IBM Algo One Managed Data Service on Cloud programs deliver data and analytical solutions for risk management

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1 Announcement ZP , dated April 29, 2014 IBM Algo One Managed Data Service on Cloud programs deliver data and analytical solutions for risk management Table of contents 1 Overview 5 Technical information 2 Key prerequisites 6 Ordering information 2 Planned availability date 7 Terms and conditions 2 Description 9 Prices 5 Program number 9 Announcement countries Overview IBM Algo One Managed Data Service on Cloud includes: Algo One Managed Data Service Market Data on Cloud provides data that is validated daily and historical risk-factor data generated through a robust data cleaning process. Algo One Managed Data Service Master Data on Cloud offers terms and conditions for bonds, funds, certificates, equities, derivatives, and insurance with emphasis on cost reduction and financial engineering for complex products. Algo One Managed Data Service Analytics Data on Cloud provides stochastic quantitative risk analytics for risk management, monitoring, and regulatory requirements. Algo One Managed Data Service Simulated Data on Cloud provides daily, simulated scenarios to help address risk management, monitoring, and regulatory requirements. Algo One Managed Data Service Asset Allocation Optimization on Cloud utilizes proprietary optimization methodologies to create model portfolios with specific asset allocations. IBM Algo Risk Service on Cloud offers: Algo Risk Service Ex Post Performance and Risk on Cloud combines Algo risk analytics with the following performance attribution capabilities from Ortec Finance: Enhances the investment process by enabling the same architecture, data, and assumptions to be shared consistently across both Algo and Ortec Finance methodologies. Provides a new diagnostic tool to help different stakeholders optimize performance and achieve better oversight of the investment process. Algo Risk Service Point in Time Processing on Cloud delivers the following capabilities: Handles backdated processing. Allows a period of time for you to put together the position holdings for a certain date in the past, meanwhile it keeps instrument prices and risk factor data stored separately, as referenced by the selected reporting date. IBM is a registered trademark of International Business Machines Corporation 1

2 Key prerequisites These programs require a workstation that supports Mozilla Firefox or Microsoft TM Internet Explorer 7, or later. Planned availability date April 29, 2014 Description Algo One Managed Data Service on Cloud Algo One Managed Data Service on Cloud helps financial institutions save time and reduce total cost of ownership with its specialized, outsourced data management, risk analytics, and optimization services. You can focus on your core business activities while IBM specialists take command of computational-intensive calculations and time-consuming data management. A key foundation to the overall service is to structure data to meet your requirements by calibrating market and reference data to your definitions. Algo One Managed Data Service on Cloud helps companies avoid gaps in coverage by accommodating private placements or internally structured securities in a consistent fashion. Algo One Managed Data Service on Cloud helps you to demonstrate to regulators and supervisory authorities that your input data is consistent and auditable. Solution packaging - Algo One Managed Data Service on Cloud Algo One Managed Data Service Market Data on Cloud offers a robust, raw-data cleaning process and methodology that uses statistical investigation, coupled with a guided-through professional engagement to supply reliable and validated risk factors for financial risk and return management. Market data is produced with automated daily data collection and storage, thorough data scrubbing and formatting, professional data validation, and proprietary enrichment methodology to compensate for data inconsistencies. Available risk factor classes include: Interest rates Credit spreads Inflation Equity indices Volatilities Commodities Benefits include: Transparent, derived data elements to explain data movement Skilled financial engineers who provide data validation and enrichment Methodologies that support quality data elements Data architecture that is designed for risk management Algo One Managed Data Service Master Data on Cloud provides clients access to an expansive repository of financial security Terms and Conditions for a large set of securities with ISIN and CUSIP codes, which include but are not limited IBM is a registered trademark of International Business Machines Corporation 2

