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Applications and Systems Analysis

Target Architecture The IB Operations Strategy


The IT target applications and systems architecture is driven by the IB Operations Strategy

IB Operations Strategy is based on 4 pillars


Client Service Control & Compliance Productivity Improvement

Cost Control

To support the Ops Strategy pillars the IT investments required to define the architecture have to be prioritised based on:

1. Revenue generation 2. Control 3. Efficiency

Revenue generation, control and efficiency improvements drive the future IT landscape

Target Architecture The Operations Strategic IT Architecture


To achieve the revenue generation, the control and efficiency improvements the following principles have to be applied:

Develop common Pre-Settlement functions across asset classes. Consolidate the settlement processing platforms to the best of breed per asset class. Create common services for the external connectivity, static data, etc. Consolidate the cash & position liquidity activities. Standardize the control functions with intelligent exception handling and process management tools to integrate the process chain across all the asset classes.

Target Architecture The High-level IT Target Architecture


The following diagram shows the potential IT target architecture by the end of 2008: Front-Office Trade capture / allocation / enrichment Structures Documentation Reporting ETD GMI OTC Derivs Summit - AE / Clearvision - Structured Trade Register / TeamWorks - TrACE / Saperion / Inbound - ARIES Flow products (Securities, FX/MM) + Commodities Calypso + CATS Lending ACBS BPM TeamWorks Control GMT

Static Data Masterfiles Mistral ops|static

Corporate Events CAM


Client Connectivity ops|tracker

Cash / Liquidity Mgmt Payments Banking

- Cash Navigator - DKIB Payment Service - Quartz + PB Services Finance

Cross Common Services Bold/Italic: Applications

Cross Asset Services

Settlement Processing

Process Management

Front-Office

Target Architecture Cross Common Services Progress and Next Steps*

Static Data Masterfiles Mistral ops|static Corporate Events CAM Client Connectivity ops|tracker

Trade capture / allocation / enrichment - AE / Clearvision Structures - Structured Trade Register / TeamWorks Documentation - TrACE / Saperion / Inbound Reporting - ARIES ETD GMI OTC Derivs Summit Flow products (Securities, FX/MM) + Commodities Calypso + CATS Lending ACBS BPM TeamWorks Control GMT

Cash / Liquidity Mgmt Payments Banking

- Cash Navigator - DKIB Payment Service - Quartz + PB Services Finance

The IT Ops projects aim to create common services for the external connectivity, static data, and corporate events.

The projects are primarily focussing on improving the static data services. Service Static Data/Reference Data Progress to Date Ops|static implemented as source of detailed counterparty Ops|static subscribers extended to cover: Calypso Sec / Calypso FX / CATS / Kondor / Fidessa / Martini / RIBS Bulk of systems now using other strategic components (e.g. Masterfiles / Hierarchy Manager) some specific exceptions (POSTS / GMI / RIBS) Main Next Steps Continue extending core static components Extend usage of ops|static across other flows Potential project to merge Mistral into ops|static Migrate maintenance of DKSL counterparty data to ops|static as part of LCS Look to leverage ops|static further as a data source for FBAS / IDE

* more detailed information can be found in the file - Ops IT Strategy Apps landscape V5 4.ppt provided by John Orton

Front-Office

Target Architecture Cross Asset Services


The IT Ops projects related to the cross asset services aim at creating common services by:

Static Data Masterfiles Mistral ops|static Corporate Events CAM Client Connectivity ops|tracker

Trade capture / allocation / enrichment - AE / Clearvision Structures - Structured Trade Register / TeamWorks Documentation - TrACE / Saperion / Inbound Reporting - ARIES ETD GMI OTC Derivs Summit Flow products (Securities, FX/MM) + Commodities Calypso + CATS Lending ACBS BPM TeamWorks Control GMT

Cash / Liquidity Mgmt Payments Banking

- Cash Navigator - DKIB Payment Service - Quartz + PB Services Finance

Supporting the development of high margin structured transactions business through better management of structured transactions. Developing a flexible platform to create, distribute, store, and process documents.

