Delta Flow Product Overview. Delta Flow Product Factsheet. Page 1 of 16

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1 Delta Flow Product Factsheet Page 1 of 16

2 Delta Flow from First Derivatives plc is the next generation in FX liquidity aggregation, trading and risk management for brokers. Delta Flow is an ecosystem built on the latest technology and brought you to by one of the world s foremost providers of services and products to the capital markets. Built by a combination of experts in FX trading and data architects specialising in the design of high performance trading and market data systems, Delta Flow has been engineered with the latest technology and deployed in the cloud following collaboration with some of the biggest players in the market. We hope to explain to you why this combination of the technology, the product and the pedigree of our company makes First Derivatives your ideal technology partner in providing the best service to your clients and the greatest return to your shareholders. Our philosophy during the creation and future development of Delta Flow is underpinned by the following key principles; Independence - We are an independent software provider and we do not wish to participate in the market Our model is bank friendly our Liquidity Providers are crucial to the success of the initiative We are customer focussed - we will work closely with our customers to react to the changing environment in which they operate Benefits sharing we will strive to make any product enhancements, new features and technology and process improvements available to all customers Volume and Velocity our underlying technology advantage is based on the amount of data we can consume and the velocity which we can analyse and process it. We will continue to drive pure R+D in the areas of high volume, low latency, high availability so that benefits will accrue to our customers Deep Configurable Liquidity Pools Speedy on-boarding process SAE16 Certified hosting environment Rich Business Intelligence Reporting Page 2 of 16

3 Liquidity Management The philosophy behind Delta Flow is predicated on providing all participants in the market with the tools to optimise their ability to service their customers. Our liquidity management solution has been developed in close consultation with the users of our ecosystem. Delta Flow is built around liquidity pools, their creation, access, risk and credit controls around them. The schematic Because of Delta s ability to deal with more data at high speed we can create deeper liquidity pools than our competitors representation below shows how we create diverse streams and pool of liquidity to create a series of mini- ECNs which can be configured dynamically. A liquidity pool is a collection of Liquidity Providers/market makers (of your choice) mapped into a defined list of market takers (again your defined list of end clients). Delta Flow provides a mechanism for creating multiple pools of liquidity targeted at specific audiences retail client base, corporate users, high frequency traders the choice is yours. Delta Flow allows you as the owner of the platform to act as the glue between the parties, creating liquidity pools that you own, sourcing prices directly for liquidity providers that you have relationships with (as opposed to anonymous ECN s), allowing your credit partners/prime Brokers direct access and offering your clients with the best prices in the market. Traders Enabling users to take and manage risk on their own Book or STP. Agency model Allows owners to access the best prices available without taking risk, by passing all executions to the liquidity providers. Delta Flow also offers extensive administration capabilities on the platform allowing each element of the process to be actively managed. Each pool is controlled and managed independently, allowing the owner to configure client specific mark-ups. Delta Flow liquidity management enables owners to configure liquidity pools based on client trading behaviour. With liquidity pools targeting specific client requirements you ensure an optimal result. Separate pools also allow for greater management of the trading behaviour and mapping to the correct market makers to the takers they want to service mapping HFT clients into market makers offering retail prices will only disaffect your liquidity providers, and raise your reject rates. Delta Flow is designed with the knowledge that Liquidity providers are critical to success. With targeted pricing and low rejection rates comes more business. Allowing your liquidity providers to directly target the client base they are after ensures they can offer you their best prices. Page 3 of 16