3 to investment funds, insurance contracts, listed derivatives, government bonds, corporate bonds, financial bonds (plain, equity linked, and foreign exchange linked), and currency exposures. Private placements or internally structured securities without industry-recognized identifiers, are available based on client-provided, term sheets. Terms and conditions are validated through a data-cleansing process that tracks data changes for auditing purposes. This helps to ensure adherence to internal or regulatory requirements. Benefits include: Validated terms and conditions for an universe of exchange traded and private placement securities Terms and conditions that are captured directly from term sheets Risk factor representation for each security Multi-exposure representation for funds modeling Algo One Managed Data Service Analytics Data on Cloud provides you with daily risk analytics for risk management, monitoring, and regulatory needs. Risk analytics, such as value at risk for specified quantiles, are calculated by using the fullrevaluation method under pre-defined historical and Monte Carlo scenario sets. Default parameters for simulated data sets and additional risk analytics may be configured according to requirements. Algo One Managed Data Service Simulated Data on Cloud provides daily, simulated scenario sets to help meet your risk management and regulatory needs. Simulated data (risk factors and scenarios) includes instruments, scenarios, and time step. Predefined scenarios include historical simulation and Monte Carlo simulation by using time series of one-year, daily observations or five-year, weekly observations. Benefits of Algo One Managed Data Service Analytics Data on Cloud and Algo One Managed Data Service Simulated Data on Cloud include: Outsourced, cmputationally intensive processes, that reduce in-house infrastructure and investment to allow optimization of in-house resources Scalable solution that is designed to address current and future needs Quality-enriched data that is suitable for risk analytics Flexibility to incorporate new instrument types and asset classes Algo One Managed Data Service Asset Allocation Optimization on Cloud provides a set of model portfolios with specified asset allocations for the purpose of clientrisk profiling that utilizes proprietary optimization methodologies. Simulations are performed by using Algo One Managed Data Service Simulated Data on Cloud. Instruments are modeled by using output that is produced by Algo One Managed Data Service Market Data On Cloud and Algo One Managed Data Service Master Data On Cloud. Benefits include the ability to: Support construction, allocation, and monitoring of investor portfolios. Empower wealth managers by using real products and related risk factors. Utilize validated and enriched market data to resolve gaps in external data. Deliver models that include stochastic scenarios, stress tests, and market views to support investment ideas and portfolio construction through time. Full revaluation over multiple time periods and scenarios. Provide probability-based optimization to focus on individual, client goals without loss of product or portfolio total return convexity. Support distribution of model portfolios and analytics to a network of client advisors. Algo One Managed Data Service on Cloud can be used with other IBM products to form a range of editions. IBM is a registered trademark of International Business Machines Corporation 3

4 Algo Risk Service on Cloud Algo Risk Service Ex Post Performance and Risk on Cloud Designed to achieve consistency and help lower costs of ownership. The addition of the Ortec Finance performance attribution capability to Algo Risk Service on Cloud means that a single, consistent data platform is used for both disciplines. The result is a consistent set of assumptions that includes data frequency, evaluation period, benchmark rebalancing, treatment between portfolio and benchmark constituents, hedging methodology, and portfolio rollover methodology. Improve client communication. The new risk and performance diagnostic tool helps you evaluate any mismatch of performance versus expected returns, and can help explain the underlying reasons for a mismatch. The result can be improved understanding and a better client experience. Optimize investment decisions. Portfolio managers can use the risk and performance diagnostic tool to understand the impact of their investment decisions. By helping managers understand the reasons for performance, the tool can help improve decision making over a period of time. Achieve superior executive oversight. The tool provides executives an indication of the efficiency of investment managers at various levels of the hierarchy. This information can help the organization stay within risk-budget limits and produce consistent, risk-adjusted returns. It also provides the basis for a more effective, remuneration policy that is based on manager performance. Validate risk models. The integrated risk and performance platform supports back testing. By facilitating regular evaluations of actual versus expected performance, it can help you validate risk numbers against past performance. Achieve customization to align with goals and investment process. The solution provides multiple risk and performance measurement and attribution methodologies that apply to a wide range of asset classes, including OTCs. When these methodologies are provided by Algo Risk Service on Cloud, you also have configuration choices (for example, evaluate at a position or fund level) and the option to specify different calculation metrics, such as frequency, methodology, and rebalancing rules. Algo Risk Service Point in Time Processing on Cloud Common operational delays can make it difficult for clients to provide Algo Risk Service on Cloud with positions for a scheduled simulation run, due to critical reporting periods, such as month or quarter-end. Algo Risk Service Point in Time Processing on Cloud allows a period of time for clients to put together the position holdings for a range of past dates. Meanwhile it keeps instrument prices and risk factor data stored separately, as referenced by the selected reporting date. This functionality is in high demand for firms that: Need to prepare internal risk management or external regulatory reports on a monthly or quarterly basis but must wait for back-office final reporting of the ledger. Provide custody services but require a period of time to obtain finalized position data from clients. Have investments that are managed by external asset managers that do not provide investment portfolios on timely basis. While the functionality enables you to have more flexibility when closing the book on a monthly run, its value extends beyond this. Clients can create a universal base session with a wide range of risk factors captured in order to set a benchmark for valuation. Position data can be brought in from a source fund and integrated consistently into a single run without trying to patch mismatched figures together. The point-in-time sessions can also be stored and used to conduct risk back testing and model back testing. Risk managers can enter new positions and perform historical what-if and scenario analyses. Algo Risk Service on Cloud is dedicated to promoting technology that is constantly evolving in line with client requirements and the challenges of risk analysis and IBM is a registered trademark of International Business Machines Corporation 4

