A Technical Examination of the Fiserv TradeFlow STP/Post-Trade Platform By Sugumaran Subramaniam

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1 A Technical Examination of the Fiserv TradeFlow STP/Post-Trade Platform By Sugumaran Subramaniam Introduction: Defining STP and Post-Trade Processing Before providing a technical explanation of the Fiserv Platform, it is first essential to describe the business operational aspects of the post-trade process. After the completion of a trade (i.e., equities), the transaction goes through what is called post-trade processing, where the buyer (i.e., an investment manager such as a mutual fund or hedge fund) and the seller (i.e., a broker-dealer) compare trade details, approve the transaction, change records of ownership, and arrange for the transfer of securities and/or cash. Post-Trade processing is especially important in markets that are not standardized such as the over-the-counter (OTC) market. Post-trade processing is also a key component of Straight-Through Processing ( STP ), which represents a concept and goal that many financial institutions are working toward that will be a major shift from present-day T+3 (Trade + 3 Days to settlement to the expediency of same-day settlement. One of the benefits of STP is a decrease in settlement risk. This benefit is obtained by shortening of transaction-related processing time will increase the probability that a contract or an agreement is settled on time. Fiserv TradeFlow's Role in STP The TradeFlow application (formerly known as Heliograph, is an application obtained via Fiserv s acquisition of CheckFree Corporation, which previously bought the software

2 vendor that owned Heliograph). In its current incarnation, the Fiserv TradeFlow Platform is a field-proven technology that enables efficient post-trade processing. Specifically, TradeFlow enables financial institutions to automate, manage, and measure the entire post-trade lifecycle from trade capture to settlement confirmation. By adhering to Securities Market Practice Group (SMPG) and industry best practices, TradeFlow offers intelligent enrichment, validation and routing based on pre-determined business criteria, including support for key financial industry standards such as SWIFT, Omgeo, etc. TradeFlow At-Glance: Some of the key features TradeFlow provides are as follows: Complete transaction process management Enterprise-level solution Single global hub/interface Certified support for key industry standards Business Intelligence, Exception Processing, and Alerting for reporting and for resolution of key STP issues Single post-trade processing architecture TradeFlow is a complete transaction process management/enterprise level solution and enables financial institutions to automate the entire post-trade process through settlement, by providing efficient integration and compatible interfaces to: Trade order management systems Portfolio management packages Links to investment managers, brokers and custodians A Single Platform/Single Global Hub/Interface: TradeFlow provides a simple integration and connectivity to all enterprise systems. The platform also incorporates SWIFTReady Gold Financial EAI platform, and a robust and scalable integration engine benchmarked at +5 M transactions/hour.

3 By offering a web-based 2.x style interface, the system is intuitive for business users on 24/7 usage across multiple sites and time zones. The TradeFlow solution also provides easy-to-use operational and business intelligence functionality. Certified Support for Key Industry Standards TradeFlow provides certified support for key industry standards, message formats, and protocols including SWIFT, Omgeo, and DTCC enabling links to be established between investment managers, broker-dealers, and global custodians.the provided data models and industry standards include: Full SWIFT, FIX, Omgeo OASYS** and Central Trade Manager (CTM)* libraries. Industry standards are updated by Fiserv All in-house formats can be captured quickly using wizards Data field dictionary approach future-proofs messaging requirements The Omgeo Central Trade Manager (Omgeo CTM) is a known as a virtual matching utility (VMU) that is a strategic platform offered by Omgeo, the joint venture between the Depository Trust and Clearing Corporation (DTC) and Thomson Financial, for the central matching of cross-border and non-u.s. domestic equity, fixed income, exchange traded derivative and contract for difference transactions. **Omgeo OASYS is the leading electronic trade allocation and acceptance service, with Omgeo TradeMatch, a centralized matching system for U.S. trades. An investment manager's OASYS allocations feed directly into the TradeMatch system to match or match-affirm confirmations that were input by executing broker/dealers. By creating a seamless solution OASYS TradeMatch- investment managers can further simplify their internal trade operations by automating and accelerating trade allocation, comparison, and affirmation. As a result, all trade partners benefit from a significant reduction in time and risk. The TradeFlow platform also offers preconfigured packs that include standard workflows that enable the following:

4 Full process model and status management for electronic trade confirmation and settlement Relevant data views and exception management functions offer application-level functionality No need to configure or test industry standard practice de-risking projects Business Intelligence, Exception Processing and Alerting Functionality The TradeFlow application provides smart exceptions processing capabilities to: Investigate and resolve all exceptions in single environment Data views and possible user actions are scenario-driven per pack Examples of typical exception actions Create, amend, cancel, replace any message or static data Resolve mismatched and unmatched ETC trades Create/amend static data used for enrichment, validation, routing Send updates to external and internal systems TradeFlow provides the following matching capabilities: Single matching processing by engine supports multiple business processes and instrument types Configurable profiles support market, asset class, and client-specific matching and tolerance requirements Highly scalable matching platform: o Benchmarked at over several hundred thousand matched pairs/hour o Millions of messages/per hour processed with addition of second matching thread Proactive alerting and real-time visibility Automatically alert operations and management of business emergencies/risk scenarios Rules-driven publish and subscribe logic means you receive only relevant information Use built-in alerts application or industry standard monitoring/alerting tools Windows event log SMTP traps Output to , fax, mobile devices

5 For reporting purposes, the TradeFlow application provides: Operations dashboard and status monitoring Real-time overview of operational statuses across functional and departmental silos Quantitative and qualitative data can be presented graphically Web delivery for zero-footprint deployment Examples of typical dashboard items Number of exceptions or at-risk items across confirmation and settlement cycle Totals of any messages/statuses such as matched, unmatched, or settled In addition, the TradeFlow platform enables measurement of efficiency and performance for: Single database for all transactional/audit data can be queried by standard reporting tools or metrics Enables analysis across asset types and departments for the enterprise Examples of typical metrics queries: Departmental performance for speed, accuracy, throughput Counterparty analysis such as broker confirmation, turnaround times or custodian settlement performance A Single-Vendor Solution The Fiserv TradeFlow platform and all the auxiliary components noted above are part of a single-vendor solution and unified architecture, which represents great benefits to the organizations that use this offering. The architecture is a classic hub and spoke variety with the ability to federate and cluster the nodes that run the product for scalability. In summary, Fiserv TradeFlow is a mature/feature-rich STP/post-trade platform provided by Fiserv that provides many benefits to the hundreds of customers, who use this unique offering.

6 Originally published June 2011 Modified and re-published September 2012 Disclaimer: To the best of the author s knowledge all capabilities of this financial application are true; however, the author cannot be held responsible for any claims about this information being inaccurate or untrue. For any questions to verify these capabilities of the TradeFlow offering please contact the software manufacturer, Fiserv. About the Author: Mr. Sugumaran Subramaniam is an independent business advisor and technical expert with several years of expertise in financial services and various technologies and applications, including the Fiserv TradeFlow niche financial post-trade application. # # #