1. Practitioner’s view – FIX standards in Post Trade Given by - Alvin Mullan Director, UBS Nov 2004

2. User perspective for using the models Given by - Alvin Mullan Director, UBS Nov 2004

3. 2 UBS’s participation with industry groups  Our competitors are doing it  Our clients want it  We need to do it  UBS – SWIFT & OMGEO  ISITC, RDUG, QDI….  FAWG & STPLite/SSIFresh  This presentation aims to - summarise how FIX can be used in the Allocation and Confirmation process

4. 3 Pre trade allocation  Pre allocated order – FIX New Order Single  When Allocation Account details need to be communicated prior to execution in certain markets  Issues with Pre allocated order Amend scenarios complicated 1Account 660AcctIDSource 581AccountType 589DayBookingInst 590BookingUnit 591PreallocMethod 70AllocID 78NoAllocs  79AllocAccount  661AllocAcctIDSource  736AllocSettlCurrency  467IndividualAllocID  component block  80AllocQty

5. 4 Model 1 – Buyside wants to be involved in SSIs BuysideSellside Agent SSI Database Global Custodian Agent SSIs CSD Affirmation THIS IS BEST SUPPORTED FIX 4.4 Allocation FIX 4.4 or MT515 for Confirmation Allocation + SSIs 1. Order (ClOrdID) 2. Order Details (AvgPx) 3. Accounts SSI is used as sent Match? Confirmation - 1 per account + SSIs X2 1. Financials Match?

6. 5 Model 1 - Strengths and weaknesses Cost saving - Reduction in settlement failures - Less manual intervention - Less effort to maintain SSIs Industry take up - Time to change - Adoption of FIX 4.4 - But some middleware suppliers can provide solutions to help Matching - In-built matching from FIX order & execution lifecycle (inc. ref nos) - No need to match buyside SSI Reduced Risk - Faster turn round on allocations - Lower error rate PSET - Broker is instructed where settlement is to occur - If instructed to use Euroclear, can match immediately

7. 6 FIX 4.4 allocation message

8. 7 FIX 4.4 confirmation message

9. 8 SSI baggage in FIX

10. 9 Model 2 – Buyside opt out Buyside Sellside Agent SSI Database Global Custodian Agent SSIs CSD Affirmation – Needed? Confirmation - 1 per account + SSIs X2 Allocation + Custodian + Financials 1. Order 2. Order Details (AvgPx) 3. Accounts 4. Financials Match?

11. 10 Model 2 – Step by step Parent Order Buy 1000 Nokia FIX New Order - single ClOrdID= AM1, Buy, 500, NokiaFIX Execution Report ClOrdID= 1, OrderID=Brok1, Comm=8bp Child Order received and Commission returned FIX New Order - single ClOrdID= AM2, Buy, 500, Nokia FIX Execution Report ClOrdID= AM2, OrderID=Brok2, Comm=8bp Single Allocation for Parent Order over 3 accounts FIX Allocation ClOrdID= AM1, AM2, Buy, 1000, Nokia, Account= Acc1&GC1. Acc2&GC2, Acc3&GC1 FIX Confirmation or MT515 Account= Acc1. SSI *2 Account= Acc2. SSI *2 Account= Acc3. SSI *2

12. 11 Model 2 - Strengths and weaknesses Cost saving - Reduction in settlement failures - Less manual intervention - Less effort to maintain SSIs Industry take up - Can be done now using FIX 4.0/4.2 Allocation message with MT515 Confirm - But some middleware suppliers can provide solutions to help Matching - In-built matching from FIX order & execution lifecycle (inc. ref nos) - Broker obtains Buyside SSI from local database/Custodian - Financials can be provided on FIX Allocation message enable Sellside match Split holdings - May lead to split holdings for dual listed stocks - E.G. Nokia traded in Germany, Sweden…. - On sell, may need auto-transfer of stock arrangements with Custodian - Or on-going reconciliation/management Reduced risk - Faster turn round on allocations - Lower error rate PSET - Broker chooses PSET based on defaults for Buyside and Place of Execution - When required, broker enquires from identified Custodian

13. 12 Model 2 – Can be done now Insulation - Third party “middleware” suppliers can convert single output format from OMS into different Broker requirements - Same can be used to process confirm Broker maintains SSIs - Broker will require relationship with Custodians for SSIs - Once SSI is held by Broker, how is a change communicated Buyside matching - Can get Broker to do the matching removing the need to have and maintain matching processes. SWIFT confirm - Already used in many back office environment FIX allocation - Send FIX 4.0/4.2 Allocation - Does not need an expensive OMS upgrade to FIX 4.4

14. 13 Contact information UBS Investment Bank is a subsidiary of UBS AG Equity Trading Electronic Execution Team 1 Finsbury Avenue London, EC2M 2PP Tel:+44 20 7568 2436 Fax:+44 20 7568 0853 www.ubs.com UBS Investment Bank is a subsidiary of UBS AG is a subsidiary of UBS AG.