Front-Office

Target Architecture Cross Asset Services Progress and Next Steps*


Product Structures Progress to Date Delivered Structured Trade Register Implemented various tools, interfaces and checks to ensure & improve data quality in the STR Established Process Management platform and workflows Main Next Steps

Static Data Masterfiles Mistral ops|static Corporate Events CAM Client Connectivity ops|tracker

Trade capture / allocation / enrichment - AE / Clearvision Structures - Structured Trade Register / TeamWorks Documentation - TrACE / Saperion / Inbound Reporting - ARIES ETD GMI OTC Derivs Summit Flow products (Securities, FX/MM) + Commodities Calypso + CATS Lending ACBS BPM TeamWorks Control GMT

Cash / Liquidity Mgmt Payments Banking

- Cash Navigator - DKIB Payment Service - Quartz + PB Services Finance

Enhancements for wider product cover and functionality On-going initiatives to deal with new structures and improve processes Make method and technology available for other initiatives Complete integration (e.g. further availability of Web Services) Further rollout for document related workflows and wider coverage of documents in the archive

Established a scalable architecture with improved control around structures


Documentation OTC Conf Engine (using Documentum) developed providing document workflow for complex derivatives confirmation Transaction Confirmation Engine (TraCE) for document dispatching via SWIFT, fax, mail or print Saperion (Carsys) electronic archive integrated to Conf Engine, TraCE and TeamWorks Inbound suite introduced 2007 to convert inbound fax / text to structured electronic data for automated processing. Links to TraCE / Saperion

* more detailed information can be found in the file - Ops IT Strategy Apps landscape V5 4.ppt provided by John Orton

Front-Office

Target Architecture Settlement Processing Benefits and Disadvantages

Static Data Masterfiles Mistral ops|static Corporate Events CAM Client Connectivity ops|tracker

Trade capture / allocation / enrichment - AE / Clearvision Structures - Structured Trade Register / TeamWorks Documentation - TrACE / Saperion / Inbound Reporting - ARIES ETD GMI OTC Derivs Summit Flow products (Securities, FX/MM) + Commodities Calypso + CATS Lending ACBS BPM TeamWorks Control GMT

Cash / Liquidity Mgmt Payments Banking

- Cash Navigator - DKIB Payment Service - Quartz + PB Services Finance

Based on the principle of consolidating the settlement processing platforms the following benefits and disadvantages have been indentified: Benefits: Overall lower IT cost base only 1 infrastructure to support / 1 vendor to manage. A single and consistent application framework across business functions allowing greater flexibility of IT development. Less need for service providers results in a cleaner architecture and in reduced maintenance. Common skills and knowledge for production applications result in flexibility to move users across functions & asset classes due to a shorter learning curve. Optimisation of the overhead on standard functions maintaining holiday calendars / static / market data and standard interfaces.

Disadvantages: Vendor concentration risk. Interdependencies across business streams and more formality in change. Increased operational risk in event of failure.

Front-Office

Target Architecture Settlement Processing Interim Solution


To consolidate the settlement processing platforms a 2 step approach has been chosen: An initial consolidation within each product group is planned. The following architecture is aimed at: 1

Static Data Masterfiles Mistral ops|static Corporate Events CAM Client Connectivity ops|tracker

Trade capture / allocation / enrichment - AE / Clearvision Structures - Structured Trade Register / TeamWorks Documentation - TrACE / Saperion / Inbound Reporting - ARIES ETD GMI OTC Derivs Summit Flow products (Securities, FX/MM) + Commodities Calypso + CATS Lending ACBS BPM TeamWorks Control GMT

