1. FCA1873-1B / 1 FRONT ARENA Introduction:Equities FRONT ARENA Training

2. F R O N T A R E N A FCA1873-1B / 2 Agenda FRONT ARENA architecture Introduction to PRIME Trading Simulation Position keeping Summary Preview: Advanced Equities Trading Exchange Off exchange and OTC Order management Combination trading Index trading Fundamental concepts Application basics FRONT ARENA architecture

3. F R O N T A R E N A FCA1873-1B / 3 Client/server environment Sessions run on a workstation The sessions communicate data via a server The server handles the database Workstation ARENA Data Server (ADS) Databases A Session is one instance of a client program connected to a database

4. F R O N T A R E N A FCA1873-1B / 4 Sharing data Other Sessions will be affected only when the data is saved Server Simulated data is limited to applications in the same session Simulate User 1User 2 Save

5. F R O N T A R E N A FCA1873-1B / 5 Central business data storage component –Stores all business data and user parameters –Implements no business logic Notification service –Provides real time data updates –Subscription based, multicast data distribution ARENA Data Server (ADS) Other Systems ARENA Message Broker Price Feeds ATLAS Telerate Tibco Reuters SSL4 Open Trade Micrognosis CSK Invision PRIME ARENA Data Server ADM

6. F R O N T A R E N A FCA1873-1B / 6 Agenda FRONT ARENA architecture Introduction to PRIME Trading Simulation Position keeping Summary Preview: Advanced Equities Trading Exchange Off exchange and OTC Order management Combination trading Index trading Fundamental concepts Application basics

7. F R O N T A R E N A FCA1873-1B / 7 Instruments and Order Books Instruments represent the security or contract definition in the database Order Books extend the Instrument Definition with market specific properties to allow trading on electronic exchanges An instrument can have one or more associated Order Books (to enable trading the same instrument on multiple exchanges)

8. F R O N T A R E N A FCA1873-1B / 8 Instruments and Order Books In the database these are represented and stored in different tables All trades refer to an instrument Order Books are based on an Instrument Definition

9. F R O N T A R E N A FCA1873-1B / 9 Instruments and Order Books ARENA Message Broker PRIME Electronic Exchanges ATLAS ARENA Database ARENA Market Servers Order created in an Order Book – and sent to the exchange Orders matched – deal transaction returned from the exchange Deal transaction transferred from market servers to database via AMB Trade stored in database – this changes the trader’s position in the corresponding instrument

10. F R O N T A R E N A FCA1873-1B / 10 Agenda FRONT ARENA architecture Introduction to PRIME Trading Simulation Position keeping Summary Preview: Advanced Equities Trading Exchange Off exchange and OTC Order management Combination trading Index trading Fundamental concepts Application basics

11. F R O N T A R E N A FCA1873-1B / 11 PRIME A workstation tool to support proprietary trading: Exchange access Fixed Income and Equity Standard prop trading Valuation Market making Basket/index trading Automated trading Position keeping Desk risk management

12. F R O N T A R E N A FCA1873-1B / 12 HTML Help – F1 Navigate by ”tree view” in table of contents Keyword search for all topics in the Help File Save frequently visited topics on the Favourites tab Press F1 for Context Sensitive help Help file also contains links to specific documents of interest on Customer central

13. F R O N T A R E N A FCA1873-1B / 13 PRIME Accesses data both from electronic exchanges and from the ARENA database Real-time calculations for: Instrument valuation Position keeping Risk values Main tool for trading is the Trading Manager. Supports basic trading, order managment, market making, position keeping, and risk management. Various other windows for managing static data and for displaying market data

14. F R O N T A R E N A FCA1873-1B / 14 Session Session – one instance of the Client software connected to the database More than one instance of the Client software can be started on a single PC Simulations can be made in one Session without affecting calculations made in another

15. F R O N T A R E N A FCA1873-1B / 15 The Session Manager These applications are open in the current Session Open new applications from the Session Manager menus If an application has been ’minimised’ double-click to display it Open new applications Manage Workspaces

