set it infrastructure outlook

SET IT Infrastructure OutlookSET IT Infrastructure Outlook

Chaiyoot Chamnanlertkit

The Stock Exchange of Thailand

2

SET Technology DevelopmentSET Technology Development

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

SRG

ASSET

ELCID

SIMS

Alternate Site

BEX

TFEX

BSBTP Manager

PRS

PTI*

PRS G2

Major System Launch

SET is committed to utilizing technology as a business enabler since 1990and has continuously improved IT delivery

SET seeks to improve IT services to keep up with industry trends and international standards

* First phase release for government securities

SDC

SBL & Repo

3

The Future of TradingThe Future of Trading

AccessibilityTransaction

CostLatency

Critical factors for the future of trading

Capacity

Low-touch trading No-touch tradingHigh-touch trading

Today Future

A new trend of trading is gaining popularity

Order inputFill rate* (Order : Deal) 2:1 5:1

Manual Computer-generated

* Data based on a leading Asian exchange in 2002 and 2006

4

Other Exchanges Upgrading IT InfrastructureOther Exchanges Upgrading IT Infrastructure

KRX

“Expanding system capacity”“Improving access infrastructure”

“Launching a new matching engine”

Exchanges around the globe are making IT investment to keep up with the new trend

“Introducing low-latency service”

What SET will deliver in the next coming years?

Some numbers on latency*

90 msec

30 msec

16 msec

* Numbers are collected public news release and exchange websites

22 msec

45 msec

Some exchanges even talk about less than 10 msec

70 msec

5

Our DirectionOur DirectionWithin 3 years, the SET will modernize IT infrastructure of trading and supporting systems

in order to enhance international competitiveness and operational efficiency by:

Util

ity-B

ase

Infr

astr

uctu

re

Pre-Trade

Trade

Post-Trade

Inte

rmed

iary

& D

irect

Ser

vice

s

TraditionalTV/Radio/News

InternetWireless

CommunityInstitutionMembersPartners

Cross Border

CORE ENGINESINTERMEDIARIESTERMINALS/CONNECTORS

S E T N E

TVendor

Broker BSB

STT

• Improving exchange backend systems and market access mechanism• Promoting IT service innovation in the participant space, including a single

trading screen and an integrated investors account structure

6

Indicative TimelineIndicative TimelineQ4 2007 20092008 2010

Service launch Message specification release

* FIX for derivatives launch is subject to protocol maturity

Features introduced or removed

PTI System Launch (October 2007)

E-CTCI Specification Initial Release

FIX Specification Initial Release (Cash Market)

Post-trade ISO Message Specification Initial Release

FIX Specification Initial Release (Derivatives)*

New Trading Backend Launch

Multi-market

Multi-matching queueNew backend with 3-minute recovery time

Post-trade ISO message Available on MAG

Participant receives all service via MAG(End of 2010)

Market Access Gateway Launch

SETNET 3 Launch (Use SETNET 1 as backup)

E-CTCI Available on MAG

FIX (Cash Market) Available on MAG

FIX (Derivatives Market)Available on MAG*

Enterprise Messaging Service

Multi-channel

64kbps limit removed

STP-enabled

IntroducingIntroducingThe Next Generation PlatformThe Next Generation Platform

Suraphol EittimeteevutSurapong Vongsopanagul

The Stock Exchange of Thailand

8

AgendaAgenda• Overview• Platform Components• Changes & Opportunities• Timeline

9

Why the Next Generation PlatformWhy the Next Generation Platform

Cost Effectiveness

Infrastructure Efficiency

CompetitiveEdge

Deliver more at the same cost

Serve better with what we have

Build attractiveness with IT asset

Choose your own optimal spending

Meet your customers’ expectation

Gain best-in-class IT infrastructure

“SET” “PARTICIPANTS”

COST

EFFICIENCY

ACCESSIBILITY

10

Key strategies will deliver values of “the Next Generation Platform”

InfrastructureConsolidation

InfrastructureEncapsulation

The Next Generation

Platform

How to Achieve the GoalsHow to Achieve the Goals

11

Analyzing Current InfrastructureAnalyzing Current InfrastructureSE

TNET

1

SETN

ET 2

SE

TNE

T 2.

