A real-time FULLY INTEGRATED treasury trading real-time FULLY INTEGRATED treasury trading ... fmbTrade is a real-time fully integrated treasury trading system that ... such as call and term accounts ...

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  • w w w . r i s k o w . c o m

    www.riskow.com

    www.riskow.com

    A real-time FULLY INTEGRATED treasury trading SYSTEM

  • OVERVIEW

    fmbTrade is a real-time fully integrated treasury trading system that segregates the FRONT,

    MIDDLE, and BACK OFFICE on security access levels. It provides total accounting exibility in

    line with latest Basel requirements with special reference to operational, liquidity, market,

    interest and exchange risk issues on an operational level.

    fmbTrade is a treasury specialist sub-system developed to cater for the nancial instruments

    dealers encounter in the treasury environment and provides a unique combination, catering for

    account based instruments such as call and term accounts and transaction based instruments

    such as buying and selling bonds, treasury bills and FX transactions.

    fmbTrade is developed around its own database which has to host details regarding the dealers,

    counterparties, treasury instruments, portfolios, limits etc. This provides the ideal scenario where

    the front, middle and back oce can always access the same data - it is integrated. A deal

    captured in the front oce is immediately visible in the middle and back oce. A limit or

    restriction imposed in the middle oce has an immediate impact on the front oce and at the

    same time the back oce is notied on the settlement and conrmation details. It is a real-time

    system: there are no time delays. All positions and limits are updated immediately. fmbTrade

    can interface with other systems available in the market to still create a straight-through process.

    For instance, when an FX deal is captured on systems like Reuters or City Dealer, portfolios and

    exposure limits are immediately updated via fmbTrade. Likewise, it is updated by the core

    operational system catering for administration and general ledger functions. fmbTrade has its

    own sub ledger system that provides real-time update of the trial balance. (See diagram below for more details).

    FRONT OFFICE

    Deal Negotiation Verify Counter Party

    Financial Database

    Real-time Positions

    MIDDLE OFFICE

    Risk Control

    FINANCIAL MODELLING & SIMULATION

    (Cube)

    Verify Limits Capture Deal

    Conrm Deal

    Settlement Limit

    Revaluation

    MonitorLimits

    MeasureProt & Loss

    Limits Utilised Credit Settlement Instrument

    Set Limits Credit Dealer Instrument Operational

    Settle Deal

    Maintain Contract

    Mature Contract

    BACK

    OFF

    ICE

  • fmbTrade is in eect the rebranding of Riskow's TASMAN system, which has been available to

    the market since 1992. It is a stable and reliable system which has been given a facelift

    celebrating its conversion to a multi-country and group treasury exposure system.

    FRONT, MIDDEL AND BACK OFFICE treasury trading system

    fmbTrade is a fully integrated system that segregates the FRONT, MIDDLE, and BACK OFFICE on

    security access levels. fmbTrade provides accounting exibility.

    fmbTrade does a clear segregation of the front, middle and back oce functions where the:

    FRONT OFFICE refers to the deal capturing, position keeping and the cash management

    function.

    MIDDLE OFFICE includes control, audit, prot and loss, risk and limit management.

    BACK OFFICE refers to conrmations, settlements, statements, regulatory reports and other

    administrative procedures.

    fmbTrade has been developed and designed from day one to be client/server and make use of

    the latest GUI functionality such as Windows connectivity products.

    fmbTrade is written in PROGRESS, which is a full graphical client/server-programming tool on its

    own relational database. The FRONT, MIDDLE and BACK OFFICES are totally integrated and can

    be fully linked to other applications such as Riskow's Cube (Balance Sheet Management), + +Riskow's Basel (Basel Compliance and Management Decision making Tool), as well as word

    processing, spreadsheets and Management Information Systems.

    Interest Rate Comparison Calculator

  • FRONT OFFICE (Dealer) Section

    The FRONT OFFICE section of the system, which is only accessible to the dealers through the

    security set-up procedure, allows the dealers to:

    Provide customer service through on-line account enquiries, updating, and rate changes.

    Support paperless trading. There is no need to ll in dealing slips and deals will be directly

    captured onscreen for verication by the BACK OFFICE.

    Deal with the latest real-time information (including on-line prot/loss) with no end of day

    runs.

    Be more productive. It is user friendly, designed by users

    Do full cash management activities on all bank accounts with system generated entries

    such as maturities and also allowing for manual updates of cash transactions outside the

    system.

    Use dealing analytic tools such as price calculations, break-even analysis, calendar and carry

    transaction calculators.

    Produce prot and loss reporting.

    BACK OFFICE (Administration) Section

    The BACK OFFICE module of fmbTrade handles conrmations, settlements, statements, journal

    entries, regulatory information reports, and other administrative procedures.

