tcs . beyond the obvious. tm tcs
DESCRIPTION
Innovations and Financial Market Institutions A Perspective from Tata Consultancy Services. Annual Conference of. TCS . Beyond the Obvious. TM www.tcs.com. September 18, 2005 Shiraz, Iran. Agenda. 1. Introduction to Tata Group and TCS. 2. TCS Products for Financial Services. 3. - PowerPoint PPT PresentationTRANSCRIPT
© Tata Consultancy Services ltd. April 21, 2023 1
TCS. Beyond the Obvious.TM
www.tcs.com
Annual Conference Annual Conference of of
September 18, 2005September 18, 2005Shiraz, IranShiraz, Iran
Innovations and Innovations and Financial Market InstitutionsFinancial Market Institutions
A Perspective from Tata Consultancy Services
2
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1 Introduction to Tata Group and TCS
3 Indian Financial Markets- Growth Story
4 Financial Markets Institutions
5 Innovative Money Market Instruments
6 FX Market Trading and Settlement Infrastructure
Agenda
7 Gilt Market trading Practices
2 TCS Products for Financial Services
8 Indian Commodity Derivatives Market
3
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Founded in 1868: Largest and Most Trusted Business House
Contributes 2.6 % of GDP and 5 % of Exports
91 Operating Companies with revenues over US$ 14.25 Billion
Over 230,000 Employees and 2 Million Shareholders
Tata Conglomerate TATA Consultancy Services
Established in 1968 Asia’s Largest Software Company Over 45,000 Consultants Overall revenue:
US$ 1.56 billion (2003-04) US$ 2.24 billion (2004-05)
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Industry Practices
Outsourcing
E-Business
Application Development & Maintenance
Engineering
Architecture & Technology Consulting
BF
SI
Re
tail
& D
ist.
Ma
nu
fac
turi
ng
Te
lec
om
He
alt
hc
ar e
Ser
vice
Pra
ctic
es
Large Projects
Global Delivery Centers
Security
Infrastructure Development & Management.
At TCS BFS Practice, we help our customers achieve financial technology freedom. This entails realizing their business results and technology objectives through:
Consulting (Listening and Sharing)Thought Leadership (Anticipating your needs)Proven Component and Point Solutions
(Delivering solutions that work)Leading Strategy to Implementation (Holding
ourselves accountable for results)
Our Presence in Financial Services
More than 90,000 person years of domain based solution delivery experience
75% of business from Repeat orders
BFS contributes
30+% of TCS topline
BFS contributes
30+% of TCS topline
At TCS BFS Practice, we help our customers in Financial Services Space
Stock ExchangesClearing and Settlement OrganizationsDepositoriesRegulatorsBroker DealersInvestment Management FirmsCustodian BanksRetail and Commercial BanksLoans and Mortgages
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1 Introduction to Tata Group and TCS
3 Indian Financial Markets- Growth Story
4 Financial Markets Institutions
5 Innovative Money Market Instruments
6 FX Market Trading and Settlement Infrastructure
7 Gilt Market trading Practices
2 TCS Products for Financial Services
8 Indian Commodity Derivatives Market
Agenda
6
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Open Standards, J2EE based Message based Component based design and
development Model driven architecture Flexible and Scalable Solution
Reduced Time to Market Shorter customization time Onsite – Offshore methodology
Proven solution with reference sites
Experience in end-to-end implementations with major clearing and settlement organizations world wide (SIS, STRATE, NSDL, CDS, etc.,)
Experience in handling System Integration and Consulting activities
Solution applicable for multiple entities in one installation
20+ functional components available Supports whole range of financial
instruments Supports Model I and III, CCP Integrated Components
Risk Management Fees & Billing
Compliance to international Standards - G30, ISO 15002, etc.,
Access thru Web, IVR, email, SMS, etc.,
Supports SSL and RSA Based Authentication
Automatic dispatch of reports using emails
… Cost-effective product available in modern technology with rich functionality
eClearSettleeClearSettleTM
Enabling Transformation in Securities Markets
eClearSettleeClearSettleTM
Enabling Transformation in Securities Markets
Jun 2004Mar 2005
Sep 2005
May 2005
KCC – Kuwait Clearing Company
NSDL – National Securities Depository Limited
PDTC – Philippines Depository and Trust Corp.