16. F R O N T A R E N A FCA1873-1B / 16 Workspace Workspace – is a way to save a desktop layout that can be used when starting a Session What is saved with a Workspace? - The windows that are open and their position on the Desktop - If there is data loaded into an application it will also be saved - Settings made in individual windows - Connections to electronic markets

17. F R O N T A R E N A FCA1873-1B / 17 Workspace Session Manager for managing the Workspace Explorer for navigating business objects Trading Manager: Traders main tool for trading and position keeping

18. F R O N T A R E N A FCA1873-1B / 18 Creating a Workspace (1) Start PRIME (Start>Programs>FRONT ARENA>Prime) Open an Explorer From the Data menu (more about this tool later) Open a Trading Manager From the Trading menu (more about this tool later)

19. F R O N T A R E N A FCA1873-1B / 19 Creating a Workspace (2) Connect to markets Do this from the Explorer in the Marketplaces folder Open other applications from the Session Manager and position them on your desktop For example, Data>News Ticker

20. F R O N T A R E N A FCA1873-1B / 20 Creating a Workspace (3) Position your windows on the desktop Select File>Save As from the Session Manager Give your new Worskpace a name and then save Select File>Save As Default from the Session Manager Select File>Exit to close PRIME

21. F R O N T A R E N A FCA1873-1B / 21 Creating a Workspace (4) Start PRIME again (choose to 'Load default workspace') Your previous layout, market connections and Order Books are restored! If you have other Workspaces saved, you can change to one of them by selecting File>Open from the Session Manager If you want to use someone elses Workspace - right-click from the Explorer (opens a copy which you should save as your own)

22. F R O N T A R E N A FCA1873-1B / 22 Trading Manager Traders main tool Design based on Excel style spread sheets Columns represent a value type (either market based or calculated) Rows can be defined by either: Order Books Instruments Orders Positions (trades) Shortcut menus and keyboard shortcuts (more later) Calculated values Market data

23. F R O N T A R E N A FCA1873-1B / 23 Trading Manager – getting started Create a new Order Book sheet (Insert menu) Give the sheet's tab a custom name (Double-click) Populate the sheet with Order Books from the Explorer (Drag and drop an entire market segment) Tip: Don’t forget to connect to the market to which the Order Books belong

24. F R O N T A R E N A FCA1873-1B / 24 Trading Manager – Insert Items Also possible to populate Trading Manager using the 'Insert>Items' tool Saves having to open/use another application The Insert tool has flexible search Can be used for inserting Order Books, Market Segments, or Portfolios

25. F R O N T A R E N A FCA1873-1B / 25 Trading Manager – columns When a new sheet is created only a set of basic columns are displayed by default Many additional columns can be added to each sheet (and saved with the Workbook so you don't have to add them manually next time) Right-click on a column header and select 'View Columns' to open the Column Selector

26. F R O N T A R E N A FCA1873-1B / 26 Trading Manager – columns The 'Context' is a way to customise the system for different user types – normally select 'Standard' Columns displayed in logical groups Brief description of each column displayed – more detail can be found in the Help File Columns can be arranged in order on the sheet using drag 'n drop

27. F R O N T A R E N A FCA1873-1B / 27 Agenda FRONT ARENA architecture Introduction to PRIME Trading Simulation Position keeping Summary Preview: Advanced Equities Trading Exchange Off exchange and OTC Order management Combination trading Index trading Fundamental concepts Application basics

28. F R O N T A R E N A FCA1873-1B / 28 Trading Manager – Order Book sheet For monitoring market actvity and basic exchange trading use the Order Book sheet Folder indentifies the market segment Pale colours indicate orders from within your organsation Sharp colours indicate your own orders Each row represents an Order Book

29. F R O N T A R E N A FCA1873-1B / 29 Trading Manager – market depth In the Order Book sheet click the ' ' icon to view market depth For certain markets it is possible to view detailed order depth Additional right-click commands to support The 'Expand' command remembers last viewed number of levels for the Order Book

30. F R O N T A R E N A FCA1873-1B / 30 Creating and sending orders Simplest method is using 'Docked-In' Order Entry Select 'View>Order Entry' A docked-in Order Entry is connected to the active sheet - The fields in the Order Entry will update automatically depending on what cells are selected in the active sheet Manually adjust order properties if required Click 'Sell' (or 'Buy') to send to market

31. F R O N T A R E N A FCA1873-1B / 31 Creating and sending orders Additional order properties can be defined – click to expose more fields Some fields are market specific, others display market specific values.

