Integration of Electronic Foreign Exchange Trading and Corporate Treasury Systems with Web Services

Transcription

1 Wirschafinformaik Wirschafinformaik Proceedings 2005 Associaion for Informaion Sysems Year 2005 Inegraion of Elecronic Foreign Exchange Trading and Corporae Treasury Sysems wih Web Services Hong Tuan Kie Vo Universiy of Karlsruhe (TH) Remigiusz Wojciechowski Bayer AG Chrisof Weinhard Universiy of Karlsruhe (TH) This paper is posed a AIS Elecronic Library (AISeL). hp://aisel.aisne.org/wi2005/25

2 In: Fersl, Oo K, u.a. (Hg) Wirschafsinformaik 2005: eeconomy, egovernmen, esociey; 7. Inernaionale Tagung Wirschafsinformaik Heidelberg: Physica-Verlag ISBN: Physica-Verlag Heidelberg 2005

3 Inegraion of Elecronic Foreign Exchange Trading and Corporae Treasury Sysems wih Web Services Hong Tuan Kie Vo, Chrisof Weinhard Universiy of Karlsruhe (TH) Remigiusz Wojciechowski Bayer AG Absrac: Hedging foreign currency risk is a cenral ask for reasuries of mulinaional corporaions. Tradiionally, i has srongly relied on voice-based broking. Wih he adven of Inerne echnology, online plaforms for foreign exchange rading emerged offering corporaions a single poin of access o he liquidiy of a global marke. However, online markeplaces only become ruly valuable if seamlessly inegraed ino he corporaion s hedging process. This paper evaluaes he srenghs and weaknesses of muli-bank online markeplaces, idenifies he demanding and complex inegraion challenge and presens a Web Services-based sraigh-hrough processing implemenaion as a manageable approach o inegrae online markeplaces and corporae reasury sysems 1. Keywords: foreign exchange rading process, Web Service, Treasury Managemen Sysem (TMS),voice-based broking, single-bank online markeplaces, muli-bank online markeplaces, sraigh hrough processing (STP), B2B inegraion 1 Inroducion Hedging foreign currency risk is a cenral ask for reasuries of mulinaional corporaions. Tradiionally, i has srongly relied on voice-based broking. Wih he 1 This work reflecs experiences and lessons learned from he Corporae Financial Poral projec, a cooperaion beween he Bayer AG, he Chair for Informaion Managemen and Sysems Prof. Dr. Chrisof Weinhard and he Chair for General Business Adminisraion, Inernaional Managemen, Accouning and Audiing Prof. Dr. Marin Glaum. The primary projec objecive is o idenify und provide relevan financial services and informaion hrough a single poin of enry wihin he corporae inrane. Thus here is a srong focus on applicaion and process inegraion as daa from various sources and channels has o be inegraed.

4 472 K. Vo, R. Wojciechowski, C. Weinhard adven of Inerne echnology, online plaforms for foreign exchange rading emerged offering corporaions a single poin of access o he liquidiy of a global marke. Beer ransparency and price discovery are ofen poined ou benefis of his rading channel [Radi01, Gne01, Sanb02]. However, online markeplaces only become ruly valuable if seamlessly inegraed ino he company s hedging process [Sanb02]. Such inegraion is a demanding and complex ask as he hedging process exceeds company borders. Companies are herefore relucan when deciding abou he use of his rading channel. The inegraion complexiy can be reduced by employing Web Services, which promise o help overcome inegraion barriers as conneciviy and ineroperabiliy issues are addressed wihin he underlying sandards [Lin04, p.311]. Samani and Sadhwani discuss he role of Web Services in he conex of sraigh-hrough processing (STP) [SaSa02a] and B2B inegraion [SaSa02b] and conclude ha he echnology is appropriae o inegrae heerogeneous sysems and processes. This paper evaluaes muli-bank online markeplaces, idenifies he complex inegraion challenge as he main reason for he relucan adopion of he his rading channel and finally presens a Web Services-based sraigh-hrough processing implemenaion as an manageable approach o inegrae online markeplaces and corporae reasury managemen sysems. The paper is srucured as follows: secion 2 focuses on foreign exchange rading. Afer he radiional voice-based rading process is oulined, elecronic rading wih muli-bank online markeplaces is addressed and evaluaed in deail. Thereafer secion 3 idenifies he challenges and implicaions of sraigh-hrough processing and evaluaes Web Services for inegraion of exernal sysems. Based on he insighs of he preceding secions, secion 4 describes how elecronic rading can be inegraed ino he corporae rading process using Web Services. The work concludes wih a summary of lessons learned and an oulook idenifying furher research opics. 2 Foreign exchange rading For mulinaional indusrial companies, buying goods and maerial or selling producs worldwide is par of heir every day business. As a resul, hey have o deal wih receivables and payables denominaed in foreign currencies. I is common pracice o hedge such iems agains foreign currency risk using derivaive foreign exchange conracs.