4 By grouping similar types of end clients in unique liquidity pools Owners can efficiently and correctly match the available liquidity sources with the trading profiles of end clients. Aggressive HFT feeds can be matched with HFT specific feeds provided by liquidity Providers, Institutional clients can be matched with Intuitional and Retail clients with retail feeds etc. Your Liquidity Providers Liquidity is your business. Having the best liquidity providers on the street connected to Delta Flow enables Owners to offer their clients consistently tight spreads and a deep pool of liquidity. We have connections to a wide variety of Liquidity Providers ranging from the largest tier one banks through to bespoke providers, offering unique regional pricing. FX Connections First Derivatives has relationships with all the majority Liquidity Providers. We can facilitate introductions Bank Of America Barclays Baxter BNP Paribas Cantor CFH Markets CIBC Citi Commerzbank Credit Suisse Currenex (FXCM) Deutsche Bank GFT Goldman Sachs GSA GTX/Gain HSBC JPMorgan Lucid Morgan Stanley Nomura Rosental Collins Group RBS SEB Société Générale SolidFX Standard Chartered Bank UBS Virtu Xenfin and many more Critical to any business is ensuring that your partners feel they are part of the process and that they have control over their product. Therefore Delta Flow provides a very flexible mechanism for Liquidity Providers to offer SER, RFQ and RFSQ streaming rates into Delta Flow offering multiple streams with different characteristics. This allows your Liquidity Providers to direct their streams to your target clients ensuring higher deal acknowledgements, whilst giving you complete control over the process. In addition our unique Business Intelligence and data mining capability allows you to work closely with your Makers to allow them to be more competitive across markets and times. Liquidity Pool Management Delta Flow contains a series of intuitive GUIs, configuration options and reports that enable Owners to manage and dynamically reconfigure liquidity pools. Page 4 of 16

5 Trading and Risk Management Delta Flow offers trading capabilities over both FIX API and a Trading UI to cater for a variety of trading profiles including High Frequency Trading, Institutional and Retail flow. Delta Flow supports Spot FX, Forwards, NDFs, Precious Metals and Swaps trading both tenors and broken dates. Delta Flow supports all common order types, including Limit, Stop and One-Cancels-Other (OCO) orders for a variety of Time In Force options. Post trade allocations and netting options are also available. Liquidity View and One Click Trading The Liquidity View and One Click Trading screens provide a number of powerful tools allowing Owners to trade and manage your warehoused risk. One Click Trading: Allows you to see the depth of pricing and execute trades on your own book Top of Book Ticker: Real-time view of the best Bid and Offer rates by currency pair Order Blotter: Real-time update of all orders Order Entry: Ability to enter complex orders Position Blotter: Real-time view of all positions by value date Delta Flow provides position blotters to view positions reported in the Owner s specified currency, and by currency pair. The positions blotter shows the running positions for each currency pair along with the associated profit or loss. Page 5 of 16

6 FIX Trading API For your internal trading systems, or clients that want to connect to you we offer an industry standard FIX Trading API. Based on the FIX Protocol standard it allows you or your clients to access the liquidity pools that you have defined for them. The FIX Trading API can be easily configured to get clients on-boarded quickly. Delta Flow offers connectivity to Traiana (both Harmony and Netlink), MarkitServ, RTNS and Elysium Technology Group for settlement and reconciliation purposes and a Drop Copy FIX API for connecting directly to back office systems. Managing Risk The Warehouse Delta Flow provides Smart Order Routing functionality that supports sweeping and dynamic price replacement. Delta Flow also provides flexible configuration to either STP trades to the liquidity provider, or warehouse trades into their own B-Book. The decision to STP or Warehouse is managed within the warehouse configuration rules. Rules around whether to STP or Warehouse trades include Order size, Client and Time of execution. Delta Flow Warehouse rules also enables a maximum risk limit to be set against each currency. Additional trade netting functionality allows offsetting of matched client trades enabling the bid/offer spread to be captured thus reducing the underlying trade risk and processing costs. Institutional Trading UI The Delta Flow offering comes with a sophisticated and intuitive user interface, which has been developed over many years in conjunction with the feedback and ever changing functional requirements of our clients in this fast paced changing market place. Delta Flow also supports design customisation to allow for white label branding and personalisation of the trading UI. Most clients will include their logo as a minimum. The Delta Flow trading UI has been designed with all users in mind, from end traders to internal prop desks and Sales traders who require the ability to trade on-behalf of their accounts. Page 6 of 16

