1. 0 Steven Wood Founder Presentation to the University College of London November 2009

2. 1 Steven Wood Global Buy Side Trading Consultants Limited 2010- Global Buy Side Trading Consultants - Founder – CESR Consultative Working Group on Secondary Markets reporting to the St Standing Committee on Secondary Markets Non Executive Member of the Board of Directors, Investment Technology Group Inc Non Executive Director Board Member, Olivetree Securities Ltd 2002 – 2010 Schroder's Investment Management - Global Head of Trading - Chairman of the Investment Managers Association Trading Committee Chairman of the NYSE / Euronext, European Institutional Advisory Committee Member and European representative of the NYSE / Euronext I Institutional Advisory Committee, New York Member of the Liquidnet Advisory Committee Member of the Turquoise Advisory Committee Member of the LSE / Bailkal Advisory Committee 1974 – 2002 JP Morgan 1974 – 1978 Management Information and Profit Analysis 1978 – 1985 Asset Management, Assistant Head of Operations 1985 – 2002Asset Management, Trading Dept Trading Equities, Fixed Income, FX and Derivatives Set up Emerging Market Trading Implemented OMS and electronic trading Head of trading in London and Asian trading out of Tokyo

3. 2 –Live trading in all global regions –Single Global Order Management System ( OMS ) –Uniformity of trader toolset across global trading hubs –Electronic access to all markets. Anonymity and control –Ability to book pass globally –Pre and Post trade analytics integrated into your OMS –Access to multi broker algorithms and bespoke in house algorithms –Ability to Program trade in all markets at reduced costs –Live tracking of implementation costs for all trades –Access to all crossing networks

4. 3 Trading innovation is being advanced by: –A global focus on trading –Technology –Our demand for liquidity –Sophistication of trading techniques –Unbundled Commission –MiFID (new legislation)

5. 4 The changing dynamic of equity trading Trader Talent + Technology (The death of the sales trader? The renaissance of the buy-side trader) Fund Manager Order Order passed to Buy Side Block Trader Order received by broker and traded in the market Past

6. 5 Trader Talent + Technology (The death of the sales trader? The renaissance of the buy-side trader) Present Executed by DMA Executed by Algo / D.M.A./ Crossing networks Negotiate a Principal Program Negotiate a Principal trade Agency TradeOrder Crossed Order passed to Block Trader Suitable for Crossing Networks Suitable for DMA? Program Trade? Order passed to Program Desk Fund Manager Order Executed in time? Broker IOI, Bid Or Offer? Principal Trade Suitable? Dynamic / Passive Crossing Engine Yes No Yes No Yes No Failed Matched

7. 6 Before 19901990–19951995–20002000–2005After 2005 NYSE AMEX NASDAQ Instinet PCX BSE ARCA Island BRUT Strike Redibook Attain GlobenetTRAC BATS ISE Stock BATS ISE Stock NYSE PCX NASDAQ Instinet BeX Globenet ARCA BRUT REDI Atten Strike ISLD Direct Edge BRUT ARCA INET NASDAQ NDAQ NYX BeX Reg ATS AMEX Instinet (CBX, etc.) ITG Morgan Stanley POOL Pipeline Liquidnet NYFIX Millennium UBS PIN Knight Match Pulse Trading NYSE Matchpoint ITG Block Alert Fidelity Cross Stream ML MLXN BIDS LeveL CS Cross Finder LEH LCX ISE Midpoint Match GS Sigma ATS CITI Liquifi NASDAQ Crossing Network Knight Link