    The back oce module includes an action ags function that signals pending events such as

    deposits maturing, payments that are due, cheques to be printed, interest payments etc.

    Reporting capabilities allow you to have up to date, on demand reports. Conrmation

    correspondence is automatically generated and can be processed as required.

    A Trial Balance is updated automatically as transactions get processed. Detail journals are kept

    and can be exported to a company wide GL system.

    Detail information is kept on transactions and can be aggregated and exported to Riskow's +Cube (Balance Sheet Management), Riskow's Basel (Basel Compliance and Management

    Decision making Tool).

    fmbTrade keeps track of all scrip and securities that accompanies transactions. It allows you to

    group scrip in parcels and also to split a security in more tradable denominations. There are

    various inventory reports to track your own securities as well as securities in safe custody.

  • The necessary information to complete your regulatory reports like month-end and average

    balances is available and aggregated under various time buckets and exposure categories.

    In the BACK OFFICE MODULE you set up all environmental details in preparation for dealing

    activities. These details include:

    Portfolio breakdowns

    Counter party information

    Settlement account details

    Dealer specications

    Brokers details

    Instrument in which you deal

    Public holidays

    Currencies

    Rates and

    General organisation information

    The System Supervisor's role is executed through

    the Administration module. Users are granted access to specic

    activities in a module. Access to setting user access levels is granted to your organisation's

    System Supervisor only a trial balance facility and will post entries to your General Ledger daily,

    weekly or monthly.

    General Ledger Entry Transactions include:

    Detail transactions

    Detail bank transactions

    Consolidated transactions

    Export to general ledger system

    Remove old general ledger transactions

    General ledger balance report

    MIDDLE OFFICE (Risk Control) Section

    The middle oce section is the management and control section. Except for the dening of

    limits the middle oce can view everything in the system, but is not allowed to enter any deals

    or do any of the administrative actions. Middle oce can do the following:

    Online, real-time information

    Comprehensive limit monitoring/reporting

    Bond Calculator

  • Enforces limit, i.e. Dealers cannot breach limit prescribed by middle-oce

    Revaluation with rate feed from Reuter

    What-if analysis

    Dealers/products/portfolio/aggregate protability

    Transfer pricing to adjust protability for funding cost

    Comprehensive operational controls, e.g. Rate/date deviation, audit trails

    Unique Features

    The unique features of fmbTrade include the following:

    Building interfaces such as to Reuters, general ledgers, Cube360 and Basel+ in response to

    user needs

    Excellent internal controls e.g. Audit trails, segregation of front and back oce, and

    custodian and bank script

    Cash management facility

    Open systems technologies

    Report builders

    Cash Flow Management Monitor

  • Real-time update of all limits

    Counter party details including statements for the receiver of revenue

    Exposure evaluation which instantaneously

    Revalue FX positions

    Revalue bond positions

    Revalue discount instruments

    Calculates interest to date on all instruments

    Displays the eect of changes in interest rates

    Updates cash position by currency

    Separates settlement from dealing operation

    Imposes constraints on user and dealer accessibilities

    IFRS calculations Fair value calculations

    Functional RequirementsDeal Capturing and recording

    fmbTrade covers activities in the money market, capital market, derivative market and foreign

    exchange market.

    fmbTrade caters for the following instrument categories:

    Transaction & Accrual Based Instruments

    Instument Types

    Fixed Despoists | Saving Accounts | Overnight Deposits |Call | Current Account | Loans

    Call Deposits | Call Investments | Term Deposits | Term Investments | Notice Deposits | Notice Investments

    Multi Currency Interest Calculations: Days/365, Days/360, Coupons Rates: Discretionary, Linked, Tier etc... Commission/Brokerage Various Interest Frequencies Time structures Daily Position Statements Withholding Tax Calculations Conrmation letters By Transaction Journals By Transactions Interdivisional Transfers

    Examples

    Features

  • Contract Based Instruments

    Secured Instrument

    Instument Types

    Instument Types

    Discount (Primary) | Discount (Secondary) | Yield (Primary) | Yield (Secondary) | Bond Issues

    Repo | Reverse Repo | Secured Investments

    Examples

    Examples

    Features

    Features

    Discount Basis & Yield Basis Coupon Investments Integrated Scrip Management Revaluations on Yield Curves Multi Currency Interest Calculations: Days/365, Days/360, Coupons Commission/Brokerage Daily Position Statements Withholding Tax Calculations Conrmation Letters By Transaction Journals By Transaction

    Bankers Acceptances | Promissory Notes | Commercial | Paper | Treasury Bills | NCD's & Corporate Bonds

