systems (ETS) and better understand how they are geared to global markets.

INTRODUCTION … Continued 2.SCOPE A A moderated discussion with technology leaders from domestic and international exchanges, interspersed with questions from the audience. Immediately followed by informal conversations with our distinguished panelists at the FIA IT Division reception today (5:45).

II. ABOUT OUR PANELISTS II. ABOUT OUR PANELISTS Bryan Durkin, Senior Vice President, Chicago Board of Trade Sam Gaer, Chief Information Officer, New York Mercantile Exchange Mark Hemsley, Managing Director, Euronext.liffe Market Solutions Scott Johnston, Managing Director and Chief Information Officer, Chicago Mercantile Exchange Juerg Spillman, Deputy Chief Executive Officer, Eurex Jan Tilfors, Product Strategy, OM Technology Moderated By: Gerald Tellefsen, Chairman, Tellefsen Consulting Group and Secretary, FIA Information Technology Division

III. SETTING THE STAGE Internationally, many exchanges have been electronic for many years with the U.S. rapidly beginning to catch up. Some exchanges “build” their ETS, others buy it: BUILD – NYMEX – CME – TSX – EUREX – Archipelago – ICE BUY – NYMEX – CME – CBOT – KCBT – Euronext.Liffe

SETTING THE STAGE … Continued Most non-domestic exchanges are all electronic, while numerous U.S. exchanges are a combination of open outcry and ETS. – Some U.S. markets already have more than half their volume traded electronically. – Other markets (e.g., ags) do not appear to fit easily into an electronic trading environment. Believe it or not, the NYSE has been electronically trading odd lot equities and corporate bonds for decades.

WHERE IS THE BUSINESS? WHERE IS THE BUSINESS? For Futures, it used to mainly be in the U.S.A. – but not any more!

SETTING THE STAGE … Continued The Philadelphia Stock Exchange will launch PHLX XL, a hybrid ETS. Market makers will deliver streaming quotes, allowing easier access to PHLX markets and leveraging of open outcry markets. Boston Stock Exchange to launch the “BOX” electronic options exchange after SEC approval. e-CBOT to begin launch at the Chicago Board of Trade in November, 2003, to be fully rolled out by February, New York Stock Exchange is being challenged …

SETTING THE STAGE … Continued ETS acceptance can be stressful … ‘traders on the floor of London’ IPE have staged a revolt and are refusing to use electronic trading screens that they say will cost them their jobs …” LIFFE CONNECT to replace the CBOT a/c/e platform by November, EUREX U.S. scheduled to begin trading U.S. markets internationally in February The NYMEX acquires the TradinGear ETS in early CME e-mini products are a huge success. ISE captures market share lead in equity options in two years.

… TO SUM IT UP … THERE IS A LOT GOING ON!

IV. LET’S ASK THE EXPERTS!

What are your major concerns involving the conversion to e-CBOT? Bryan & Mark: What are your major concerns involving the conversion to e-CBOT?

What is on your drawing board for the NYMEX ACCESS upgrade or replacement? SAM: What is on your drawing board for the NYMEX ACCESS upgrade or replacement?

How will the Eurex U.S. ETS differ from the a/c/e platform used by the CBOT? JUERG: How will the Eurex U.S. ETS differ from the a/c/e platform used by the CBOT?

OM has probably installed more trading systems than any other organization, what is your next generation ETS going to look like? JAN: OM has probably installed more trading systems than any other organization, what is your next generation ETS going to look like?

How easy or difficult would it be for GLOBEX to handle multiple non-futures products – and how would you do it? SCOTT: How easy or difficult would it be for GLOBEX to handle multiple non-futures products – and how would you do it?

What is your ETS user connectivity strategy? For all exchanges: What is your ETS user connectivity strategy?

Is there much more functionality you can add to your ETS or is it generally, “fixed?”

How do you monitor capacity planning and implement capacity upgrades as your ETS volumes have increased ?

What is the current size of your IT staff dedicated to the development/ maintenance and operation of your ETS?

How can new technologies decrease (or increase) the time and costs required to build and maintain your ETS?

How does your ETS differentiate your exchange from others?