8. 7 Trader Fidelity Cross Stream LEH LCX CS Cross Finder GS Sigma X UBS PINS Morgan Stanley POOL CITI ACE MS Trajectory Crossing Liquidnet NYFIX Millennium BIDS ITG Now ITG Block Alert Instinet (CBX, etc.) NASDAQ Crossing Network Matchpoint ISE Midpoint Match LeveL Pipeline POSIT TRAC / DATA EDGX / EDGA FLOW BATS BTRD CBSX ISE Stock Exchange NSX / CINN BeX CHX NYSE Arca NASDAQ INET NYSE AMEX PHLX NYSE American Stock Exchange (AMEX) Philadelphia Stock Exchange (PHLX) ISE Stock Exchange CBOE Stock Exchange (CBSX) BATS Lava Flow (FLOW) Direct Edge (EDGX / EDGA) Boston EquitiesExchange (BeX) Pipeline POSIT Liquidnet NYFIX Millennium BIDS Matchpoint ITG Marketplace ISE Midpoint Match ITG Marketplace Instinet (CBX, etc.) LeveL GS Sigma X CS Cross Finder UBS PINS CITI ACE (Automated Cross Engine) LEH LCX Morgan Stanley POOL Morgan Stanley Trajectory Crossing Track ECN (TRAC / DATA) NASDAQ Crossing Network SMART ORDER ROUTING TECHNOLOGY SORT Fidelity Cross Stream TradeBook (BOOK) National Stock Exchange (NSX/CINN) NYSE Arca NASDAQ INET for listed only, thru early Feb 2006 Chicago Stock Exchange (CHX)

9. 8 2000 – 2005Pre 2000Post 2005 LSE D. Borse Paris AMS Milan SIBE OM HEX Lisbon Brussels Oslo Copenhagen Ireland Iceland Euronext Virt-X LIFFE OMX NYSE Euronext LSE SWX Nasdaq OMX Chi-X Turquoise BATS EU Market “Fragmentation”

10. 9 According to one large global investment bank, 1 mille-second lost in latency equates to $100 million per annum in lost opportunity In practice, between a broker and the exchange or MTF, there are several routers, switches and cables, so it is unlikely that the latency can ever be below 1ms for a roundtrip message to a venue Throughput is also key and whether the venue can sustain a continuous load of message traffic

11. 10 Source: Instinet internal statistics for a typical average time between sending an order/message to each venue and receiving the message acknowledgement. Data is from a sample day in each of April 2006, November 2007 and October 2009 Roundtrip Latency by Venue (ms)

12. 11 BATS Trading No initial investment or backing from bulge bracket brokers Good technology + rebate revenue model + electronic liquidity providers = tightest spreads Tightest spreads + best execution rules = must trade there Launched in 2005 and now the 3 rd largest US exchange Average market data events per second 27,000 Peak events per second 95,000

13. 12 Liquidity fragmentation Order fragmentation Lower trading costs High frequency trading Σ = Huge increase in data volumes 1 second in Vodafone –72 price changes –11 backwardations –90 trades

14. 13 –Multi User –Global list monitoring –Algorithms and DMA –Multibroker access –Portfolio trading –Real-time Transaction Cost Analysis –Algorithms and DMA –Custom rules engine –Multi-user environment Examples of 3rd party algorithms –ASP model –FIX compliant –Component based –Flexible methods of delivery –Microsoft.NET open architecture –Full access to API –Trader designed user interface –Integrated market data –Unique support model Examples of 3 rd party algorithms

15. 14 Implementation shortfall The trading analysis starts with the release of an order to the desk. Each unique order to the desk is measured independently Desk costs are broken into three parts: Timing costs (the cost between the order release and the broker placement), impact (the broker cost), and commission How quickly the desk handles an order will determine the cost. Too fast may result in low timing costs, but excessive Impact. Too slowly may reduce Impact, but result in too high timing. The trader’s role is to determine the optimal blend given the underlying trade motive 30-day Potential Returns Event timeline Trade Desk Gain/Loss Time Trade Executed Decision Point Execution Gain/Loss Order Sent to Trade Desk Order Sent to Broker Trader Focus here Order Sent to Broker Order Sent to Trade Desk Trade Executed Trader Timing Gain/LossImpact Gain/Loss Trade Desk Gain/Loss

16. 15  The views and forecasts contained herein are those of Global Buy Side Trading Consultants and are subject to change. The information and opinions contained in this document have been obtained from sources we consider to be reliable. No responsibility can be accepted for errors of facts obtained from third parties. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions. Past performance is no guarantee of future results. The value of an investment can go up as well as down Important Information