1. Fidessa Group plc Smart Order Routing Everything You wanted to know (but were afraid to ask) 28 th October 2009 Steve Grob - director of strategy Fidessa

2. Agenda - Do you need a smart router at all? - What are the challenges of SOR - What's in the SOR Box - Implementing SOR successfully - SOR Checklist

3. Spread of Fragmentation European wide regulation enacted in November 2007 to: –Harmonise the investment services regime in 30 European countries –Improve transparency –Improve client categorisation Provide “best” execution –Based upon multiple factors not just price Led to creation of: –Multilateral Trading Facilities (MTFs) –Systematic Internalisers (SIs) –and dark pools

4. Unintended Consequences Fragmentation has also increased in: –Market Data –Clearing and Settlement Transparency Decreases –Different rules for Primaries, MTFs, SI’s and Dark Pools –MiFID Waiver –Cost of execution Lack of coordination –Market opening times –Tick sizes

5. But………………. Nevertheless trading of European equities has continued to fragment at an alarming pace.

6. Which venues are most affected: Source: Fidessa Fragmentation Index Sep 2008 to Sep 2009 www.fragmentation.fidessa.com

7. The London Experience Fragmentation of FTSE 100 stocks has risen by over 50% in the last year Source: Fidessa Fragmentation Index Sep 2008 to Sep 2009

8. The London Experience II And FTSE 250 stocks are affected too Source: Fidessa Fragmentation Index Sep 2008 to Sep 2009

9. France, Germany too Source: Fidessa Fragmentation Index June 2008 to June 2009

10. Even Switzerland Source: Fidessa Fragmentation Index Sep 2008 to Sep 2009

11. And the Nordics? Source: Fidessa Fragmentation Index Sep 008 to Sep 2009

12. Q -So do I need a smart router? A - Probably Chi -X, Burgundy, Turquoise The Nordics is a microcosm for what is happening in Europe Break down of national boundaries Sector breakdown Cross listing http://fragmentation.fidessa.com/stats/index/OMXC20.CO.html

13. Old Style Order Routing directed DMA flow order Trader Algo Client CARE flow ALGO flow electronic (FIX) CSX

14. Smart Order Routing SORSOR Smart Order Router Smart CARE flow Smart ALGO flow smart DMA flow Client electronic (FIX) smart order Trader Algo smart instruction CSX Chi -X Burgundy Turquoise

15. SOR Challenges SOR versus Smart Workflow –Fungibility –Must be completely integrated Monitoring –did my SOR make the right decision? –Proving it to customers and regulators Venue Connectivity –Highly dynamic –Need plug and play approach Build versus buy –The risk of using smart brokers

16. What's in the SOR Box Market Data –Virtual Market –Consolidated tape –Fungibility Making a smart decision –Liquidity/Price –Trading fees –Recycling unfilled orders Reporting - can I prove the SOR made the right choice to –Myself –My customers –My regulator http:// fragmentation.fidessa.com /

17. Reporting

18. Implementing an SOR Strategy Build versus Buy –Or……. use a third party Broker How does SOR fit with Algo trading –Algos are concerned with when to place an order (VWAP, TWAP, POV) –SOR is focussed on where (CSX, Chi-X, Burgundy, Lit v Dark) –And yes they do ultimately need to talk to each other Use suppliers that have proven technology –SOR sounds easy but it gets complicated quickly

19. SOR Checklist It will be impossible to offer “good enough” execution without an SOR that: –Includes lit and dark capabilities –Provides complete workflow –Tells you what is going on It will be difficult to offer execution services without adopting a pan Nordic and, ultimately a pan European, outlook The MiFID genie is out of the bottle – there’s no going back! And you're going to need better information than before www.fragmentation.fidessa.com