5 reporting. Point-in-time processing is one of the contributions to that effort and allows clients extra time to handle operational pressures without compromising on the integrity of the risk evaluation. Accessibility by people with disabilities A US Section 508 Voluntary Product Accessibility Template (VPAT) containing details on accessibility compliance can be requested at Program number Program Program number VRM name 5725-H IBM Algo One Managed Data Service on Cloud 5725-H IBM Algo Risk Service on Cloud Education support IBM training provides education to support many IBM offerings. Descriptions of courses for IT professionals and managers are on the IBM training website Contact your IBM representative for course information. Offering Information Product information is available via the Offering Information website Also, visit the Passport Advantage website Technical information Specified operating environment Hardware requirements Algo one Managed Data Service on Cloud Workstation that supports Mozilla Firefox or Microsoft Internet Explorer 7, or later. Algo Risk Service on Cloud Workstation that suports Microsoft Internet Explorer 7, or later. Software requirements For details, refer to the Hardware requirements section. The program's specifications and specified operating environment information may be found in documentation accompanying the program, if available, such as a readme file, or other information published by IBM, such as an announcement letter. IBM is a registered trademark of International Business Machines Corporation 5

6 Documentation and other program content may be supplied only in the English language. Global Technology Services Contact your IBM representative for the list of selected services available in your country, either as standard or customized offerings for the efficient installation, implementation, or integration of this product. Ordering information This product is only available via Passport Advantage. It is not available as shrinkwrap. These products may only be sold directly by IBM or by authorized IBM Business Partners for Software Value Plus. For more information about IBM Software Value Plus, visit To locate IBM Business Partners for Software Value Plus in your geography for a specific Software Value Plus portfolio, visit IBM Algo One Managed Data Service on Cloud 5725-H91 IBM Algo Risk Service on Cloud 5725-H57 Product category: Customer solutions For ordering information, consult your IBM representative or authorized IBM Business Partner, or visit Passport Advantage Program name/description Part number Algo One Managed Data Service on Cloud (5725-H91) - Algo One Managed Data Service Market Data on Cloud Per Billion Asset Conversion Unit (BACU) Subscription with Support per Annum Daily Fee for Partial Month - Algo One Managed Data Service Master Data on Cloud Per Billion Asset Conversion Unit (BACU) Subscription with Support per Annum Daily Fee for Partial Month - Algo One Managed Data Service Analytics Data on Cloud Per Billion Asset Conversion Unit (BACU) Subscription with Support per Annum Daily Fee for Partial Month D14MHLL D14MILL D14MJLL D14MKLL D14MLLL D14MMLL IBM is a registered trademark of International Business Machines Corporation 6

7 - Algo One Managed Data Service Simulated Data on Cloud Per Billion Asset Conversion Unit (BACU) Subscription with Support per Annum Daily Fee for Partial Month - Algo One Managed Data Service Asset Allocation Optimization on Cloud Per Billion Asset Conversion Unit (BACU) Subscription with Support per Annum Daily Fee for Partial Month D14MNLL D14MPLL D14MQLL D14MRLL Algo Risk Service on Cloud (5725-H57) Algo Risk Service Ex Post Performance & Risk - Per Billion Asset Conversion Unit with Support per Month D156KLL - Daily Fee for Partial Month D156LLL Algo Risk Service Point in Time Processing On Cloud - Document per Month Subscription D156MLL - Daily Fee for Partial Month D156NLL - Document Overage D156PLL For other ordering information for Algo Risk Service on Cloud, refer to Software Announcement ZP , dated October 2, 2012 Software Announcement ZP , dated May 21, 2013 Software Announcement ZP , dated September 3, 2013 Charge metric PID Program name number Charge metric IBM Algo One Managed Data Service 5725-H91 Billion Asset Conversion Unit on Cloud IBM Algo Risk Service on Cloud Document 5725-H57 Billion Asset Conversion Unit Document per Month Subscription Document is defined as a finite volume of data that is enveloped within a document header and trailer record that marks its beginning and end or any physical or electronic document type as defined in the IBM SaaS, including but not limited to: invoices, sales orders, purchase orders, quotes, schedules, plans, returns, shipments, receipts, and financial instruments. Billion Asset Conversion units Billion Asset Conversion Unit (BACU) is a unit of measure by which the IBM SaaS can be obtained. An Asset Conversion Unit (ACU) is a currency-independent measure of an Asset amount relevant to the IBM SaaS. Currency-specific Asset amounts must be converted into ACUs in accordance with the table located at Conversion unit table. Each BACU entitlement represents one Billion (10 to the 9th power) ACUs. Sufficient BACU entitlements must be obtained to cover the amount of Assets processed or managed by the IBM SaaS during the measurement period specified in Customer's Proof of Entitlement (PoE) or Transaction Document. Terms and conditions The information provided in this announcement letter is for reference and convenience purposes only. The terms and conditions that govern any transaction with IBM are contained in the applicable contract documents such as the IBM International Passport Advantage Agreement, the International Passport Advantage Express Agreement, or the IBM International Agreement for Selected IBM SaaS Offerings, or the IBM SaaS Terms of Use. IBM is a registered trademark of International Business Machines Corporation 7

