FACT SHEET: EMPOWERING YOUR OPERATIONS WITH AN INTEGRATED PLATFORM TO DRIVE DOWN SETTLEMENT COSTS AND BETTER MANAGE RISK

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1 Wallstreet BackOffice Global, cross asset solutions for high performance STP workflow FACT SHEET: EMPOWERING YOUR OPERATIONS WITH AN INTEGRATED PLATFORM TO DRIVE DOWN SETTLEMENT COSTS AND BETTER MANAGE RISK Wallstreet BackOffice is a scalable, high volume engine that supports post trade processing for an extensive range of asset classes. Wallstreet BackOffice centralizes and optimizes the global operations of your bank. It monitors activities across all asset classes, in turn providing transparency and interactive services to your clients. Wallstreet BackOffice enables you to deliver quality, best of breed and efficient service to other departments and improves margins by driving down transaction costs. Business Challenges Banks today face new challenges driven by soaring volumes due to algorithmic trading, the growing prominence of ECNs and bank portals, insourcing and outsourcing of services by clients, prime brokerage and overall increasing complexity of the business. This and the rising demand for cross-product operational services has increased the requirement for the effective integration of multiple systems and applications in the post trade environment to ensure the seamless flow of data and transactions. Traditional broker services, voice trading and associated customer contact is declining in contrast to the rise in demand for post trade services. Cost competition is more of an imperative than ever before. In an environment striving to maintain high straight through processing (STP) rates while keeping operational costs low, managing transaction workflow and exceptions in the most effective way, is key to achieving this. At the same time, banks are under pressure to maintain control and minimize operational risk. Efficiency and flexibility are essential. Back Office Operations require scalable, high volume solutions that cater for a wide range of asset classes and will automate processes wherever possible to keep up with increasing volumes while allowing a flexible approach to cater for any specific requirements or customized processes. Edition 1 PAGE 1 OF 12

2 Key Features The Wallstreet BackOffice Settlement and Controls component is a consolidated operations solution that provides the client with the functionality to control and physically manage the trades or cash flows generated from the front office system(s). It provides the ability to function in a range of modes catering for any organization from Corporate Treasuries to Tier One Banks. It is complemented by a full static database where settlement instructions, bank details, customer preferences and control parameters are managed. The configuration modules allow clients to control the rules for the management of static data, to review and amend profiles of deal types and the profile for effecting payment. The solution is based on a straight through processing model by default and, as such, operations are concentrated on exception processing and the management of settlement relating to exotic products. FRONT-OFFICE SYSTEMS: Including Reuters, Bloomberg, Murex, Summit, In-house systems The Settlement and Controls component is central to the management of operational risk on the system and runs in parallel with Wallstreet s Confirmation and Matching and Cash Reconciliation solutions. The solution covers the following six key functional areas: Integration Exception Management Workflow and Escalation Settlement and Custody G/L Accounting Key Performance Indicators Trade Processing Wallstreet BackOffice s compute engine to revalidate trade components ACTIVE PASSIVE Cash Flow Processing Processes all trade components generated by source systems STP INTEGRATION EXCEPTION MANAGEMENT WORKFLOW AND ESCALATION CONFIRMATION AND MATCHING CASH MANAGEMENT SETTLEMENT AND CUSTODY CASH RECONCILIATION SUB-LEDGER ACCOUNTING CLIENT SERVICES KEY PERFORMANCE INDICATORS (KPIs) PAGE 2 OF 12 Edition 1

3 INTEGRATION Wallstreet BackOffice offers standard interfaces to popular industry platforms and a development toolkit to interconnect with other applications. INTERFACES TO ALL MAJOR CLEARANCE & SETTLEMENT SYSTEMS Wallstreet BackOffice provides interfaces to all major clearance and settlement systems for both cash and securities movements. These interfaces - standard APIs to the directly-connected settlement and clearance systems - provide full control over the status and success or rejection of payments and clearance activities. They can be time-controlled, initiating alerts and tracers within certain minimum or maximum time spans allowed for responses to a settlement/clearance activity. Examples of major interfaces include: SWIFT CLS Euroclear Clearstream Trax STANDARD APPLICATION PROGRAMMING INTERFACE (API) The system also offers an array of standard APIs that provide interfaces to the corporate general ledger (such as SAP, Peoplesoft etc.), other banking and trading systems including Reuters and Bloomberg, spreadsheets, statistical databases etc. These interfaces can be real time, batch intraday or end-of-day, weekly or monthly, depending on the frequency requirement of the client. Wallstreet BackOffice also provides data to client-sites for risk management, operations controls, customer profitability calculations and credit statistics. Interface Configuration and Parameterization Edition 1 PAGE OF 12