5 Inegraion of Foreign Exchange Trading and Corporae Treasury Sysems The foreign exchange rade lifecycle The foreign exchange rading process can be classified ino four phases [Pic + 96, p.16]: he informaion phase (pre-rade phase), he order rouing phase, he rade phase and finally he selemen phase (pos-rade phase). Figure [1] gives an overview abou he rading phases and illusraes hem in he conex of he involved paries. informaion phase Company Treasury [1] informaion phase [2] order rouing phase Foreign Exchange Liquidiy Provider order rouing phase IT sysems [3] rade phase (confirmaion) [3*] processing selemen phase rade phase prepare selemen [4] selemen phase [4*] processing Figure 1: Foreign exchange rading process The informaion phase [1] involves deermining he parameers of he required foreign exchange deal (e.g. conrac ype, volume, mauriy ec.) and idenifying possible liquidiy providers (i.e. sell-side counerparies). During he subsequen order rouing phase [2], requess for quoe are processed o deermine maching offers. As soon as an offer has been acceped, he foreign exchange conrac is closed and confirmed wihin he rade phase [3]. Final selemen and clearing procedures are prepared and execued during he selemen phase [4]. This work focuses on he corporae perspecive of he foreign exchange rading process herefore phases [3*] and [4*] are no discussed.

6 474 K. Vo, R. Wojciechowski, C. Weinhard 2.2 Voice-based foreign exchange rading Tradiionally, he ask of dealing in foreign exchange has been accomplished using voice-based broking. The corporae dealer calls one or more 2 counerpary banks, which serve as foreign exchange liquidiy providers. During each phone call he dealer specifies he key parameers of he conrac (e.g. currency pair, amoun and mauriy) and requess a corresponding quoe. Once a sufficien number of quoes is available, he dealer chooses he bes quoe. Figure 2 illusraes his process. Company Foreign Exchange Liqidiy Provider Dealer Bank A Bank B Bank C Bank D FXrading quoe excue qvalid FXrading : ime available for reques for quoes and deal execuion quoe : ime needed o deermine a valid quoe valid : validiy period of he quoe execue : ime of execuion : valid quoe Figure 2: Voice-based foreign exchange rading process Obviously, he major drawback of voice-based broking is ha each reques for quoe has o be execued sricly sequenially due o he physical limiaions of he medium 3. Moreover, since offered quoes are valid for only a limied ime ( qvalid ) he maximum number of valid quoes ha he corporae dealer can reques is limied [Radi01]. In he siuaion illusraed in Figure [2], i is impossible for he dealer o obain more han hree valid quoes from differen liquidiy providers a 2 3 Usually inernal guidelines prescribe compeiive bidding hus compelling foreign exchange dealers o conac more han one counerpary. This drawback can only be overcome by inroducing more raders, who rade simulaneously.

7 Inegraion of Foreign Exchange Trading and Corporae Treasury Sysems 475 he same ime, because as soon as he fourh counerpary is conaced he quoe from he firs will expire. Furhermore, he fac ha informaion exchanged over he phone needs o be manually enered ino he reasury managemen sysem (TMS) makes his process error prone. 2.3 Elecronic foreign exchange rading Inerne echnology paved he way from aforemenioned voice-based broking o online plaforms for rading in foreign exchange. Single-bank online plaforms, which appeared a firs, were followed by muli-bank markeplaces Single-bank online plaforms Single-bank online markeplaces enable cusomers o access liquidiy and services offered by a single bank hrough he Inerne. However he mere replacemen of elephone by a web browser only represens a change in he rading channel wihou helping overcome he limiaions of voice-based rading menioned in he previous secion. On he conrary, he siuaion deerioraes as he corporae dealer has o ge accusomed o use differen web-based rading sysems, which ofen resuls in an increased amoun of ime needed o rerieve quoes as well as an higher probabiliy for producing manual errors due o necessary daa re-keying. Neverheless, single-bank plaforms as a elecronic medium can be conneced wih corporae reasury managemen sysem solving he above menioned drawback. Figure [3] illusraes he siuaion where differen single-bank markeplaces are inegraed ino he TMS using cusom buil inerfaces. Company Dealer deal parameers Treasury Managemen Sysem inegraion reques quoe Liquidiy provider A online plaform Liquidiy provider B online plaform Liquidiy provider C online plaform inerface/connecor Figure 3: Inegraion of single-bank rading plaforms and corporae TMS 4 [Kölz01] gives a comprehensive overview of e-rading plaforms.