    Based on Discount or Yield Instruments Multi Currency Interest Calculations: Days/365, Days/360, Coupons Collateral Instruments Commission/Brokerage Integrated Scrip Management Daily Position Statements Withholding Tax Calculations Conrmation Letters By Transaction Journals By Transaction

    Repurchase Agreements | Secured Investments | Collateral Lending

  • Derivatives

    Bonds

    Instument TypesBonds Trading | Carries | Index Linked Bonds | JSE Compliant | Floating Rate Bonds

    Examples

    Features

    Discount Basis & Yield Basis Coupon Investments Integrated Scrip Management Revaluations on Yield Curves Multi Currency Interest Calculations: Days/365,

    Days/360, Coupons Commission/Brokerage

    Government Bonds | Corporate Bonds & Carries

    Instument TypesInterest Rate Swaps

    Examples

    Features Multi Currency Interest Calculations: Days/365,

    Days/360/ Coupons Rates: Discretionary, Linked, Tier etc... Commission/Brokerage Various Interest Frequencies Time structures Daily Position Statements

    Interest Rate Swaps | Future Rate Agreements

  • Instument TypesSpot Transactions | Forwards | FX Swaps | FX Extensions/Drawdowns/Surrenders

    Examples

    Features

    Spot | Forward | Swap | Options

    Based on Discount or Yield Instruments Multi Currency Interest Calculations: Days/365, Days/360, Coupons Collateral Instruments Commission/Brokerage Integrated Scrip Management Daily Position Statements Withholding Tax Calculations Conrmation Letters By Transaction Journals By Transaction

    Exchange

  • Cash Management

    fmbTrade has an integrated cash management component that allows the user to create cash

    ow reports specifying the cash ow per account, currency, specic date or period into the

    future for all transactions captured in the system as well as user dened external cash ow

    transactions that may have an impact.

    fmbTrade allows the user to drill down for transaction detail making up the consolidated

    information.

    Select Date or time period

    Details Drill Down

    Manual cash ow adjustments

    MS Excel Analysis

    Record all system ows pernostro account or currency

    Cash Flow Management Monitor

    Cash Flow Monitor - Drilling down for more detail

  • Risk Management

    Online, real-time information

    Comprehensive limit monitoring/reporting

    Enforces limit, i.e. Dealers cannot breach limit prescribed by middle-oce

    Revaluation with rate feed from Reuter

    What-if analysis

    Dealers/products/portfolio/aggregate protability

    Transfer pricing to adjust protability for funding cost

    Comprehensive operational controls, e.g. Rate/date deviation, audit trails

    Reporting

    There are many standard reports from fmbTrade. There is also an end-user report writer,

    RESULTS, available for users to design their own reports and queries. All Reports can be exported

    to Excel or Text format.

    Other Requirements

    Real time application:

    fmbTrade oers a fully integrated, online, real-time, multi-currency treasury system, that covers

    the Money, Repo, Capital (Bonds), Forex, Equity and Derivatives Markets with a linked facility to 360 +Cube and Basel .

    Straight Through Processing:

    fmbTrade supports Straight Through Processing, Front to Back. (Also see process diagram on page 2.)

    Internal and External Integration:

    fmbTrade provides accounting exibility and Riskow has experience integrating fmbTrade

    clients to 15 dierent accounting packages. Riskow has the skills to integrate fmbTrade to any

    other system as required.

    +fmbTrade already provides for Cube and Basel codes to link instruments and position with +the Cube and Basel systems.

    Access Controls:

    Segregation of the FONT, MIDDLE and BACK OFFICE is access controlled and with in each

  • segregated module, user access is dened per activity, see screen shot below.

    Regulatory Compliance

    fmbTrade already conforms to a number of regulatory requirements such as AC133 fair value

    calculations, mark-to-market and will have no problem to comply with IFRS7 Financial

    Instruments disclosures.

    Administration

    Riskow provides all the necessary services in the form of a help desk, internet support, manuals

    and training to ensure the successful implementation and running of its systems. See attached

    Appendix A: Index Manual- Dealing Module, Appendix B: Index Manual- Administration Module,

    Appendix C: Index Manual- Risk Module

    Technical

    System Architecture

    fmbTrade is a client-server system. The database would reside on a server computer that may be

    running Microsoft NT, or any one of a number of dierent versions of Unix.

    The network protocol used is TCP/IP. See diagram below for technical architecture diagram.

    Desktop machines (Client workstations): should have the following minimum specications

    Dening Security Access

  • Operating system (OS) Preferably Windows XP Professional, Windows 2000 (works with

    Windows 98, Windows NT)

    Hard disk drive (HDD) space required is less than 1Gb (Approx. 400Mb for Progress if

    conguration is used where Progress is not c...

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