anticipated announcement, page-3

fforest re: anticipated announcement Yes Fforest still holding for a week or two...
Im not yet in the money..with brokerage...
should have taken the lousy $500 last week as you note
momentum slowed..however fairly safe trailing stops still ok, the 100k at 356 is a bummer..
cheers
john

Sydney Futures Exchange Buys .NET Securities Depository

As the novelist Tom Clancy knows, a central securities depository (CSD) is mission critical. In his 1994 book, Debt of Honor, an attack on the United States combined military cunning with a carefully designed bit of code that wiped out a day’s trading records held on Stratus computers at the Depository Trust Company. (Just tell the boss this is research while you work through the fast-moving, 766-page novel at your desk).

In the real world of CSDs, however, securities data is apt to reside on IBM mainframe systems that were custom-built by each depository (about 100 around the world), usually with the assistance of a pricey consultancy. It was all very fine for a world in which most equities trading stayed within a nation’s borders, but globalization brings new challenges and crossborder trading will require more standards and the ability to link to other depositories.


Johan Eriksson and
OM’s Stockholm office
For CSDs, this presents significant challenges. For OM, the Stockholm-based creator of transaction systems for over 25 exchanges and clearing houses, it represented an opportunity. The company has created Exigo, an application for CSDs around the world, and it has sold the first system to the Sydney Futures Exchange (SFE), which has acquired Austraclear.

After looking at available platforms, OM chose to build Exigo on Microsoft technologies, including .NET and Microsoft development tools, evidence that Microsoft continues to win acceptance in key areas of financial services technology.

“OM is the world leader in building exchange systems, and you’d be hard-pressed to find a more mission-critical application in finance than exchanges,” said Paul Foley, partner manager for financial markets at Microsoft Ltd. in the UK. “To succeed in this rather demanding marketplace, a company has to understand the business and the technology thoroughly. OM’s decision to build its central securities depository on a Microsoft platform is proof that Microsoft’s .NET architecture does just what it says on the tin – you can develop your applications more quickly and it is scalable, reliable, and bulletproof.”

Exigo is designed to handle the two basic functions of a CSD: the safekeeping (depository) of the securities in records showing who owns what; and a safe mechanism to support the exchange of securities for money – the settlement of trades.

”Depositories need to install new technology,” said Peter Falk, product manager for Exigo. “This is especially true in Europe where they are under pressure from globalization of capital markets, the advent of a single European currency, European Central Bank requirements, stock exchange alliances and the need for a greater efficiency in the back office of the market participants. The proposed Crest-Euroclear merger merely increases the pressure on the local CSDs to move ahead quickly.”

Falk figures they need to make a decision on their technology decision by the end of 2003. “The old systems work for local markets, but for cross-border trading the depositories must implement a large number of changes to their core systems to be able to adapt to the market structure of the future.”

OM is betting that the old build-it-yourself model will prove to be too slow and far too expensive to meet market demands. Not only does a securities depository need new technology, it also requires an expertise in securities settlement, a relatively arcane branch of knowledge where there are few experts compared to larger, faster-moving areas, like trading and risk management.

“CSD know-how is a scarce resource,” said Johan Eriksson, the software architect for Exigo. “Since you have only one CSD per country, only a few people in each country understand what is required in a securities depository to meet the demands of the future.” With its expertise in exchanges and clearing and settlement systems, OM management concluded that it could design a system that met 80 percent of the requirements of all CSDs. By building on a standardized platform with excellent interface and communications capabilities, they believed that their solution would facilitate the final 20 percent or less customization to meet special local requirements.

“We built the core system to perform necessary linkage to other depositories,” said Falk. “We believe that Exigo improves upon the basics of a securities depository and offers more functions.”

In researching technologies to support a new depository system, OM, which reviewed Gartner Group reports and talked to the research firm’s analysts, made the decision to build its depository application on Microsoft .NET for the middle tier and client.

“Feedback from Gartner indicated that over time more people in the financial services area would use .NET,” said Eriksson. With .NET, developers will be able to focus on code that supplies value, rather than reinventing the wheel in terms of platform code, he explained. “We also like the ability to define an interface, simply add WebMethod and have .NET generate all the needed infrastructure to export that interface as a Web service.”

In choosing .NET over J2EE, Eriksson said that OM’s developers cited the attraction of a single modern development language, VB.NET, and a state-of-the-art development environment in Visual Studio .NET. “The business logic in the middle tier and the user interface is developed using .NET,” said Eriksson. “This means that we’re using .NET as an enterprise-class application server.”

The company has opened a dialogue with Microsoft concerning further development efforts supporting the .NET technology, added Eriksson.

“We need support from them to clearly understand where they plan to take the .NET product. We also want to influence, as much as possible, where they’re going. Since we are actually taking .NET into a new market, one with extreme customer requirements, we expect this will be an interesting opportunity for Microsoft.”

www.sfe.com.au