8 476 K. Vo, R. Wojciechowski, C. Weinhard Having inegraed he liquidiy providers, he corporae dealer now only needs o specify he rade deails once. The TMS hen connecs o he differen available counerparies, requess quoes and provides he resuls virually simulaneously o he dealer. However, since each bank mainains is own plaform, he company will usually have o inegrae n sysems for n counerparies. Building and paricularly mainaining inerfaces is a very cosly procedure [Lin00]. Therefore in realiy he number of differen liquidiy providers inegraed and hus available is bound o be limied. Furhermore, from a global perspecive, if m companies need o inegrae n liquidiy providers, m*n inerfaces need o be buil in order o esablish a nework 5 (see Figure [4]). This inefficiency can be deal wih hrough he inroducion of an inermediaor, which offers sysem inegraion as a service and reduces he number of needed inerfaces o m+n. This demand is one of he main drivers behind he inroducion of muli-bank online markeplaces. Company A Bank A Company A Bank A Company B Bank B Company B Inermediaor Bank B Company C Bank C Company C Bank C inerface/connecor Figure 4: Benefis of inermediaion Muli-bank online markeplaces Muli-bank online markeplaces offer corporae cosumers access o heir relaionship banks by inegraing auomaed pricing services provided by he banks [Sanb02]. Corporae cosumers can reques live, execuable quoes simulaneously from heir counerparies using his rading channel. The number of quoes is limied by he counerpary s response ime, echnical consrains as well as he number of available sell-side counerparies. Figure [5] illusraes he rading process. 5 The siuaion reflecs he negaive effec of "Mecalfe's Law" [ShVa98]

9 Inegraion of Foreign Exchange Trading and Corporae Treasury Sysems 477 Company Muli-bank Markeplace Foreign Exchange Liqidiy Provider Dealer Trading plaform Bank A Bank B Bank C Bank D quoe excue FXrading FXrading qvalid FXrading : ime available for reques for quoes and deal execuion quoe : ime needed o deermine a valid quoe valid : validiy period of he quoe execue : ime of execuion : valid quoe Figure 5: FX rading process wih muli-bank online markeplace Afer execuing he reques for quoe he FX markeplace forwards he reques o he pricing services of he chosen liquidiy providers. Afer he reques is processed ( quoe ), he pricing service will respond a valid execuable price, which is forwarded o he corporae dealer in real ime. Usually he dealer has o confirm an FX deal wihin a cerain fixed ime span FXrading hus quoes aking longer o respond will no be available and herefore lowering he number of heoreically available quoes. Finally he dealer compares he obained compeiive bids and chooses he one ha fis his needs bes while considering qvalid. 2.4 Evaluaion of elecronic FX rading and muli-bank markeplaces Muli-bank markeplaces from an inermediaor perspecive add value o he buyside and he sell-side cusomer hrough coordinaion services [Sak + 95]. By inegraing he liquidiy providers, he muli-bank markeplaces no only help overcome he compaibiliy issue of connecing he heerogeneous sysems [Gomb01] bu more imporanly offer he corporae cusomer access o a single foreign exchange marke wih he accumulaed liquidiy of he paricipaing relaionship banks. Liquid markes are considered less volaile han illiquid ones [Harr03, p. 394]; consequenly immediae rading of high volume deals wihou significanly affecing he marke price is possible [O Har97]. Using voice-based broking, i is very difficul if no virually impossible o ge an idea abou he real marke price of a ransacion. Muli-bank markeplaces on he