32. F R O N T A R E N A FCA1873-1B / 32 Creating and sending orders Security mesures are available to ensure orders are not sent accidentally Use the 'Clr' button to empty the Order Entry when not in use De-select 'Fill Order Entry On Click In Sheet' in the Tools>Options dialog

33. F R O N T A R E N A FCA1873-1B / 33 Creating and sending orders Selecting a cell on the Buy side will load the Order Entry with a Sell order (and vice-versa) Select a 'Price' cell and order loaded with default qauntity Select a 'Quantity' cell and order loaded with quantity currently at that market depth This feature is applied when using "Double-Click" trading Must be enabled in the Tools>Options dialog Creates and sends an order in one action

34. F R O N T A R E N A FCA1873-1B / 34 Creating and sending orders Possible to load one or more 'stand-alone' Order Entry windows with different orders, ready to "send to market" Hide the "docked-in" Order Entry and then open a "stand-alone" (Trading>Order Entry) De-select 'Single Order Entry' and 'Double-Click Trading' in the 'Tools>Options' dialog Double clicking will open a new Order Entry each time

35. F R O N T A R E N A FCA1873-1B / 35 Efficient workflow – keyboard shortcuts Navigate between cells in the worksheet using ARROW keys Use 'F6' to move between active sheet and Order Entry 'TAB' and 'SHIFT + TAB' move between fields in Order Entry Many commands have associated shortcut key CTRL+N creates a new Workbook

36. F R O N T A R E N A FCA1873-1B / 36 Efficient workflow – keyboard shortcuts Creating and sending orders most efficient using keyboard Fill Order and Join Order load the Order Entry with order the same or opposite side of the market (respectively) Buy and Sell will also load the Order Entry with appropriate order details If docked-in Order Entry isn't displayed then new stand-alone wil be opened Note: See Help File for a list of all shortcut keys

37. F R O N T A R E N A FCA1873-1B / 37 Agenda FRONT ARENA architecture Introduction to PRIME Trading Simulation Position keeping Summary Preview: Advanced Equities Trading Exchange Off exchange and OTC Order management Combination trading Index trading Fundamental concepts Application basics

38. F R O N T A R E N A FCA1873-1B / 38 Off Exchange and OTC Trading Where the customer wants to record a trade made off- exchange there is a Trade Entry window Can be opened by right-click menu in Trading Manager

39. F R O N T A R E N A FCA1873-1B / 39 Off Exchange and OTC Trading Enter the details of your trade Select 'File>Save' to complete See FCA1007 for more info Set Trade Status to 'FO Confirmed' Allocate your trade to a Portfolio Note: Some trade fields are mandatory - this is defined using System>Control Parameters

40. F R O N T A R E N A FCA1873-1B / 40 Off Exchange and OTC Trading 'Trade Detail' command for easily displaying/hiding certain fields Can customise 'Trade Detail' from the Trade Layout dialog Yes – always visible Detail – only visible in 'Detail' view ' - ' – not visible Possible to define a default layout – both the fields that are displayed and default values for certain fields

41. F R O N T A R E N A FCA1873-1B / 41 Off Exchange and OTC Trading If you want to define your own OTC instrument – select an Instrument Definition application from the 'Trading' menu in Session Manager Default layout and Instrument Detail feature available 'Layout>Trade' provides the possibility to define the instrument and enter a trade in the same window More information on instrument fields in FCA1007

42. F R O N T A R E N A FCA1873-1B / 42 Agenda FRONT ARENA architecture Introduction to PRIME Trading Simulation Position keeping Summary Preview: Advanced Equities Trading Exchange Off exchange and OTC Order management Combination trading Index trading Fundamental concepts Application basics