Cash / Liquidity Mgmt Payments Banking

- Cash Navigator - DKIB Payment Service - Quartz + PB Services Finance

ETD GMI

OTC Derivs Summit

Securities, FX/MM + Commodities Calypso + CATS

Lending ACBS

2 The decommissioning of all the applications and consolidation into Calypso is planned approximately by the end of 2012:
ETD OTC Derivs Securities, FX/MM + Commodities Calypso Lending

Calypso*

Calypso

Calypso*

To reduce the operational risk the transformation of the settlement platform requires a phased approach
* Most probable evolution

Front-Office

Target Architecture Settlement Processing Main Projects

Static Data Masterfiles Mistral ops|static Corporate Events CAM Client Connectivity ops|tracker

Trade capture / allocation / enrichment - AE / Clearvision Structures - Structured Trade Register / TeamWorks Documentation - TrACE / Saperion / Inbound Reporting - ARIES ETD GMI OTC Derivs Summit Flow products (Securities, FX/MM) + Commodities Calypso + CATS Lending ACBS BPM TeamWorks Control GMT

Cash / Liquidity Mgmt Payments Banking

- Cash Navigator - DKIB Payment Service - Quartz + PB Services Finance

1 5 main projects are required to develop the initial parallel consolidation of the settlement processing platforms:
FX / MM and commodities onto Calypso FX / MM and global rollout in parallel with ANLOS decommission OTC derivatives onto Summit European Securities processing onto AE / Calypso Securities / CATS Complete the migration of EMP business from Ubitrade to Clearvision / GMI and rollout to emerging markets Consolidation of lending business onto ACBS

Calypso was the strategic choice established in 2002 based on: 2 The breadth of asset class covered A more advanced open technology The vendor relationship.

Front-Office

Target Architecture Settlement Processing Progress and Next Steps*


Product ETD Progress to date Clearvision / GMI installed in London Reliance programme completed (Swapclear / Repoclear, clearing strategy) Main Next Steps

Static Data Masterfiles Mistral ops|static Corporate Events CAM Client Connectivity ops|tracker

Trade capture / allocation / enrichment - AE / Clearvision Structures - Structured Trade Register / TeamWorks Documentation - TrACE / Saperion / Inbound Reporting - ARIES ETD GMI OTC Derivs Summit Flow products (Securities, FX/MM) + Commodities Calypso + CATS Lending ACBS BPM TeamWorks Control GMT

Cash / Liquidity Mgmt Payments Banking

- Cash Navigator - DKIB Payment Service - Quartz + PB Services Finance

Decommissioning of legacy Derivate Pool Completion of migration of remaining DK FFT business onto GMI/Clearvision Support for US FCM project in NY on GMI

OTC Derivatives

Summit installed for interest derivatives 2000 to replace Devon 2.34 Extended for Credit Derivatives 2004 and hybrid structures with MUST module 2005

Migration of FX-Derivatives & Equity Derivatives Decommissioning of legacy infrastructure Roll out to St. Petersburg/Moscow London Calypso Securities Programme: POSTS / RIBS replaced by Calypso Global Corporate Actions processing solution based on CATS/CAM Focus on standardizing the ACBS processing Support for the Global SAP pilot project in LX Support for Secondary Loan Trading

FX/MM

Calypso installed for FX / MM 2001 2003 Roll out to DrKW Ltd 2005 Roll out to DK Japan Securities 2007

Lending

ACBS deployed in Ldn, NY, Lux 2003 User operations centrlised into Luxembourg 2006

* more detailed information can be found in the file - Ops IT Strategy Apps landscape V5 4.ppt provided by John Orton

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Front-Office

Target Architecture Payment & Liquidity Management

Static Data Masterfiles Mistral ops|static Corporate Events CAM Client Connectivity ops|tracker

Trade capture / allocation / enrichment - AE / Clearvision Structures - Structured Trade Register / TeamWorks Documentation - TrACE / Saperion / Inbound Reporting - ARIES ETD GMI OTC Derivs Summit Flow products (Securities, FX/MM) + Commodities Calypso + CATS Lending ACBS BPM TeamWorks Control GMT

Cash / Liquidity Mgmt Payments Banking

- Cash Navigator - DKIB Payment Service - Quartz + PB Services Finance

The IT Ops projects related to the payment and liquidity management aim to consolidate the cash & position liquidity activities by: Providing a state of the art Cash (intraday & overnight liquidity) Management solution based on Cash Navigator allowing regional Operations hubs. Providing a common payment platform for all DKIB business areas.