10 478 K. Vo, R. Wojciechowski, C. Weinhard oher hand allow he corporae dealer o observe and compare muliple compeiive bids simulaneously herefore supporing price discovery as well as beer marke ransparency [Radi01]. The compeiive bids can be recorded wih furher rade informaion o build a solid daa basis for daa mining and pos rade analysis [Radi01]. Mining daa on rade deails like bids, spreads ec. can provide answers o various quesions and can, e.g. become useful when negoiaing wih relaionship banks concerning general business condiions. However, muli-bank markeplaces are no he holy grail of foreign exchange rading. The relaionship banks acually have no moivaion o join such plaforms as hey benefi from corporae business in he radiional sae. The lack of personal relaionships is anoher aspec ofen menioned in he conex of muli-bank markeplaces [Sale02]. Personal relaionships are ofen believed o resul in faser and beer quoes especially when rading high volume deals [Glob01]. Togeher wih he fear of giving away precious business informaion o compeiive marke paricipans when searching for counerparies o sele high volume deals, hese are imporan reasons for companies o limi heir online FX rading o lower volume deals only [Gne02]. Increased operaional efficiency and conrol ofen regarded as he cenral benefi of elecronic rading [Sanb02] is a double-edged sword. Alhough companies can improve heir FX rading process wih he help of elecronic rading, he inegraion challenge is far from being rivial and is herefore considered as a major hurdle for he adopion of his rading channel [Sale02]. Operaional efficiency is hardly improved by merely changing he rading medium from voice-based broking o elecronic rading. In order o achieve significan cos savings i is necessary o seamlessly inegrae he new process ino he company s enire foreign exchange rading process. Alhough major muli-bank markeplace vendors suppor inegraion by providing inerfaces for commonly deployed reasury managemen sysems, he ask o inegrae he heerogeneous sysems remains and here is always he possibiliy, ha he inerfaces provided do no fi o he acual reasury sysem. Furhermore, elecronic muli-bank markeplaces services do no encompass rade confirmaion and maching. Tradiionally, rade confirmaion and maching has been performed manually and involves he generaion of confirmaion leers. As he number of possible counerparies increases wih muli-bank markeplaces, companies will have o make sure ha hey are sill able o inegrae hem ino heir rade confirmaion process 6. 6 Confirmaion maching service providers (e.g. Misys offer an soluion o his dilemma, as hey inegrae he differen liquidiy providers and offer a single poin of access o confirmaion and maching informaion.

11 Inegraion of Foreign Exchange Trading and Corporae Treasury Sysems Sraigh-hrough processing and Web Services 3.1 Sraigh-hrough processing in he financial indusry Sraigh-hrough processing and inegraion The erm sraigh-hrough processing (STP) is used in he financial indusry in he conex of achieving end-o-end processing of financial ransacion from iniiaion o selemen [SaSa02a] hrough he auomaion of financial (sub-)processes. Ideally a manual ineracion is only required a he sar of a ransacion while subsequen phases are processed wihou he need for any furher human inerferences. Consequenly he risk of possible addiional manual errors i.e. hrough mis-keying rade deails or hrough delays is eliminaed [Smih03]. In order o achieve his goal heerogeneous informaion sysems ha are involved in financial ransacions have o be seamlessly conneced, ofen alongside wih he redesign of business processes [SaSa02a]. Thus STP is abou solving he quesion of how o inegrae hese sysems [Lin04] while keeping inegraion iself manageable (i.e. a low cos) a complex ask, as exernal and inernal inegraion problems have o be solved [Wei + 03]. Inernal STP refers o sreamlining financial processes ha are inernal o an indusry paricipan [SaSa02a], a opic ha is discussed in he conex of enerprise applicaion inegraion (EAI). Exernal STP on he oher hand addresses he challenge of seamlessly inegraing exernal parners ha are involved in financial processes [SaSa02a]. Therefore cross company coordinaion, securiy of daa exchange as well as sysem conneciviy and ineroperabiliy are key issues ha have o be considered [FiCo01]. Exernal STP is discussed wihin he conex of B2B inegraion Evaluaing he consequences of process auomaion The imporance of STP for he financial indusry can be compared o he role supply chain managemen plays for he manufacuring indusry or cusomer relaionship managemen for he service indusry [SaSa02a]. Imporan drivers pushing STP iniiaives are [Eldr04, SaSa02a, FiCo01, Tayl03]: 7 Weizel [Wei + 03] analyses coordinaion in he conex of B2B inegraion resuling in he need for indusry-wide sandards, whereas his work will concenrae on he echnological aspecs of connecing he heerogeneous sysems across company borders.