4 EXCEPTION MANAGEMENT The Wallstreet BackOffice Exception Management solution offers non-stop operational management and control from a central control panel which summarizes the current status of all trades being processed. Post trade activities across all asset classes can be monitored in real time at a summary level and examined at detail level from the same view. Workflow exceptions can be easily identified and dealt with efficiently. Straight through processing is at the core of the Wallstreet BackOffice with exception handling being rules based and user configured to comply with client policies. STP MODEL Wallstreet BackOffice follows a straight through processing (STP) model and, as such, post trade operations are concentrated on exception processing and the management of settlement relating to exotic products. Trades are entered into Wallstreet FX (front office) by the dealers or arrive into the system via electronic dealing systems. If all the required static data is in place, the deal will be confirmed, matched, settled, accounted for, reported and interfaced to other systems without any user intervention. Wallstreet BackOffice is highly parameterized to allow for specific flows at a product, currency or customer level and provides dynamic rule and rule based exception handling configured to client policies. SETTLEMENT QUEUE MONITOR The Settlement Queue Monitor is the central control panel for the management of the back office. The screen summarizes the current state of all deals in the back office by status and from here all exceptions or outstanding actions to be completed can be monitored to ensure that all due settlements have been processed and acknowledged. The monitor allows various levels of drill down to view or process deals according to specific rules. Input Control: This shows all deals that require processing action by the back office regardless of value date. There are various input control statuses like verification required, repair required, additional review required, pending approval required, special handling required or retrieval of funds required. The input queues also keep track of all deals approved or modified during the day. Settlement Request or Value Date view: This shows what status the deal has reached from a settlement point of view, for example if the deal has been approved, if it is ready for payment, if it has been paid, acknowledged or rejected. The same panel monitors the internal settlements and any expected receipts. Settlement Queue Monitor: Central Exception-based Processing While this single screen is typically the focal point for most exception-based back office processing, the system has a layered product called the back office watchdog that monitors all actions that present a potential operational risk such as non payment of deals, loss of communications, nonexercised options etc. This process continually monitors the back office queues and alerts potential problems directly to the screen or broadcasts them to various pre-defined groups. PAGE OF 12 Edition 1

5 WORKFLOW AND ESCALATION The Wallstreet BackOffice Workflow and Escalation component is a fully integrated lifecycle management solution. It supplies the tools necessary to define transaction workflow, increase operational efficiency, optimize resources and reduce operational risk. This easy to use solution gives the ability to configure workflow, exception queues, alerts and escalation rules allowing the user to manage their business more effectively. OPERATIONS CONTROL MONITOR (OCM) The Operations Control Monitor (OCM) contains robust workflow functionality to allow the client to define the transaction lifecycle and workflow definition of all products throughout multiple locations. The system will process all types of transactions throughout their lifecycle from automatic generation of confirmations, confirmation matching, netting (both bilateral and multilateral), payments, reconciliation, etc. The system allows the client to define how these will process through the system and will include tools to configure alerts, escalation rules (both manual and automated) and a workflow monitor to control operations from a consolidated view. The Workflow Monitor provides a graphical representation of the transaction lifecycle and gives access to all underlying back-office processing functionality. Workflow Monitor: Graphical Representation of Back Office Transaction Lifecycle The Operations Monitor screen allows the client to group several cities/entities to control, monitor and process their consolidated operations. Edition 1 PAGE OF 12

6 The Input Control Queue Allocation allows the client to define rules that will overwrite straight-through processing and re-route transactions to a new destination queue that may require dual control or special processing. Workflow Configuration: Rules-based Queue Allocation The system also includes Work Allocation rules functionality that allows the routing of work to a particular user or user group. Work allocation rules can be defined by input control queues to access, currencies, products, cash value etc. Alerts against particular processes can be easily configured within the transaction workflow. The Alert Setup screen will allow the user to define the rules that will trigger these alerts. Alert Setup: Internal and External Alerts of Issues or Bottlenecks Automatic Escalation rules can be easily defined and users can also escalate a particular transaction manually. The system may send a broadcast message or escalation and can also be configured to move transactions from one queue to another for special or urgent processing. Automatic Escalation: Rule definition PAGE OF 12 Edition 1