DIFX – Dubai International Financial Exchange
Rich Functionality
Expertise
Modern Technology
Secured Access
Cost Effective
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Cater to needs of the exchanges such as Order matching, trade management, risk
management Exchange operations - index management,
market data dissemination, surveillance, addition of new trading markets
Architectural flexibility to be able to provide for changes in functionality through parameterisation
Single system which can support multiple instruments in various models / levels of integration as desired by stock exchanges
System which has high performance, quick response time
System which has high scalability even at higher volumes
Reduced dependency on the machine vendors
Layering and componentising the technical architecture
Specifications• Hardware : Unix Server on
SUN, HP, Intel, IBM• Op. System : Posix-compliant OS
LINUX, HP UX, SUN Solaris, AIX
• Middleware : MQ Series, Unix Q,in-memory queues
• Database : Oracle, in-memory• Application : C• Messaging : FIX 4.3
Live Sites• NCDEX : TradeX Trader Workstation
TradeX™
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Risk Management System
PositionMonitoring
LimitsManagement
ExposuresManagement
MarginCalculation
Broker - Dealers
Access Channels
Internet Clients
InstitutionalClients
Stock Exchanges & ECN’s
Payment Gateways
Third PartyInterfaces
Depositories
Interfaces
WAP/IVR
Investor
InvestorsTrade
ManagementMarket DataBroadcast
DecisionSupport
FRONT OFFICE (MATRIX)
Order Routing
MarketData Vendors
Electronic Trade Confirmations OASYS
Clearing
Regulatory Reporting
InstrumentAdministration
Book Keeping
Trade Management
CustomerManagemen
t
BACK OFFICE (PRECISION)
Collateral Management Funds & Securities SettlementIn
terf
ace
Laye
r
Com
mun
icat
ion
L
ayer
eIBS –The Broking Business Catalyst
CLSA, India
ICICI Brokerage Services Ltd.
Morgan Stanley Dean Witter
HSBC Securities
HDFC Securities Ltd.
JM Morgan Stanley Retail Services
Apollo Sindhoori Capital Investment Ltd.
Clients
Single window Multi-exchange, Multi-segment
(Equity, Derivatives)
Integrated Front-Office and Back-Office
Solution
Supports Multiple Business Models
Retail
Institutional
Bank Broker
Highly configurable & Flexible
Robust scalable Unix and Oracle based
architecture
Supports global messaging standards such
as FIX; STP enabled
Component-based Architecture
Features
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1 Introduction to Tata Group and TCS
3 Indian Financial Markets- Growth Story
4 Financial Markets Institutions
5 Innovative Money Market Instruments
6 FX Market Trading and Settlement Infrastructure
7 Gilt Market trading Practices
2 TCS Products for Financial Services
8 Indian Commodity Derivatives Market
Agenda
10
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A Quick QUIZ
1. Which securities market is the first to set up demutualised stock exchange in the world ?
2. Which securities market is the first to use satellite communication technology for securities transactions?
3. Which major securities market has implemented T+2 rolling settlement?
4. In which market 99.99% of the settlement takes place on dematerialized securities?
5. In which market 6 mn investors get direct protection from the depository for their holdings ?
6. Which is the largest market for stock futures?
7. Which securities market started real time on line position monitoring of brokers?
Source: SEBI
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It is Truly an Amazing Indian Story
Unparallel reach Nation wide access to trading system- over 400
cities Over 3000 VSATs and 1000 leased lines – largest
VSAT network in Asia Daily average turnover exceeded 100 times since
the advent of screen based trading Increased Transparency
Internet trading provides direct access to retail investors
Investors are guaranteed new level of transparency and reliability
Risk Management Guaranteed financial settlement Online real-time position monitoring VaR based daily margining
Transaction costs have reduced by a factor of 10
Indian Markets are transformed through innovative use of technologyIndian Markets are transformed through innovative use of technology
We touch every trade of Indian Investor…through TCS built systemsWe touch every trade of Indian Investor…through TCS built systemsSource: NSEIL & BSE
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Country Total turnover value in 2003 USD Billion
Market Capitalisation in USD billions
GDP in USD Billion
Turnover as % of Market capitalisation
Turnover as % of GDP
USA (NYSE & NASDAQ) 16761 26800 10857.2 63% 154%London 3624 2426 1775 149% 204%Hong Kong 296 715 159.2 41% 186%Korea 459 297 520.9 155% 88%India (NSE) 196 253 541 78% 36%Singapore 92 149 89.7 62% 103%Taiwan 593 379 288.8 156% 205%
International Comparison
Source: NSEIL
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NSE of India – No. 1 in Stock Futures
S.No. Name of the Exchange 2003 % to total1 NATIONAL STOCK EXCHANGE OF INDIA 25573756 46.85%2 MEFF,SPAIN 12492568 22.89%3 EURONEXT 6941851 12.72%4 SAFEX 4585919 8.40%5 ONECHICAGO 1488573 2.73%6 OM STOCKHOLM 1424890 2.61%7 BUDAPEST 694553 1.27%8 NQLX 576765 1.06%9 ITALIAN STOCK EXCHANGE 468083 0.86%
10 AUSTRALIA 267630 0.49%11 SYDNEY 47822 0.09%12 HONGKONG 18654 0.03%13 SIMEX 549 0.00%
54581613 100.00%
Stock Futures Contract Volume
-
10
20
30
40
50
NSE
India
RTS
SE
Euro
next
Span
ish E
x JSE
Othe
r ex.