To achieve these goals*: GPP was chosen as the DKIB standard and installed at DrKW Ltd as part the of AIMS decommission and integrated with Cash Navigator as part of the London rollout A further rollout is planned to support Calypso / Summit rollouts, and a tactical use to overcome operational risk in manual payment processing in selected sites The ANLOS decommission has chosen a new Banking package Temenos T24 with payment functionality to suite Corporate Banking requirements direct debits / mass payments / local clearing / SEPA compliance and International Cash Management support

* more detailed information can be found in the file - Ops IT Strategy Apps landscape V5 4.ppt provided by John Orton

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Front-Office

Target Architecture Payment & Liquidity Management Progress and Next Steps*
Product Cash & Liquidity Management Progress to Date Cash Navigator live in FFT Roll out to London 3 entities to replace ANLOS / POSTS / manual processing, integrated with GPP Payments Global PayPlus (GPP) installed in DrKW Introduced to other London entities with Cash Navigator for sweeping and manual payments Manual payment processing automated with Teamworks process Banking Quartz in Ldn 2005 as part of AIMS decommission Main Next Steps

Static Data Masterfiles Mistral ops|static Corporate Events CAM Client Connectivity ops|tracker

Trade capture / allocation / enrichment - AE / Clearvision Structures - Structured Trade Register / TeamWorks Documentation - TrACE / Saperion / Inbound Reporting - ARIES ETD GMI OTC Derivs Summit Flow products (Securities, FX/MM) + Commodities Calypso + CATS Lending ACBS BPM TeamWorks Control GMT

Cash / Liquidity Mgmt Payments Banking

- Cash Navigator - DKIB Payment Service - Quartz + PB Services Finance

Global roll out to be prioritized

Rollout with Calypso FX/MM Alignment with Bridge (Bridge) project to establish one standard payment and receipt gateway for all DKIB business including CB requirements (mass payments / SEPA) One gateway to SWIFT & Clearing systems Introduce a new core banking solution Temenos T24 to replace Quartz 2009 and ANLOS

* more detailed information can be found in the file - Ops IT Strategy Apps landscape V5 4.ppt provided by John Orton

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Front-Office

Target Architecture Process Management

Static Data Masterfiles Mistral ops|static Corporate Events CAM Client Connectivity ops|tracker

Trade capture / allocation / enrichment - AE / Clearvision Structures - Structured Trade Register / TeamWorks Documentation - TrACE / Saperion / Inbound Reporting - ARIES ETD GMI OTC Derivs Summit Flow products (Securities, FX/MM) + Commodities Calypso + CATS Lending ACBS BPM TeamWorks Control GMT

Cash / Liquidity Mgmt Payments Banking

- Cash Navigator - DKIB Payment Service - Quartz + PB Services Finance

The IT Ops projects related to the process management aim to standardise the control functions and to provide an enterprise wide solution for managing manual work arising from non STP process flow.

To achieve these goals*: The controls process will evolve to a proactive, error avoidance intelligent exception process by creating one single technology platform based on City Networks Enterprise Reconciliation with a common integrated exception handling based on CityNetworks Proactive and encompassing intelligent process improvement using TeamWorks business process management.