12 480 K. Vo, R. Wojciechowski, C. Weinhard The eliminaion of unnecessary manual ineracions reduces he number of errors consequenly increasing efficiency and reducing operaional risk. Financial ransacions can be performed faser and a higher number of ransacions can be processed wihou a decrease in he qualiy of a single ransacion. Changes in financial sraegies can be performed faser and more accurae. Increased operaional efficiency and ime savings reduce operaional cos. Despie he above saed benefis, process auomaion also bears risks ha mus no be overlooked. Wih ongoing process sreamlining, manual inervenions will be reduced o a minimum alongside wih errors. Bu manual inervenions also serve as saniy checkpoins in case daa is erroneous. Humans will usually a leas skip ransacions as soon as hey noice possible errors or simply do no undersand insrucions. Auomaed processing on he oher hand mus include mehods ha validae daa and deec possible errors righ from he sar. Also excepion handling rouines mus be implemened in case of errors; oherwise here is he risk ha unrecognized errors migh ulimaely resul in a cascading amoun of fauly ransacions [Eldr04]. Consequenly a possibiliy o inerrup a process mus be implemened. Auomaion hides deails abou he underlying processes as well as he involved procedures execued in he background. Consequenly here is he possibiliy ha people forge abou he deails behind he auomaed process. This will prove roublesome in case of business excepions i.e., errors, when auomaion fails and ransacions have o be performed manually again. As a consequence STP iniiaives mus consider no only he poenial benefis bu also he possible hreas of process auomaion avoiding poorly designed STP iniiaives. Criical parameers, especially from a echnological perspecive, ha deermine he success or failure of STP iniiaives are ransacion speed, accuracy of rade informaion, overall sabiliy and exensibiliy of he chosen echnological infrasrucure as well as he level of securiy provided for daa exchange [SaSa02a]. 3.2 Sraigh-hrough processing wih Web Services Enerprise applicaion inegraion and Web Services Enerprise applicaion inegraion seeks for mehods and ools ha help o connec applicaions, share services and daa wihin and across company borders and neworks [SaSa02b]. Conceps supporing inernal and exernal sysem inegraion namely he Common Objec Reques Broker Archiecure (CORBA), he Disribued Componen Objec Model (DCOM) or he of Remoe Mehod Invocaions

13 Inegraion of Foreign Exchange Trading and Corporae Treasury Sysems 481 (RMI) [WoWe02, p.102] have exised for a while however he noion of Web Services is he only one people are paying aenion o oday [Lin04, p. 324]. Web Services are encapsulaed, loosely coupled, conraced funcions offered via sandard proocols ha can be used o share applicaion funcionaliy and daa over neworks such as he Inerne [SaVo04]. Web Services are based on esablished sandards including XML, SOAP, and WSDL [WoWe02, p. 100] which provide remoe procedure call (RPC) mechanisms ha can pass hrough company firewalls [Maie02b]. Being operaing sysem and programming language agnosic, Web Services can help o efficienly inegrae echnical heerogeneous and disparae environmens [W3C03] Evaluaion of Web Services and sysem inegraion Web Services presen a paradigm shif in he way sofware asses can be shared and managed. Though inegraion via disribued sysems, namely Remoe Procedure Calls (RPC), is no a new idea, he noion of Web Services enriches his concep by adding he following faces [Glas00]: Ineroperabiliy: In conras o exising disribued archiecures, he use of Web Services is independen from he operaing sysem and he programming language. This is backed up by he fac ha vendors could agree on he proposed Web Service sandards [Lin04, p. 311]. Ubiquious Use: Using XML o marshal daa ino reques and respond documens and HTTP, Web Services can be virually used by any device supporing hese indusry sandards [Cohe02]. Low enry-barriers: simple conceps behind Web Services make i easy o adop his echnology (also from a cos poin of view). Wide accepance hroughou he sofware indusry: suppor from companies like Microsof, Sun, IBM, SAP, ec. [SmBa01]. Neverheless here exis unresolved issues concerning he use of Web Services ha are discussed and should be herefore considered when evaluaing he applicaion of Web Services [Smi01]. Trade informaion are highly business relevan daa hus securiy mus be considered when using Web Services o ransfer and consume he precious informaion. Web Service performance is anoher criical facor ha mus be evaluaed. Alhough he number of service requess from a single company migh be relaively low, he service will mos likely no be consumed by a single pary only hus he absolue number of reques ha mus be handled migh be very high. The per- 8 Wojciechowski [WoWe02] gives a comprehensive overview abou he Web Service sandard.