Milli
ons
2004
2003
12 exchanges
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Comparative Analysis of All Contracts
Source: NSE Derivatives update June 2005
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20th Position in Just 5 years
2003 Rank
2002 rank
Name of the exchange 2003 volume
1 1 Korea Stock Exchange 2,899,937,8952 2 Eurex 1,014,932,3123 3 Euronext 694,970,9814 4 Chicago Mercantile Exchange 640,209,6345 5 Chicago Board of Trade 454,190,7496 6 Chicago Board Options Exchange 283,946,4957 8 International Securities Exchange 244,968,1908 7 American Stock Exchange 180,074,7789 11 Bovespa 177,223,140
10 14 Mexican Derivatives Exchange 173,820,94411 9 New York Mercantile Exchange 137,225,43912 10 BM&F 120,785,60213 12 Philadelphia Stock Exchange 112,705,59714 15 Tokyo Commodity Exchange 87,252,21915 13 Pacific Exchange 86,152,63716 18 Dalian Commodity Exchange 74,973,49317 17 London Metal Exchange 72,308,32718 16 OM 72,137,34719 21 Sydney Futures Exchange 44,755,34020 33 National Stock Exchange of India 43,081,968
Enhanced Integrity and Confidence ….Positive impact of technology use and adoption of best practices
Enhanced Integrity and Confidence ….Positive impact of technology use and adoption of best practices
Derivatives Market
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1 Introduction to Tata Group and TCS
3 Indian Financial Markets- Growth Story
4 Financial Markets Institutions
5 Innovative Money Market Instruments
6 FX Market Trading and Settlement Infrastructure
7 Gilt Market trading Practices
2 TCS Products for Financial Services
8 Indian Commodity Derivatives Market
Agenda
17
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Building Blocks of Strong Financial Markets
EquitiesMarket
CorporateDebt
GiltsMarket
MoneyMarket
ForexMarket
CommoditiesMarket
CommoditiesDerivatives
ForexDerivatives
Interest RateDerivatives
TreasuryDerivatives
EquityDerivatives
Trading Infrastructures
Clearing and Settlement Infrastructures
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Infrastructure Institutions in India
EquitiesMarket
CorporateDebt
GiltsMarket
MoneyMarket
ForexMarket
CommoditiesMarket
CommoditiesDerivatives
ForexDerivatives
Interest RateDerivatives
TreasuryDerivatives
EquityDerivatives
NSEBSE
NSE
NSCCL
NSCCLBOISL
NSDLCDSL
NSEBSE
CCIL
CCILRBI
CCIL
CCIL
CCIL
CCILSeveral
Regional
NCDEXMCX
NMCE
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Clearing Corporation of India Limited
Promoted by leading Banks, Financial Institutions & Primary Dealers operating in India
Establish a safe institutional structure for the clearing and settlement of trades in Government Securities, Forex, Money and Debt markets
Trading platform for repo and forex transactionsClearcorp Dealing Systems (India) Limited , a wholly owned subsidiary of CCIL, was incorporated in June, 2003 to facilitate, set up and carry on the business of providing dealing systems/platform in CBLO and all money market instruments of any kind and also in foreign exchange, foreign currencies of all kinds.
Bring in efficiency in the transaction settlement process
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1 Introduction to Tata Group and TCS
3 Indian Financial Markets- Growth Story
4 Financial Markets Institutions
5 Innovative Money Market Instruments
6 FX Market Trading and Settlement Infrastructure
7 Gilt Market trading Practices
2 TCS Products for Financial Services
8 Indian Commodity Derivatives Market
Agenda
21
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Two Traditional popular instrumentsRepurchase Agreement (Repo) is a money
market instrument in which transaction, a holder of securities sells them to an investor with an agreement to repurchase at a predetermined date and rate (second leg)
Advancing fund against collateral in the form of securities
Repayment of fund against return of the collateral
Payment of a repo interest by the borrower Compensation of Income earned on the
collateral Daily computation of difference between
extended credit & value of collateral
Call Money Purely Uncollateralized market Limited participation of market players
resulting in restricted price discovery optionsCounter-party & default risk in trade and
settlement
Innovative Instruments in Money Markets
DisadvantagesLimited participation of market players
resulting in restricted price discovery options
Counter - party & default risk in trade and settlement
Complete absence of fungibilityPrice and value risk of collaterals Absence of reference benchmark rate
for the marketMultiple inherent problems e.g.