* more detailed information can be found in the file - Ops IT Strategy Apps landscape V5 4.ppt provided by John Orton

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Front-Office

Target Architecture Process Management Progress and Next Steps*


Process Controls Progress to date GRASS deployed to cover most intersystem reconciliations GMT platform (CityNetworks Enterprise Reconciliation & Proactive (investigation tool)) chosen as strategic tool and implemented in London for Cash recs 2007 1st use of GMT for real time payment monitoring at Bundesbank clearing account in conjunction with Cash Navigator Deployment of first case exception handling in Proactive Nov 2007 Business Process Mgt Teamworks selected and live for managing manual aspects of processing structured transactions and manual payments 2006 / 2007 Main Next Steps

Static Data Masterfiles Mistral ops|static Corporate Events CAM Client Connectivity ops|tracker

Trade capture / allocation / enrichment - AE / Clearvision Structures - Structured Trade Register / TeamWorks Documentation - TrACE / Saperion / Inbound Reporting - ARIES ETD GMI OTC Derivs Summit Flow products (Securities, FX/MM) + Commodities Calypso + CATS Lending ACBS BPM TeamWorks Control GMT

Cash / Liquidity Mgmt Payments Banking

- Cash Navigator - DKIB Payment Service - Quartz + PB Services Finance

Consolidate processing on to GMT platform

Development of Smart Exception Manager as part of LCS program Roll out to other asset classes

* more detailed information can be found in the file - Ops IT Strategy Apps landscape V5 4.ppt provided by John Orton

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Front-Office

Target Architecture Main IT Projects London Cash Securities


Description 3 main initiatives: Develop one single securities platform based on Calypso Build a prototype Smart Exceptions Management (SEM) model Develop a Crest self clearing model for FFT and a Clearstream self clearing model for London Rationale

Static Data Masterfiles Mistral ops|static Corporate Events CAM Client Connectivity ops|tracker

Trade capture / allocation / enrichment - AE / Clearvision Structures - Structured Trade Register / TeamWorks Documentation - TrACE / Saperion / Inbound Reporting - ARIES ETD GMI OTC Derivs Summit Flow products (Securities, FX/MM) + Commodities Calypso + CATS Lending ACBS BPM TeamWorks Control GMT

Cash / Liquidity Mgmt Payments Banking

- Cash Navigator - DKIB Payment Service - Quartz + PB Services Finance

Deadline (approx.) 3 main initiatives: 1. April 2009 2. Aug. 2008 3. Oct. 2008

Legacy POSTS and RIBS systems are expensive to run and maintain. Consolidation onto the Calypso standard will reduce running costs and enable business and operational efficiencies Total cost reduction will be 9.9m p.a. across Capital Markets, Operations and Technology (net of incremental new Calypso sustaining costs) following delivery of this project The imperative for cost reduction has been illustrated by Mercer Oliver Wyman, Z/Yen benchmarking and internal IT and Operations analysis. This heightens the need for a major reduction in operational and technology costs to which this programme contributes significantly Benefits Total Cost of Ownership NPV 24,039k EUR 19,768k EUR Return on investment Payback period 200% 63 months

Source: LCS PMO 11th Dec 2007 v0 1 MI.ppt

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Front-Office

Target Architecture Main IT Projects FX/MM Calypso


Description The transfer of FX and MM processing from ANLOS to Calypso, realising operational synergies. The transfer of FX sell off process from Finance to Front Office, reducing operational risk

Static Data Masterfiles Mistral ops|static Corporate Events CAM Client Connectivity ops|tracker

Trade capture / allocation / enrichment - AE / Clearvision Structures - Structured Trade Register / TeamWorks Documentation - TrACE / Saperion / Inbound Reporting - ARIES ETD GMI OTC Derivs Summit Flow products (Securities, FX/MM) + Commodities Calypso + CATS Lending ACBS BPM TeamWorks Control GMT

Cash / Liquidity Mgmt Payments Banking

- Cash Navigator - DKIB Payment Service - Quartz + PB Services Finance

Deadline (approx.) FX: Nov. 2007 MM: Apr. 2008

Rationale This will provide benefits to both Finance (resolve audit point of moving FX sell-off to Front Office) and Operations (increased control of the settlement processes and removal of manual intervention which is an Operational Risk)