7 Credit Management Delta Flow provides Banks and Prime Brokers with the ability to define and monitor credit risk across counterparties from a single view. Delta Flow enables changes to be applied in real-time thereby offering a swift response to changing market conditions or new client information. Credit lines can be extended or reduced to zero instantly suspending all further trading. With volatile markets and a wide assortment of bilateral relationships, credit management, risk and control it is critical to ensure credit lines are optimised. Delta Flow Credit managers can view and control exposure based on the following models: Bank/broker: Overall limits based on gross/net open positions and on a daily basis. Liquidity provider: Limits on the exposure to individual liquidity providers or across all liquidity providers. Client/Taker limit: Limits on the exposures to clients/takers, this is particularly important in high frequency trading arena. Account/Sub account: Limits on the exposures of client s accounts. To satisfy varying regulatory requirements it is possible to specify either Gross or Net exposures per client along with alerting and stop trading levels to further control the trading exposure. Alerts provide advance warning of adverse exposure levels while a breach of the stop trading limits ceases all further trading with that counterparty. Delta Flow offers the ability to define limits on Clients and Liquidity Providers. An exposure blotter provides real time mark-to-mark exposure against clients. Breaches are notified by or popup and stored to logs for audit and compliance purposes. This information provides a valuable source for performing client credit analysis and credit utilisation. Page 7 of 16

8 We have also partnered with leading companies Traiana and Elysium to provide direct connectivity to all of the major Prime Brokers directly though Delta Flow. Business Intelligence Built upon kdb+ technology Delta Flow offers unparalleled levels of performance and scalability for capturing and processing data. Tick-by-tick data is stored on prices, spreads, orders and fill ratios, creating dashboard views and analytics capabilities producing an unrivalled insight into how the business is performing and how it can be improved. A unique feature of Delta Flow is its market leading kdb+ database storing tick by tick data on rates, orders and trades. This data coupled with the dashboard functionality within Delta Flow enables business users to monitor, analyse and profile their business performance. Business Intelligence can be used to; Review price stream performance, including spreads and coverage by time Analyse ACK/NACK ratios and improve credit relationships Analyse client trading patterns and volumes Assist in pricing and warehousing decisions Optimise liquidity and pool management Improve credit risk management The reports allow visualisation, filtering and drilldowns in a number of intuitive formats. Chart types supported include: heat maps, pie charts, bubble charts and time series graphs. All Delta Flow Business Intelligence reports are interactive, allowing users to zoom, select and filter dates for a specified range. Page 8 of 16

9 Business Intelligence Business Intelligence Reports Price Takers Volumes traded by Symbol / P&L / Time Warehoused v Outsourced Analyse historical data over different time frames and client pools Live and Daily Average spreads To analyse different symbol lists, client pools and depth of liquidity. Credit Utilisation by date or by time To review and optimise the credit utilisation of all takers on the system historically over different time windows and for different client pools Rates and Pricing Pricing Snapshot by Pool or by Stream Pricing Time-Series Live and Daily Average spreads View average price and deviation of quotes over different time for windows/symbols and client pools Page 9 of 16

10 Clients Transactions Transactions Details Profit and Volume All maker, taker and owner transactions that can be viewed by different time windows, symbols, client pools and their takers and with filtering options down to transaction level Provides information on the profit and maker/taker volume per symbol or client pool for outsourced/warehoused trades and is configurable over different time windows. Trading Profile Volumes by Symbol / Pool / Stream, Vol comparisons, Rank/Vol/%Vol Ack Nack Total / Nack ratio / Ack Nack by Frequency / % Nack by Volume Views by maker or taker. They can also be shown over different time windows and filtered by symbols and client pools. Can be viewed in graphical or grid format and are configurable over different time windows and can be filtered by client pools and symbols Delta Flow Business Intelligence reports are also exportable to Excel for further manipulation. Page 10 of 16