14 482 K. Vo, R. Wojciechowski, C. Weinhard formance of Web Services is highly dependen on is implemenaion poor implemenaion can highly affec he overall service scalabiliy (i.e. performance) [Lio02]. Finally Web Services sill have o be inegraed ino exising IT sysems. Inerface and service will have o be build ha consume he service and ransform he daa ino a forma ha is required by he underlying IT sysems. Inegraion using Web Services sill is no an ou-of-he-box even [Lin03]. 4 Inegraion of elecronic foreign exchange rading and corporae reasury sysems wih Web Services The following secion will presen lessons learned from implemening a sraigh hrough processing iniiaive a Bayer AG Corporae Finance. The objecive was o sreamline and enhance he corporae foreign exchange rading process wih elecronic rading using muli-bank markeplace and auomaed deal confirmaion and selemen services [cp. Secion 2.1]. 4.1 Inegraion analysis of he iniial siuaion The iniial siuaion of he company s foreign exchange rading process can be described as follows: afer he corporae dealer has enered ino a foreign exchange conrac [1], she has o reener he exac rade informaion ino he company s own reasury managemen sysem [2]. The back-office saff han has o manually rack confirmaion of open foreign exchange deals [3] by observing daa-feeds from he confirmaion and maching provider [4]. In case here is a valid mach and an open deal has been confirmed, he corresponden rade informaion is manually updaed. Figure 6 gives an overview of he siuaion as of before inegraion.

15 Inegraion of Foreign Exchange Trading and Corporae Treasury Sysems 483 Company 1 Liquidiy providers Treasury FX Poral 2 4 Treasury Managemen Sysem Oher sysems Corporae Financial Poral business objec inegraion layer 3 Confirmaion & Maching Service Provider manual process [phone, fax, eleconic] cross company border daa exchange Figure 6: FX rading iniial siuaion 4.2 Inegraion implemenaion of elecronic FX rading using Web Services The firs sep was o eliminae he need o manually reener he deal daa ino he corporrae TMS afer he deal has been execued using he online markeplace (cp. sep [2] in figure [6]). This was achieved by connecing o he elecronic rading plaform o firs obain and subsequenly save he deal informaion o he TMS (cp. [2] in Figure [7]). Usually he rading plaforms provide inerfaces o suppor he daa exchange and inegraion. As menioned in secion [2.4] hese inerfaces can be based on proprieary communicaion proocol sandards and hus ofen require he company o open furher pors of he corporae firewall. Web Services do no suffer from his resricions consequenly inegraion complexiy could be reduced if a service based on he Web Service sandards is used. In our specific case, he inegraion-service of he chosen rading plaform was no based on he Web Service sandard bu shared imporan characerisics of Web Services mainly he use of sandard web proocolls for communicaion as well as a daa forma based on he XML sandard. As a consequence in order o consume he service, no addiional pors of he corporae firewall had o be opened and he daa received could be parsed and processed using sandard XML ools and he semanic daa descripion provided by he rading plaform provider. As a maer of fac he main inegraion hurdles urned ou o be no abou consuming and inegraing he service bu abou providing a generic possibiliy o exrac, modify and ener rade daa ino he corporae reasury managemen sysems.

16 484 K. Vo, R. Wojciechowski, C. Weinhard Thus a lo of effor was spend on designing and building an inegraion layer ha offered inerfaces, funcions and common business objecs o encapsulae, ransform and process he business daa. This layer was implemened using Microsof.Ne echnology which was chosen because of is naive suppor for XML and Web Services and due o already exising experiences using his echnology in similar projecs. Designing and implemenaion of he inegraion layer required aproximaely welve man-days wih a significan amoun of his ime being spend on designing a highly reusable objec oriened archiecure. Using his inegraion layer a service was designed and implemened which periodically (every 15 minues) consumes he rading plaform s inegraion service o check for new deals, parses he XML daa received from he service, maps he informaion o he common rade objec provided by he inegraion layer and finally saves he exraced informaion o he corporae TMS. Manual deal maching and confirmaion (cp. sep [3] and [4] in figure 6) was eliminaed by inegraing he rade confirmaion process using he inegraionservice offered by he CMS provider. The implemenaion execuion was similar o he inegraion of he online rading plaform service described above. Again a service was build ha periodically consumes he CMS inegraion-service o check for newly confirmed rades, exracs his informaion and uses business objecs and inerfaces from he inegraion layer described above o save he informaion o he TMS. Implemenaion of his service could be carried ou significanly faser as he inegraion layer could be highly reused. In summary i ook he eam approximaely sixeen man-days o implemen he sraigh hrough processing iniiaive. The sreamlined corporae foreign exchange rading process is illusraed in Figure [7].