Benefits Total Cost of Ownership NPV 982k EUR N/A Return on investment Payback period 123% 24 months

Source: PMO FX MM Calypso 2007-07-10.ppt

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Front-Office

Target Architecture Main IT Projects GMT


Description The implementation is based on the further roll out of the GMT platform Roll out further Cash Rec investigation processes in London Implement and roll out Interest Claims New World, a globally consistent interest claims process covering all relevant business areas in London and Frankfurt Replacement of SkonIT in FFT for the investigation and reporting of stock and cash breaks Develop new EMP intersystem reconciliations and related investigation workflows Rationale Increase control and operational risk Reduce operational costs Implement streamlined and transparent processes Alignment with GMT strategy platform Benefits Total Cost of Ownership NPV 1,236k EUR 3,158k EUR Return on investment Payback period 315% 12 months

Static Data Masterfiles Mistral ops|static Corporate Events CAM Client Connectivity ops|tracker

Trade capture / allocation / enrichment - AE / Clearvision Structures - Structured Trade Register / TeamWorks Documentation - TrACE / Saperion / Inbound Reporting - ARIES ETD GMI OTC Derivs Summit Flow products (Securities, FX/MM) + Commodities Calypso + CATS Lending ACBS BPM TeamWorks Control GMT

Cash / Liquidity Mgmt Payments Banking

- Cash Navigator - DKIB Payment Service - Quartz + PB Services Finance

Deadline (approx.)

June 2008 Sep. 2008 Dec. 2008 Dec. 2008

Source: GMT Europe Dresdner Kleinwort PMO Project presentation 20071129 review.ppt

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Front-Office

Target Architecture Main IT Projects OTC Equities Processing into Summit


Description Replace Murex Equity and the supporting infrastructure by using the existing Summit system (used for the processing of OTC IRD, OTC FX Options and Credit Derivatives) to process OTC Equity Derivatives. It is planned to integrate the processing of OTC Derivatives into one team in FFT.

Static Data Masterfiles Mistral ops|static Corporate Events CAM Client Connectivity ops|tracker

Trade capture / allocation / enrichment - AE / Clearvision Structures - Structured Trade Register / TeamWorks Documentation - TrACE / Saperion / Inbound Reporting - ARIES ETD GMI OTC Derivs Summit Flow products (Securities, FX/MM) + Commodities Calypso + CATS Lending ACBS BPM TeamWorks Control GMT

Cash / Liquidity Mgmt Payments Banking

- Cash Navigator - DKIB Payment Service - Quartz + PB Services Finance

Deadline (approx.)

Rationale Support the settlement process for the changed trading profile, risk reduction, fulfil internal and external regulatory requirements, robust platform, greater flexibility towards future challenges in volume and complexity. Without this investment the volume and complexity growth planned by the business cannot be supported.

Benefits Total Cost of Ownership NPV 4,073 k EUR 6,004 k EUR Return on investment Payback period 188 % 25 months

Source: Dresdner Kleinwort PMO Project presentation Equities V1 7.ppt

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Content

Section The Baseline The Projects The Priorities The Target Architecture The Next Steps Appendix

Slide 2 14 23 28 43 45

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The Next Steps

Detail the major projects Provide updated figures on savings and investments

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Appendix

The Ops Processes Top Down Processes


The following processes have been defined during the Top Down approach:

Trading Enhancement of Trade Capture Confirmation & Documentation

End of Lifecycle Expiry Unwinding / Sale Management Continuous Improvement Management Information & Reporting Support Reference Data Reconciliation Investigation Claims Customer Support Risk Analysis, Compliance, Audit Confirms

Settlment & Payments


Brokerage, DRE, Other payments & Billing Positions Key Events Management Collateral Management Position Management Cash Management Margining

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