11 Delta Margin For retail, HNWI and other non-institutional clients, Delta Flow offers a complementary Margin Trading module where counterparty exposure is marked to market against posted client collateral. Delta Margin enables banks and brokers to provide trading capabilities to clients with the corresponding exposure secured against collateral deposited with them. The solution is designed for seamless integration with executable streaming rates and order management to provide a comprehensive web-enabled trading suite to the end-client trader. This system combines a powerful revaluation engine, margin calculator, margin monitor and collateral manager, to give a fully integrated solution for margin trading. Delta Margin s Exposure Blotter allows you to view the components used to calculate your free margin availability and view the margin breakdown in amount and percentage terms. You can also manually withdraw collateral through the user interface. The platform provides a comprehensive reporting facility, including Account Statements, Collateral, Transaction and Deposit History. Margin Statistics The following statistics can be viewed both in real-time and historical mode. Cash Balance: This field displays the sum of deposits, withdrawals, transaction fees, funding and realised P&L from previous days. Daily Realised PL: This is the realised P&L as a result of intra-day trading. At the end of day Daily Realised P&L is moved to cash and therefore resets to zero daily. You can expand the Realised P&L item to View Components of Realised P&L that contribute to the P&L figure. Net Collateral: This is the sum of your Cash Balance and Daily Realised P&L. Free Margin: This is your Equity minus Margin Used. Margin Used: This is the sum of the Margin used on all open non hedge trades. MTM: This is the MTM on all open trades Margin Coverage: This is your Margin Coverage shown as a percentage. Margin Coverage is calculated as Equity divided by Margin Used. Margin Call Level: This is the level at which margin will be called if Margin Coverage reaches this level. Close Out Level: This is the level at which you will be closed out if Margin Coverage reaches this level. Page 11 of 16

12 Platform Delta Flow Product Overview The Delta Flow platform is designed for scale and speed. Like other Delta applications, Delta applications are powered by kdb+, a database technology used by the world's largest banks, hedge funds and exchanges. Kdb+ is implemented by the First Derivatives professional services team to manage the trading, risk and regulatory challenges associated with the exponential increase in market data in recent years. In practical terms this speed and scalability delivers competitive advantages to brokers and their customers using the platform. These advantages include: More LPs providing dedicated streams means tighter pricing and greater depth; Lower latency increases fill rates; More timely calculations means better market and credit risk management Handling more data provides valuable Business Intelligence. Why not build a solution? We provide the hardware and storage We manage the data centre We develop and manage the connectivity to LPs We are co-located with LPs the world's top data centres in New York, Tokyo and Chicago We continually review and upgrade our technology stack so that we keep abreast and take advantage of innovations and new breakthroughs on the technology front. Our software is designed for localisation and has been implemented in Japanese and Arabic Our product can be white labeled to promote your brand or to allow you to launch multiple brands in different markets We have a number of ready built bridges such as MT4 plus drop copy services to Traiana, Elyssium, RTNS, ETG and MarkitServ Our solution meets the highest and most rigorous industry standards and is SSAE16 certified We provide full connectivity to systems such as MetaQuotes MetaTrader platform, C- Trader Build v Buy Partnering with First Derivatives using Delta Flow allows brokers to focus on providing a premium service to clients while letting us take care of the technology aspect of your business requirements. Delta Flow is a multi-tenanted hosted platform. The Total Cost of Ownership using this model is substantially lower than building, managing and upgrading your own technology solution. Our platform and our services team deliver substantial savings in otherwise prohibitive technology and personnel costs. Go Live Go Live We provide a demo system to allow you to onboard API clients and to integrate your downstream systems in a controlled manner We bear much of the cost of regulation. We are SEF registered and our clients use our solution for regulatory reporting for regional bodies such as NFA, CFTC, FINMA, SFC and FSA Parameters such as markups and pool/stream setups can be dynamically reconfigured Configuration of parameters such as markups is straightforward and live trading can begin on Delta Flow within hours of the decision to switch Post Go Live Post Go Live New product features, reports and enhancements are seamlessly added as part of a regular release cycle. We work continuously with your API customers and technology partners to keep your applications up to date We have a world class monitoring and alerts system (Delta Monitoring) in place to ensure the stability and efficiency of our system. We monitor and dynamically manage resources such as CPU, memory, storage, external connections and processes to ensure that even during times of excessive market volatility your operations continue to run smoothly. Our Business Development team works with you as your business grows by liaising with partners and LPs in centres such as New York, London and Tokyo Page 12 of 16