43. F R O N T A R E N A FCA1873-1B / 43 Order management Orders can be managed using the Order sheet Create a new Order sheet – 'Insert>Order sheet' What orders that are displayed on an Order sheet depends on the Order Filter for the sheet Select 'View>Filter' to view a sheet's filter

44. F R O N T A R E N A FCA1873-1B / 44 Order management - colours

45. F R O N T A R E N A FCA1873-1B / 45 Order management – Inactive orders An inactive order can appear in the Order Sheet but is not present on the market Create a new Inactive order by: Using shortcut menu in the Trading Manager Using shortcut menu in Explorer An order in the market that is cancelled becomes 'Inactive' Inactive orders can be re-sent to the market Note: Deleted orders can not be re-sent

46. F R O N T A R E N A FCA1873-1B / 46 Agenda FRONT ARENA architecture Introduction to PRIME Trading Simulation Position keeping Summary Preview: Advanced Equities Trading Exchange Off exchange and OTC Order management Combination trading Index trading Fundamental concepts Application basics

47. F R O N T A R E N A FCA1873-1B / 47 Combination Trading Combination instruments are used to define customer specific trading strategies Combination instruments are created and maintained in the Instrument Editor Drag and drop instruments from the Explorer to add new legs

48. F R O N T A R E N A FCA1873-1B / 48 Combination Trading Trading Manager/Order Sheet Trading Manager/Order Book Sheet Trading Manager/Portfolio Sheet Create inactive order Send it to the market Handled as individual orders on the market Trades update the corresponding position Synthetic Order Book Appears in the Order sheet

49. F R O N T A R E N A FCA1873-1B / 49 Combination Trading The Price Tracking feature continually modifies an inactive order's price according to the current market prices Can be activated by default from 'Tools>Options', or activated manually from shortcut menu

50. F R O N T A R E N A FCA1873-1B / 50 Combination Trading Eurex combinations can be entered from the Trading Manager Select Insert>Eurex Combination Insert Items tool used to select Primary Order Book

51. F R O N T A R E N A FCA1873-1B / 51 Agenda FRONT ARENA architecture Introduction to PRIME Trading Simulation Position keeping Summary Preview: Advanced Equities Trading Exchange Off exchange and OTC Order management Combination trading Index trading Fundamental concepts Application basics

52. F R O N T A R E N A FCA1873-1B / 52 Index Trading Index instruments are a special kind of combination instrument Two instruments must be created: - The Index Definition instrument defines an index weight for each leg - The Index Replica instrument defines the traded quantity for each leg The Index replica is the instrument that is traded

53. F R O N T A R E N A FCA1873-1B / 53 Index Trading Index weights Quantities to trade Quantity adjusted to round lot

54. F R O N T A R E N A FCA1873-1B / 54 Agenda FRONT ARENA architecture Introduction to PRIME Trading Simulation Position keeping Customisation Summary Preview: Advanced Equities Trading Exchange Off exchange and OTC Order management Combination trading Index trading Fundamental concepts Application basics

55. F R O N T A R E N A FCA1873-1B / 55 Simulation Number of simulation possibilities in PRIME Simulating the used input parameter values connected to a calulated value that are displayed in the Trading Manager (the focus of this section) Working directly with valuation parameters in tailored windows – e.g. Volatility surfaces, dividend estimations. (this is not normally covered in this course) Another simulation possibility is to check the impact of a new trade on your portfolio before closing it (this is covered in the next 'Position Keeping' section)

56. F R O N T A R E N A FCA1873-1B / 56 Simulation - Trading Manager Possible to manually override input values to calculated values that are displayed in columns in the Trading Manager Note: Simulating a cell in the Trading Manager only affects the Workbook in which it is made A simulated value, or a value affected by a simulation made in the sheet is displayed in italic text Used Volatility simulated for a single Order Book Underlying price simulated – affects multiple Order Books

57. F R O N T A R E N A FCA1873-1B / 57 Simulation - Trading Manager Simulation can be "soft" or "hard" * indicates a soft simulation - will be "knocked-out" if the parameter value changes ! indicates a hard simulation – won't be knocked out if the value of the parameter changes Columns default to either "soft" or "hard" simulation, but can be manually overridden by entering * or ! Before the value Remove the simulation by selecting the cell and pressing DELETE. Also 'Remove All Simulations' command from shortcut menu.