5

SET Backend Hosts

Member Servers Member Servers

It reveals that improvements can be made

NetworkConsolidation

Threeseparate networks >

SecurityConsolidation

Service Access PointConsolidation

Message-basedCommunication

Scatteringsecurity mechanisms

Many points ofservice delivery

Limited usage ofmessages

>

>

>

Today’s Nature Improvement Actions

Consolidation

Encapsulation

12


13

Introducing the Platform Components Introducing the Platform Components

SETNET3

3

Service Delivery Carrier

SETSET community portal

Back officeFund admin

New Trading Backend

Post Trade Integration (PTI)

Enterprise Messaging

Service

Backend

4 5

SET Engines

Market Access Gateway

Messaging Protocol

Participants

1 2

Member Interface

Trading server

Back office server

End-terminal

E-CTCI & FIX

SWIFT

Back office

Trading desk

Internet trading DMA orders

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Member InterfaceMember Interface• Market Access Gateway (MAG), managed by SET, is a “Single Service Access Point” to all

SET services

• MAG is located at participant’s premise

• Participants make contact with SET through MAG• Message-based: Send and receive messages based on message specification issued by SET• Terminal-based: Users request service from a specific port of MAG

Trading server

Back office server

End-terminal

E-CTCI & FIX

SWIFT

Your IP address SET IP address

HSMSecurity devices installed

To SET

Trading and post-trade message specification

Terminal-based application accessing

SET service by referencing MAG

Market Access Gateway

MAG is referenced by two independent IP addresses

Each SET service is referenced by a network port number

15

Improved Trading Message SpecificationImproved Trading Message Specification

Note• New trading message specification will be released end of 2007• The old format (AUTO-t wrapping CTCI messages) will not be available on the MAG

…

What?• Enhanced CTCI (E-CTCI) is an improved version of CTCI

Why?• Redundant transmission overhead will be removed

• Synchronization• Flow control

• The current specification has limitations• Enhancement is needed for future trading functions offered by the Next Generation Platform

When?• E-CTCI will be introduced on Market Access Gateway when MAG comes into service• Technical constraint of 64kpbs line will be lifted and a new fairness control mechanism will be in

place, including response time from SET engine

Current

Future

CTCImessage

AUTO-t header

CTCImessage

CTCImessage

CTCImessage

CTCImessage

CTCImessage

CTCImessage

CTCImessage

AUTO-t header

CTCImessage

CTCImessage

CTCImessage

CTCImessage

CTCImessage

CTCImessage

TCP/IPheader

TCP/IPheader

E-CTCImessage

E-CTCImessage

E-CTCImessage

E-CTCImessage

E-CTCImessage

E-CTCImessage

E-CTCImessage

TCP/IPheader

E-CTCImessage

E-CTCImessage

E-CTCImessage

E-CTCImessage

E-CTCImessage

E-CTCImessage

E-CTCImessage

TCP/IPheader

Redundant overhead Limited features

16

FIX ProtocolFIX Protocol

What?• Stands for “Financial Information eXchange”• A standard messaging protocol to communicate trading information electronically

between buy-side institutions, brokers, and markets• A flexible means of handling many types of financial instruments and transactions - global

in nature• Platform independent - it works on many types of computers and communications

systems

Why?Globally adoptedPrepares participants for shortened settlement cyclesEnables front to back STPPromotes liquiditySupports complex trading instructions efficiently

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MAG will be FIXMAG will be FIX--enabledenabledGlobal Trend• Major leading exchanges make FIX available for order routing, including Australian

Securities Exchange, New York Stock Exchange and London Stock Exchange

ASEAN Trend• ASEAN exchanges agree to move towards FIX for order routing across exchanges

When?• FIX specification will be available in 2008• FIX messages will be accepted by MAG in 2009• Trading participants will be able to communicate with SET using FIX via MAG

– In the beginning, FIX will be used with cash market only– Later, FIX will also be available for derivatives instruments

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Service Delivery Carrier: SETNET 3Service Delivery Carrier: SETNET 3

SETNET 3SET Site 1

SET Site 2

Participant Site 1

Participant Site 2

“Single Virtual Private” Network

Network will be managed such that traffic of trading system has

highest priority

• Services on current networks (SETNET 1, SETNET 2 and SETNET 2.5) will be gradually migrated to SETNET 3

• Traffic of all application will be transmitted over SETNET 3

Types of connection

Participants can choose types of connection, subject to minimum requirements set by SET

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Enterprise Messaging ServiceEnterprise Messaging Service

• Enterprise Messaging Service is an enhancement to the existing TP Manager

• It routes messages received from participants, through MAG, to an appropriate SET backend which processes

• Participants will communicate with Enterprise Messaging Service through Market Access Gateway

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The New Trading BackendThe New Trading Backend

New Features At Initial Launch• Multi-market• Multi-matching queue• Resilience• Recovery time (within 3 minutes)

Planned New Features• Multi-channel when MAG comes

into service

New trading backend is designed for scalability and availability

Note• There will be no impact to trading participants when the new trading backend is in service initially in 2008• At the new backend introduction, MAG will not be included• A few changes are expected when MAG is introduced on the Platform

Current Status• Internal test in progress• Launch in early 2008

21

PostPost--Trade Integration SystemTrade Integration SystemPTI enhances efficiency of post-trade transactions: open architecture and messages