7 SETTLEMENT AND CUSTODY The Wallstreet BackOffice Settlement and Custody solution offers extensive functionality to handle high and low value payments, receipt management, current accounts, netting, custody and stock records and commercial payments. The core settlement functionality is driven by a combination of the configuration profile and static data. The settlement instruction database is central to this functionality. The system allows for instructions to be managed at a city/legal entity/product category/product/currency level for each counterparty. Settlement instructions may be managed manually on the system or loaded automatically. PAYMENTS Wallstreet BackOffice is real-time by design and payments are issued when they have reached their release time provided that there are no settlement restrictions. However, payments may be grouped together if required. The system allows for the management of a series of critical times for the processing of settlements including user-defined payment release times and bank cut-off times. Wallstreet BackOffice generates SWIFT compliant payment orders as default. The system can also generate EDI formatted messages and links into many proprietary banking systems that are used for payment clearing by Corporate Treasuries. The system allows for the encryption and authentication of payment traffic and supports the generation of covered payments and split release of covered payments. When payments have been transmitted, Wallstreet will expect an acknowledgement from the payment network (SWIFT) indicating that the payment message has been accepted or rejected based on message format. If accepted, the deal is recorded as acknowledged or otherwise as rejected. RECEIPT MANAGEMENT While much of the operational control in the settlement solution is based around the management and execution of the payments, the system also manages the processing of receipts for both a cash management and settlement risk point of view. The system can accept MT910 (advice of Credit) or MT950 statements in real-time to update the status of the receipts filed in the system. Wallstreet BackOffice also has the functionality to identify receipts that have not been acknowledged and thus get the correct visibility of available funds. Receipts may be manually acknowledged if required. The component manages both external and internal (settling over current account) receipts. Receipts can be manually or automatically included as candidates for netting. The system can generate avisos (MT210) on a nostro basis to advise expected receipts. NETTING & SPLITTING The system has full settlement netting capability for both bi-lateral and multi-lateral netting. It supports both automatic netting (for regular netting counterparties) and adhoc netting. Transactions are netted at a location, value date and counterparty level. Netting can be done on a net, gross, currency pair basis or by cherry picking the deals. The system suggests netting by listing all netting candidates. The user can then decide if all transactions should be netted or if certain transactions should be excluded from netting. Wallstreet BackOffice also allows for the splitting of a cash flow relating to a deal into individual components for the same or different counterparties. The component deals, once processed by a user, follow the normal processing rules in the back office. Netting Management: Selecting Trades for Netting Edition 1 PAGE OF 12

8 CUSTODY AND STOCK RECORDS Wallstreet BackOffice provides the ability to see projected settling securities trades, which includes all possible fails, pair off candidates and open payable and receivable. The system comprises both a Stock Record and a Depository Position Monitory for views of positions, as well as interfacing with SWIFT for confirmations and delivery instructions. Settlement Messages: Delivery instructions for securities trades will normally get produced as soon as the trade is approved. However, it is possible to schedule the creation of the messages at a specific time or a specific day for a particular Custodian/ Currency/ Product/ Payment Method. Managing Cash: Wallstreet BackOffice has two main screens for managing cash, the Depository Summary and the Depository Activity Monitor. The Depository Summary screen displays the overall activity for all depositories within a particular city (a city is generally used to represent a physical back office processing centre.) This function tracks projected and actual cash settlements as they occur at the depository. The Depository Activity Monitor provides a more detailed view of cash positions within a single depository. Managing Position Balances: The Depository Position Monitor shows all of the activity within a given depository for a particular day, on an issue-by-issue basis. The screen shows one line for each security and then provides drill down capability on fails as well as cleared items. The Stock Record is a centralized database that displays the position and location of securities. The back office Stock Record allows the user to view end-of-day snapshots of trading activity on a security-by-security basis. COMMERCIAL PAYMENTS Wallstreet BackOffice provides comprehensive payments processing that allows the user to make payments and register receipts to/from external third parties (e.g. the payment of brokerage fees, margin calls) as well as effect internal cash movements (Nostro Transfers). Commercial Payments can be settled and accounted for, and the resulting cash flows can be seen in numerous inquiry screens throughout the back office in real-time. The system files cash flows derived from the above type transactions in the Wallstreet BackOffice processing queues as normal and the same processing rules are applied to allow execution of the payment orders. Commercial Payments can be entered manually via the Commercial Payments input screen or can be automatically entered via the Commercial Payments API. The automatic use of Nostro Transfers may be utilized as part of the Cash Management Functionality where Cash Pooling and Zero Balance account arrangements can be facilitated. Third Party Payments are used to register actual payments (or receipts). Processing occurs over a current account (out of or into which the funds move) and a customer (the payee). Details of the cashflows are picked up from the standard settlement instructions or can be typed in manually at deal input time. Third Party Payments can be configured to generate an MT202 message if required. Nostro Transfers allow for the movement of cash between Nostro Accounts (within the same or different legal entities), and can be used as part of the Cash Management solution to effect Cash Pooling and Target/Zero Balancing Cash Movements. The system can be configured to generate an MT200 message if required. PAGE OF 12 Edition 1