8 This product is only available via Passport Advantage. It is not available as shrinkwrap. Subscription The IBM International Passport Advantage Agreement and the IBM SaaS Terms of Use govern your use of this offering. Technical Support Technical support is provided for IBM SaaS and enabling software, as applicable, during the subscription period. Any enhancements, updates and other materials provided by IBM as part of any such technical support are considered to be part of IBM SaaS or enabling software, as applicable, and therefore governed by these Terms of Use. Technical support is included with IBM SaaS and is not available as a separate offering. Refer to additional technical support information in the IBM Software as a Service Terms of Use document for the program. Terms of use The program's Terms of Use document is available on the IBM Software as a Service Terms of Use website Limited warranty If warranted, refer to the warranty as stated in the Terms of Use document or the Cloud Services Agreement for this offering. Money-back guarantee No Volume orders (IVO) No Passport Advantage applies Yes, and through the Passport Advantage website at Software Subscription and Support applies No System i Software Maintenance applies No Variable charges apply No Educational allowance available Education allowance does not apply. Special education prices are available for qualified customers through Passport Advantage. IBM is a registered trademark of International Business Machines Corporation 8

9 Statement of good security practices IT system security involves protecting systems and information through prevention, detection, and response to improper access from within and outside your enterprise. Improper access can result in information being altered, destroyed, or misappropriated or can result in misuse of your systems to attack others. Without a comprehensive approach to security, no IT system or product should be considered completely secure and no single product or security measure can be completely effective in preventing improper access. IBM systems and products are designed to be part of a comprehensive security approach, which will necessarily involve additional operational procedures, and may require other systems, products, or services to be most effective. IBM does not warrant that systems and products are immune from the malicious or illegal conduct of any party. Prices For all charges, contact your IBM representative. Passport Advantage For Passport Advantage information and charges, contact your IBM representative or authorized IBM Business Partner for Software Value Plus. Additional information is also available at IBM Global Financing IBM Global Financing offers competitive financing to credit-qualified customers to assist them in acquiring IT solutions. Offerings include financing for IT acquisition, including hardware, software, and services, from both IBM and other manufacturers or vendors. Offerings (for all customer segments: small, medium, and large enterprise), rates, terms, and availability can vary by country. Contact your local IBM Global Financing organization or visit IBM Global Financing offerings are provided through IBM Credit LLC in the United States, and other IBM subsidiaries and divisions worldwide to qualified commercial and government customers. Rates are based on a customer's credit rating, financing terms, offering type, equipment type, and options, and may vary by country. Other restrictions may apply. Rates and offerings are subject to change, extension, or withdrawal without notice. Financing from IBM Global Financing helps you preserve cash and credit lines, enables more technology acquisition within current budget limits, permits accelerated implementation of economically attractive new technologies, offers payment and term flexibility, and can help match project costs to projected benefits. Financing is available worldwide for credit-qualified customers. For more financing information, visit Announcement countries All European, Middle Eastern, and African countries except Iran, Sudan, and Syria. Trademarks IBM is a registered trademark of International Business Machines Corporation 9

10 IBM, Algo One, Algo Risk, Algo, Passport Advantage, Global Technology Services, Express and System i are registered trademarks of IBM Corporation in the United States, other countries, or both. Microsoft is a trademark of Microsoft Corporation in the United States, other countries, or both. Other company, product, and service names may be trademarks or service marks of others. Terms of use IBM products and services which are announced and available in your country can be ordered under the applicable standard agreements, terms, conditions, and prices in effect at the time. IBM reserves the right to modify or withdraw this announcement at any time without notice. This announcement is provided for your information only. Reference to other products in this announcement does not necessarily imply those products are announced, or intend to be announced, in your country. Additional terms of use are located at: For the most current information regarding IBM products, consult your IBM representative or reseller, or visit the IBM worldwide contacts page IBM is a registered trademark of International Business Machines Corporation 10