illiquidity & non transparency
Market innovates new instrument and trading mechanism to address
these issues
Market innovates new instrument and trading mechanism to address
these issues
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Collaterised Borrowing and Lending ObligationCBLO is an obligation by the borrower to return the money borrowed, at a specified future date;An authority to the lender to receive money lent, at a specified future date with an option/privilege to
transfer the authority to another person for value received;An underlying charge on securities held in custody (with CCIL) for the amount borrowed/lent. Trade
guaranteed by CCIL
CBLO – New Money Market Instrument
FeaturesCBLO is a money market instrument approved by RBI, is a product developed by CCIL for the benefit
of the entities who have been given restricted participation in terms of ceiling on call borrowing and lending transactions and who do not have access to the call money market.
CBLO is a discounted instrument available in electronic book entry form for the maturity period ranging from one day to ninety Days (can be made available up to one year).
CCIL provides the Dealing System through Indian Financial Network (INFINET), a closed user group to the Members of the Negotiated Dealing System (NDS) who maintain Current account with RBI and through Internet for other entities who do not maintain Current account with RBI.
AdvantagesLenders
Quicker deployment of short-term resources
Borrowers Quicker access to short-term resources
Four step processFixing Members limitIssue of instrument in Auction
MarketTrading in Secondary MarketRedemption on Maturity
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CBLO- Advantages over Traditional Instruments
Tri-party nature
Market driven price discovery
Fully collateralized transactions
Protected against price & value risk
Easy liquidity & fungibility
Eliminating the movement
of collaterals
Borrowing at lower rates
Lender’s risk are reduced
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Clearing & Settlement
Member’s Limit
Member
DW
S
CBLO Pay-in
Funds Obligation
TradesNovation
Collateral Management
Fund SettlementConfirmation
RBI
Funds Instructions
CBLO Trading System
Order Management
Limit Validation
Business Validation
OrderMatching
Multilateral Netting
Member’s Limit
CCIL-Admin
CBLO Pay-out
Authorization
Master Set-up
Borrow Rqst
Orders
Accounting System
CBLO Trading System – Trades & Settlement
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CBLO Settlement Volumes
16,055.05
217,889.91
0.00
50,000.00
100,000.00
150,000.00
200,000.00
250,000.00
FY 2003-04 FY 2004-05
(US
$ M
illio
n)
Product is Gaining Market Acceptance
26
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CBLO Membership is growing
1311
1312
19
6 7 76 7
13
0 0
33
11
33
1 1
4
1 1 11 1 0
17
1415
10
0
5
10
15
20
25
30
35
2002-03 2003-04 2004-05
Co-operative Members
Mutual Funds
Nationalised Banks
Primary Dealers
Private Banks
Foreign Banks
Associate Members
Financial Institutions
Insurance Companies
Other Corporate Bodies
Product is Gaining Market Acceptance
27
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Comparative Money Market Rates
4.18
4.79 4.664.454.94
5.06
4.58
5.065.09
4.62
5.005.175.15
4.77 4.86
0
1
2
3
4
5
6
APR ' 05 MAY ' 05 JUN ' 05 JUL ' 05 AUG ' 05
Wei
gh
ted
Avg
. (%
)
CBLO
REPO
CALL
Market Pricing Recognises the Advantages of the Product
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Comparative Money Market Volumes
52319.06
70142.06 72009.13
80664.50
39939.06
48650.74
58358.3663641.07
75796.8075371.50
86010.79
108103.52
90982.8894259.7196736.65
0.00
20000.00
40000.00
60000.00
80000.00
100000.00
120000.00
APR ' 05 MAY ' 05 JUN ' 05 JUL ' 05 AUG ' 05
Tu
rno
ver
(US
$ M
illi
on
)
CBLO
REPO
CALL
Highest Turnover Volume on 1st Sept ’05: US $Million 6918
Volumes have Surpassed Traditional Instruments
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1 Introduction to Tata Group and TCS
3 Indian Financial Markets- Growth Story
4 Financial Markets Institutions
5 Innovative Money Market Instruments
6 FX Market Trading and Settlement Infrastructure
7 Gilt Market trading Practices
2 TCS Products for Financial Services
8 Indian Commodity Derivatives Market
Agenda
30
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FX Clear – Domestic FX Dealing Platform
An effective, efficient & robust system for Inter- bank Dealing in Foreign Exchange launched by CCIL on August 7, 2003
For Inter Bank Forex Deals Started with – INR-USD Spot and Swap deals.Now Transactions in major cross currencies (EUR/USD, USD/JPY,
GBP/UDS etc.) Two modes
Negotiation - Negotiation mode can be used for dealing in cross currencies.