17 Inegraion of Foreign Exchange Trading and Corporae Treasury Sysems 485 Company Treasury 1 FX poral Liquidiy providers Treasury Managemen Sysem Oher sysems Corporae Financial Poral business objec inegraion layer 3 2 cross company border daa exchange Confirmaion & Maching Service Provider manual process [phone, fax, eleconic] auomaed/inegraed process Web Service inerface/connecor Figure 7: Inegraed FX rading process 5 Conclusion and furher work This paper evaluaes elecronic foreign exchange rading wih muli-bank online markeplaces. Through his rading channel he corporae dealer gains access o he liquidiy of a global marke raher han fragmened single markes and benefis from beer ransparency and price discovery. However he prospec of achieving higher operaional efficiency when seamlessly inegraing elecronic rading ino he corporae rading process reflecs he rue moivaion behind he adopion of his rading channel. The inegraion complexiy can be reduced by employing Web Services which help solving conneciviy and ineroperabiliy issues when inegraing exernal sysems. This paper herefore describes a Web Services-based sraigh-hrough processing implemenaion as a manageable approach o inegrae online markeplaces and corporae reasury sysems o realize an efficien and sreamlined FX rading process. Nex seps are o deermine he raio of deals execued using he elecronic rading plaform versus radiional rading channels (STP-rae), o evaluae how his raio changes over ime, o idenify aspecs ha have an effec on he STP-rae and o quanify he operaional cos savings due o he STP implemenaion.

18 486 K. Vo, R. Wojciechowski, C. Weinhard References [Blai02] Blair, D.: Grasping he Nele: Reaping efx Benefis Now and in he Fuure, GTNews, 2002, hp:// (03. July 2004) [Cohe02] Cohen, F.: Undersanding Web service ineroperabiliy, IBM developerworks, 2002, hp://www-106.ibm.com/developerworks/webservices/library/ws-iner.hml (28.Juni 2004) [Eldr04] Eldridge, G.:Deal Execuion in an STP World - Par 2: Fron/Middle Office Risks, GTNews 2004, hp:// (11. June 2004) [FiCo01] Firs Consuling: A Train called Sraigh Through Processing, 2001, hp://perso.wanadoo.fr/firs-consuling/leers/leer3.pdf, (27. June 2004) [Glas00] Glass, G.: The Web services (r)evoluion - applying Web services o applicaions, 2000, hp://www-106.ibm.com/developerworks/library/ws-peer1.hml (11. June 2004) [Glob01] Globalinvesormagazine: Foreign Exchange Survey, Globalinvesormagazine, March 2001, hp:// (11. July 2004) [Gomb99] Gomber, P.: Elekronische Handelssyseme, Physica-Verlag Heidelberg, 1999 [Gne01] GTNews: Muli-Bank FX Plaforms line up o bring cos savings o reasurers, GTNews, 2001, hp:// (11. June 2004) [Gne02] GTNews: Wha do corporaes wan from heir banks? GTNews, 2002, hp:// (11. July 2004) [Gne03] GTNews: Delivering he promise, GTNews, 2003, hp:// /4892.cfm (03. July 2004) [Harr03] Harris, L.E.: Trading and Exchanges, Oxford, 2003, Oxford Universiy Press [O Ha97] O Hara, M.: Marke Microsrucure Theorie, Blackwell Publishers, 1997 [Kölz01] Kölzer, C.: E -Trading Plaforms, GTNews, 2001, hp:// aricle/3399.cfm, (10. July 2004) [Kus02] Kuschke, G.: Trading Forex and Money Markes via he Inerne, GTNews, 2002, hp:// (5. July 2004) [Lio02] Lioiu, M.: Migraing o Web Services Laency and Scalabiliy, in: Proceedings Fourh Inernaional Workshop on Web Sie Evoluion, 2002, p [Lin00] Linhicum, D. S.: Enerprise Applicaion Inegraion, London 2000 [Lin04] Linhicum, D.: Nex Generaion Applicaion Inegraion From Simple Informaion o Web Services, Addison-Wesley 2004 [Maie02a] Maier, G. E.: Web Services for STP, Back Office Focus, May 2002 [Maie02b] Maier, G. E.: Sraigh Through Processing for he Masses, Trading Technology Week, Vol. 5/27, May 2002