58. F R O N T A R E N A FCA1873-1B / 58 Simulation - Calculator Simulate existing instruments Create new instruments Create new instruments using existing instruments as template Use of ! And * when simulating values Status bar insdicates when values need to re-calculated

59. F R O N T A R E N A FCA1873-1B / 59 Agenda FRONT ARENA architecture Introduction to PRIME Trading Simulation Position keeping Summary Preview: Advanced Equities Trading Exchange Off exchange and OTC Order management Combination trading Index trading Fundamental concepts Application basics

60. F R O N T A R E N A FCA1873-1B / 60 Trading Manager - Portfolio sheet Primarily used for desk risk management and Position keeping A set of trades can be defined by either: Physical Portfolio Compound Portfolio Trade Filter Rows can display: –Compound/Physical portfolio totals –Positions –Underlying totals –Expiry month totals –Live/Expired totals –Individual trades

61. F R O N T A R E N A FCA1873-1B / 61 Portfolios A Physical portfolio is defined for each trade record –Trades made on an exchange are assigned to a Physical portfolio according to properties of the order – how the properties are used is decided by each organisation A Compound portfolio represents the aggregation of one or more Physical Portfolios A Trade Filter defines a set of trades according to criteria based on trade fields

62. F R O N T A R E N A FCA1873-1B / 62 Portfolios – Trade Filters Open the Trade Filter application from the Data menu Define the set of trades using conditional operators and trade field values Save the Filter using 'File>Save As' The Filter will available to load and view in the Portfolio sheet

63. F R O N T A R E N A FCA1873-1B / 63 Trading Manager - Portfolio sheet Drag and drop from the Explorer or use 'Insert>Items' tool The default view lists all live positions Possibility to "drill-down" and inspect the trades the build up each position

64. F R O N T A R E N A FCA1873-1B / 64 Trading Manager - Portfolio sheet Also possible to group trades in a portfolio in different ways Can create user defined grouping - more information in Help File Use right-click 'Group' command Display sub-totals for each group of trades Sub-total for all positions with AZN underlying

65. F R O N T A R E N A FCA1873-1B / 65 Trading Manager – Portfolio sheet Can trade directly from the Portfolio sheet Docked in Order Entry Trade Entry window Manage performance for large Portfolios using 'View>Options' dialog

66. F R O N T A R E N A FCA1873-1B / 66 Portfolios – Order Book sheet For each instrument in the Order Book sheet it is possible to display your corresponding position in a Portfolio Add columns from the Portfolio groups ('View>Columns') Drag and drop a portfolio from the Explorer (or use the 'Insert>Items' tool) The portfolio 'Name' column displays the name of the portfolio currently loaded Values for the PRIME1 portfolio

67. F R O N T A R E N A FCA1873-1B / 67 Portfolios – simulated trades Possible to simulate the impact of a trade on your portfolio Enter the trade manually and set the status to 'Simulated' The simulated trade appears in the portfolio indicated by a special icon Icon with a tilde ' ~ ' indicates trade is simulated

68. F R O N T A R E N A FCA1873-1B / 68 Agenda FRONT ARENA architecture Introduction to PRIME Trading Simulation Position keeping Summary Preview: Advanced Equities Trading Exchange Off exchange and OTC Order management Combination trading Index trading Fundamental concepts Application basics

69. F R O N T A R E N A FCA1873-1B / 69 Agenda FRONT ARENA architecture Introduction to PRIME Trading Simulation Position keeping Summary Preview: Advanced Equities Trading Exchange Off exchange and OTC Order management Combination trading Index trading Fundamental concepts Application basics

70. F R O N T A R E N A FCA1873-1B / 70 Preview: Advanced Equity Training Market Making Creating and Managing Volatility Surface Dividend and Dividend Estimation Yield Curve and the Repo Rate Valuation Control Extension Manager and Customisation Changing Customisation - Context Advanced Trade Control - Greeks Managing Portfolio Risk - Risk Matrix Automated Trading