9 G/L ACCOUNTING The Wallstreet BackOffice contains robust and flexible accounting functionality. It can serve as a bank s official general ledger, support regulatory-based practices such as FAS 133 or IAS 29, and export main account and sub-ledger account balances to an outside ERP system such as SAP or PeopleSoft. Typically, the system will act as a sub-ledger to a larger bankwide general ledger. Interfaces can be built between the Wallstreet sub-ledger and external general ledger systems to provide the necessary accounting information. Account Posting Tables: Rules-driven Account Postings All accounting postings are event-driven. A transaction can have one or more events associated with it. Examples of events are: Start date or maturity date for a loan or deposit Interim interest payment dates on floating or fixed rate instruments with multiple payment periods Trade and value date for an FX transaction P/L recognition (via accruals or mark-to-market) The events used to account for a transaction are user configurable. Accounting Rules: Account Posting Tables contain the accounting rules that drive the account postings within the system. The posting table is the mechanism by which accounting events are linked to accounts. Posting tables are linked to one or more products. Within the posting table set up it is possible to define profit and loss accounts, be they mark to market, accruals, premium, or amortization accounts. Trial Balance Profit & Loss: The system comes with a versatile tool to view P/L. This spreadsheet tool allows the user to create various P/L views simply by specifying accounts within a spreadsheet. For example, it is possible to set up a spreadsheet for accruals that will allow the dealer/ financial controller to view the total accrual P/L across all currencies and for all products. Debit/Credit Detail Edition 1 PAGE OF 12

10 KEY PERFORMANCE INDICATORS (KPIS) STATISTICS Wallstreet BackOffice is supported by a comprehensive statistics database that records: the number of payments on a daily, month to date and year to date basis a currency equivalent amount of these payments any associated fails the number and type of operations at both a city level and a user level Payment and Failure amount are expressed using a Statistic Base Currency. Today s data is real-time and gets updated every time a payment is acknowledged or rejected. Monthly and yearly statistics are updated every night during Close of Area processing. END TO END STP ANALYSIS Wallstreet BackOffice provides comprehensive straight through processing analysis tool covering all stages of the trade lifecycle. Data relating to non STP actions from external systems can be integrated via standard API and drill down to trade and audit trails is supported for in depth analysis. Further features include a historical database. STP Analysis Monitor: STP Analysis through all stages of the trade lifecycle The STP Analysis Monitor allows the user to view their STP rates for a particular city at every process in the transaction lifecycle as well as the overall STP rate for selected dates. The user can drill down into any of the value dates on the STP analysis and this will break down each of the processes by the appropriate STP and non-stp percentages for each particular process. The enquiry will also detail the number of trades that are non-stp and will allow the user to drill down and see the trades that make up that number. Functionality includes the ability to generate a graph based on the STP analysis. PAGE 10 OF 12 Edition 1

11 STP Analysis over a specified date range The bar chart button at the top of the STP Analysis screen will allow the user to breakdown and analyse the output based on different criteria. These include counterparty, currency, product, nostro, user, customer type and customer location. STP Analysis by Counterparty The system will allow both the graph and the chart to be copied and pasted into a third party application such as a word processor or spreadsheet. Edition 1 PAGE 11 OF 12

12 Business Challenge HIGH TRADE VOLUME AND CROSS PRODUCT SUPPORT SEAMLESS INTEGRATION OPERATIONAL COST REDUCTION GREATER OPERATIONAL RISK CONTROL AND TRANSPARENCY WALLSTREET BACKOFFICE SOLUTION Wallstreet BackOffice is a scalable, high volume engine that supports post trade processing for an extensive range of asset classes. The Wallstreet BackOffice provides you with a consolidated operations solution that ensures the seamless flow of data and transactions. Wallstreet BackOffice offers standard interfaces to popular industry platforms and a development toolkit to interconnect with other applications. Straight through processing and client-defined workflow management are at the core of the Wallstreet BackOffice Settlement and Controls solution. Wherever possible processes are automated to keep up with high volumes, to increase operational efficiency and reduce the cost associated with settling deals. Wallstreet BackOffice provides you with an integrated platform and the functionality to control and physically manage trades or cash flows in a real-time environment. Wallstreet BackOffice allows you to centralize and optimize your global operations and monitor activity across locations. Rules-based exception management, comprehensive statistics and analysis tools offer you operational control and transparency across all asset classes Wall Street Systems Delaware, Inc. All rights reserved. CONTACT US North America HQ info@wallstreetsystems.com Europe HQ +44 (0) Website Asia HQ Wall Street Systems Empowering Treasury, Trading and Settlement Edition 1 PAGE 12 OF 12