13 Additional Platform benefits: Hosting Environment Best of Breed approach in selection of IT solution HW & Providers including Data Centre hosting partners. Equinix NY4 (Tier 4 provider) currently the default global Data Centre hosting partner for FD production with provision of 24*7 onsite smart hands resources to support ongoing maintenance & upgrades. Configuration includes Disaster Recovery/Business Continuity Planning site. Data Centre delivers 5*9s SLA in power, AC, network & hosting pace. High availability clustered/redundant solutions with resilient fail over implemented at the core network, internet & firewalls layers. High availability clustered/redundant solutions with resilient fail over implemented at the server /system layer across LP, Application, DB, FIX and Web tiers. Delta Mon-proprietary Delta monitoring application across server resources and internal DF processes. Delta Flow Alert messaging system and alert generation. Enterprise-wide IT infra monitoring platform. Ultra low latent market data and order execution speed Delta Flow provides key attributes that provide an ultra low latent environment: Ultra low latency connections - Liquidity providers and clients are linked via fibre/copper cross connections and collocation in data centres. Streamlined application structure Delta Flow is coded with delivery and speed as critical requirements. The application has been build to parallel process all rate checks, mark-ups and risk management features to avoid any unnecessary processing which could delay rate or deal transmission High speed architecture Delta Flow is written in Delta s native q language and run in-memory to allow for extremely fast and efficient processing of very large amounts of data Very high LP & network carrier density provides increased flexibility & superior lead-time in connection of Colo d & Non-colo d Makers/Takers All of these attributes enables rates to be delivered and deal flow returned with the lowest possible latency. This helps to reduce levels of trade rejections caused by Liquidity Provider rates updating during the time it takes from deals to flow from the provider through to Delta Flow, reach the client and then to be returned to the provider. If the round trip time for rates and deal flow is greater than the frequency between updates then chances of trade rejections are increased. IT Security & Compliance Defence in Depth philosophy & approach to IT Security. Enforcing Governance & Compliance with respect to maintaining Data Centre SSAE16 accreditation, physical & logical controls including monitored secure access, change & patch mgmt., data backup & archive, sandboxing, physical & logical segregation etc. Maintain alignment with Industry standards ISO Security Incident Management protocol. Deploy, support & monitor SIEM (Security Info & Event Mgmt system which includes real-time HIDS & NIDS monitoring & logging, clustered redundant firewalls & DDoS protection. Regular UAM audits, vulnerability & penetration scans. Page 13 of 16

14 OUR TEAM We have assembled a large team of battle hardened professionals with deep technical and domain knowledge who have worked with the world s leading banks, brokers and exchanges. The team has been organized into specialist units dedicated to driving our product roadmap and to provide a premium support service to our clients; Page 14 of 16

15 First Derivatives Corporate First Derivatives plc ( FD ) is a leading provider of software solutions and consulting services to the capital markets industry. Founded in 1996, FD occupies a niche market position in terms of deep domain knowledge and technical expertise. Headquartered in Ireland, FD has a global presence with offices across EMEA, the Americas and Asia Pacific. Publically held company on London Stock Exchange (LSE FDP.L) Headquartered in Newry, Co. Down, N Ireland employees worldwide Consulting Services Multi Vendor Services Calypso, Murex, Wall Street, Summit, Opics Legal, Regulatory and Compliance Data Management Software Development Big Data and Data Science Big Data Solutions Delta Flow/Delta Flow+ Foreign Exchange Trading Delta Algo Low latency trading strategies and execution Delta Surveillance For Regulators, Exchange and Brokers Delta Data Factory Market and Reference Data Management Delta Stream High Volume data capture, analysis and distribution... powered by kdb+ and other Big Data technologies Page 15 of 16

16 Delta Suite Delta is a powerful Big Data platform, offering capabilities in reference data management, market data management, CEP, algorithmic and high-frequency trading, FX trading, treasury risk management and exchange management surveillance. Deployed in some of the world s largest banks, exchanges and hedge funds, Delta applications are designed for Volume and Velocity low-latency, high-throughput applications delivered as a hosted service or deployed locally. FD provides a range of brochures on its products and services. For more information please contact us via our website or the numbers below Contact Us New York +1 (212) Europe +44 (28) Asia-Pacific info@firstderivatives.com This information is subject to change without notice and is offered for information purposes only. Page 16 of 16