…

Closed System Open System

SDC SRG

PTIBroker System

Broker System

Broker System

Full services on PTI will commence in October 2007

22

All PostAll Post--trade Service on Single Platformtrade Service on Single Platform

Post-Trade Integration SystemC

lear

ing

Settl

emen

t

Dep

osito

ry

Reg

istr

ar

Ris

k M

anag

emen

t

Basic Post-Trade Services

Secu

ritie

s Le

ndin

g

Rep

o

RTG

S …

Value Added Services

BOT SWIFTNet

Payment instructions

Post-Trade instructions

PTI system is a tool for business innovations- Straight through processing- New clearing model- Integrated risk management

MAG


23

PostPost--Trade Automation with MessagesTrade Automation with MessagesPTI introduces ways to automate business processes

Reduced operational riskBank of Thailand

PTI

Increased accessibility

Example Real-time Gross Settlement (RTGS) Transaction Automation

Participants has two options in generating instructions to PTI1) PTI-provided screen2) Messages generated by participants’ system

1

2

PTI validates instructions and performs necessary operations PTI sends payment instructions

to BOT3

BOT processes payment requests4

BOT confirms payment5

PTI receives confirmation6Improved operational efficiency

Automation

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MAG will be ISOMAG will be ISO--standardstandard--enabledenabledWhat?• ISO-based standard messaging protocol• Enables electronic securities instructions exchange among financial institutions• PTI has already adopted ISO15022 standard for selected government securities

transactions• SWIFT uses ISO15022 in its network

Why?• Enables transaction automation• Globally adopted

– BAHTNET of the Bank of Thailand

When?• PTI will take ISO-based messages for selected transactions through MAG• Post-trade message specification will be available in late 2008 with service to be

launched on MAG in 2009

25

Listed CompaniesListed Companies’’ Information DisclosureInformation Disclosure

• A new initiative to improve listed companies’ information disclosure process

• SET has just launched XBRL pilot program• Thailand is among the very first pioneers in adopting XBRL standards, just after

Japan and Korea• Already launched for selected sectors: Banking, Commerce and Securities• Acknowledged by XBRL international

• XBRL stands for eXtensible Business Reporting Language • Make company data collection process more efficient, comprehensive, and

reliable• Strengthen the transparency and robustness of information on markets

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The XBRL Business Reporting ProcessThe XBRL Business Reporting Process

Banks: Bank Document

Revenue department: Tax ReportXBRL

XBRL

XBRL

XBRL

XBRL

SET/SEC: Securities Report

Website: Annual Report

Securities Companies: Analysts Auditors: Accounting Statements

XBRLInvestors

Investors

Subsidiaries

XBRL

XBRL

Listed companies

Finance Department

Investor Relation

Financial System

XBRL

XBRL

To improve business reporting process seamless and to benefit every party in the reporting chain

27


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Preparing for the ChangesPreparing for the Changes

Trading: CTCI Trading: E-CTCI & FIXPost-Trade: ISO-based

• 3 Separated Networks• 64kbps limit to ASSET

• Single Virtual Private Network• 64kbps removed (Fairness to be controlled

by response time)

• Many points of technical connectivity

• Single access point to MAG

• CTCI wrapped by AUTO-t • Enhanced CTCI and FIX introduced• Post-Trade messaging introduced

Network

Access Point

Message Services

Current Future

29

With the Introduction of Next Generation PlatformWith the Introduction of Next Generation Platform

• Participants will benefit from:

– Better connectivity through Market Access• Linking your business partners

– Unfolded IT service innovations• Integrated Investors Account• Integrated Trading Screen

30


31

Indicative TimelineIndicative TimelineQ4 2007 20092008 2010

Service launch Message specification release

* FIX for derivatives launch is subject to protocol maturity

Features introduced or removed

PTI System Launch (October 2007)

E-CTCI Specification Initial Release

FIX Specification Initial Release (Cash Market)

Post-trade ISO Message Specification Initial Release

FIX Specification Initial Release (Derivatives)*

New Trading Backend Launch

Multi-market

Multi-matching queueNew backend with 3-minute recovery time

Post-trade ISO message Available on MAG

Participant receives all service via MAG(End of 2010)

Market Access Gateway Launch

SETNET 3 Launch (Use SETNET 1 as backup)

E-CTCI Available on MAG

FIX (Cash Market) Available on MAG

FIX (Derivatives Market)Available on MAG*


Multi-channel

64kbps limit removed

STP-enabled

32

Future Updates on Future Updates on ConnexConnex

A monthly newsletter issued byInformation Technology DivisionThe Stock Exchange of Thailand

https://www.setportal.set.or.th

on

Thank YouThank You

set it infrastructure outlook

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