19 Inegraion of Foreign Exchange Trading and Corporae Treasury Sysems 487 [Meye03] Meyer, O.: Inegraion he key o back office compeiiveness, Back Office Focus, 2003, hp:// omeyer pdf (27.June 2004) [Misy04] Mysis: Misys Wholesale Banking Sysems and Currenex sign sraegic parnership agreemen, Misys Press Release, 2004, hp:// media/press/pr_banking/2004/ ba/ (9. July 2004) [Mire00] Mirek, L.P.: The inerne: auomaing and improving global FX, The Treasurer, Oc [Mois01] Moiseiwich, J.: Online Forex: Promises, Promises, CFO.com, 2001, hp:// A,00.hml?f=opions (03. July 2004) [Pic + 96] Pico A., Borenlänger C., Röhrl H.: Börsen im Wandel - Der Einfluß von Informaionsechnik und Webewerb auf die Organisaion von Werpapiermärken, Friz Knapp Verlag, Frankfur, 1996 [Radi01] Radin, M.: The reasury and elecronic rading, GTNews/Fina, 2001, hp:// (27. June 2004) [RiSo03] Richmond Sofware: Sraigh Through Processing in a Corporae Treasury, Richmond Sofware TMI Repor, 2003, hp:// /supplemen/03sp/richmond.pdf (27.June 2004) [Sak + 95] Sakar, M.B., Buler, B., Seinfield, C.: Inermediaries and Cybermediaries: A Coninuing Role for Mediaing Players in he Elecronic Markeplaces, Journal of Compuer Mediaed Communicaion, Vol.1(3), 1995 [Sale02] Sales, R.: Elecronic FX: Realiy or jus a smoke screen, Wall Sree & Technology Online, 2002, hp:// doc_id=wst s0004 (10. June 2004) [Sanb02] Sanborn, T.: Hype or Realiy? The Hard Facs Abou Elecronic Trading, GTNews, 2002, hp:// (10. July 2004) [SaSa02a] Samani, G., Sadhwani, D.: Web Services and Sraigh Through Processing Web Services in he Financial Indusry, Web Service Archiek 2002, (07. June 2004) [SaSa02b] Samani, G., Sadhwani, D.: B2Bi and Web Services - an inimaing ask? Web Service Archiek 2002, hp:// (07. June 2004) [SaVo04] Sandrock, J., Vo,.K.: E-Learning communiy inegraion wih Web Services, in Mulikonferenz Wirschafinformaik (MKWI) 2004 Essen, Band 1, p [ShVa98] Shapiro, C., Varian, H.R.: Informaion rules, A sraegic guide o nework economy, Boson, Massachuses 1998 [SmBa01] Smih, D., Bachelder, R.: Garner Predics 2002: Inerne Plaforms and Web Services,Garner 2001 [Smih03] Smih, J.: Online Trading: A Hands-Off Approach, GTNews Aricle, 2003, hp:// (27.June 2004)

20 488 K. Vo, R. Wojciechowski, C. Weinhard [Smih03b] Smih, J.: On he move: The challenges of online rading, GTNews, 2003, hp:// (27. June 2004) [Tayl03] Taylor, G.: Why aren reasurers buying ine efx?, GTNews, 2003, hp:// (03. July 2004) [W3C03] W3C: Simple Objec Access Proocol, 2003, hp:// (11 June 2004) [WeKö03] Weizel, T., König, W.: Nezeffeke im E-Business, in: Proceedings of he 6. Inernaionale Tagung Wirschafsinformaik 2003 (WI 2003); Dresden [Wei + 03] Weizel, T.,Marin, S.,König, W.: Sraigh Through Processing auf XML-Basis im Werpapiergeschäf, in: WIRTSCHAFTSINFORMATIK 45 (2003) 4, p [WoWe02] Wojciechowski, R., Weinhard C. Web Services und Peer-o-Peer Nezwerke, in Schoder, D. e al: Peer-o-Peer, Heidelberg Springer: P