Order matching - anonymous . Spot and Swap deals in USD- INR in Order Matching Mode and Cash,
Tom, Spot, Outright forwards and Swap deals in Negotiation Mode Facilitates setting up of counterparty limits for trading. Facility available to all Forex Clearing members at free of cost. Major advantage – Straight Through Processing (STP).
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Advantages of FX - Clear
Cost efficient Forex Dealing
Straight - Through Processing (STP)
facility
Automatic price discovery
Reduction in counter – party
& default risk
Provides Viable Alternative for Domestic Currency Trading Facility
32
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Transparent Trading Replacing Telephone Market
Trading System-
Forex
Order
Order-Notificn.
Bilateral-Limit-Notificn.
Negotiation
Negotiation-Notificn
CSSTrade-Details
Dealer
Basic-Data-Response
Basic-Data-Query
Bilateral Limit
DealerMarket-Query
Market-Response
Own-Query
Own-Response
Market-Information
Trade-Notificn
Counter-Party
Counter-Party-Notificn
CCIL Admin
User
Basic-Data-Query
Basic-Data-Response
Oprerating-Param
Operating-Param-Resp.
33
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Electronic Trading Brings Transparency
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Institutional Facility for FX Settlement
Traditionally FX deals are settled bilaterally CCIL acts as the central counter party and guarantees Settlement of all trades accepted for settlement. Settlement Banks used for Foreign Currency leg
RBI for INR leg of settlement
ABN Amro, NY for USD leg of settlement
CCIL
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Types and Sources of Deals
Types of Deals
Cash – Settling today Tom – Settling on T+ 1
Spot – Settling on T+ 2 Forwards – Settling beyond Spot window
Source of Deals
•Forex Trading System Deals (FX-CLEAR)
•Directly reported deals by members
Common Reference
•NEWT - A deal reported for the first time
•AMND - Amend an existing deal
•CANC - Cancel an existing deal
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Netting and Exposure Monitoring
CCIL determines the maximum exposure that it would normally be willing to take on the member for a given settlement date
Exposure Limit depends on Settlement Guarantee Fund, the Margin Factor etc assigned to the member
During Exposure monitoring the exposure check for a trade ensures that on acceptance of the trade for settlement, the member’s net sold position in USD does not exceed the his Exposure limit
The netting scheme adopted - netting by novation where the bilateral relationship between the two members is substituted with bilateral contracts between each member and CCIL.
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CCIL Eliminates Settlement Risk
CCILas
CCP
SETTLEMENT BANK
FOREX MEMBERS
CORRESPONDENT BANK
RBI-DAD
4. Send details of the INR amnt to be paid and received from members (Pay in – Pay out )
5. Get INR confirmation including LOC utilization 1. Send details of
USD amnt to be debited for mbrs who have activated the Direct Debit facility
1. Send details of the USD amnt to be received from members (Pay – in Instructions)
2. Instruct to transfer forex to CCIL’s A/C and get confirmation
Send settlement reports
3. Transfer forex to CCIL’s A/C
6. Send details of the USD amnt to be paid to members (Pay – out Instructions)
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131700
354541
91505951
184133
533015
11275069882
0
100000
200000
300000
400000
500000
600000
Cash Tom Spot Forward
Vol
ume
(US
$ M
illio
n)
FY 2003-04
FY 2004-05
Forex Settlement Volumes
Settlement Volumes are Growing
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1 Introduction to Tata Group and TCS
3 Indian Financial Markets- Growth Story
4 Financial Markets Institutions
5 Innovative Money Market Instruments
6 FX Market Trading and Settlement Infrastructure
7 Gilt Market trading Practices
2 TCS Products for Financial Services
8 Indian Commodity Derivatives Market
Agenda
40
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Highly characterized with presence of few numbers of wholesale players
Major market activities concentrated in government securities alone around 85%
GILTS Market
Few active players
determine prices
Markets are active & liquid when interest rates
are falling
Low volumes render market shallow & prone to market manipulation.
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Secondary Market Trading Platforms
NSE - WDM RBI - NDS
Introduced in 1995, securities market transactions controlled by brokers registered to NSE – WDM market
Introduced in 2002, transaction controlled by two banking entities.
Telephone Market – Bringing buyer & seller to clinch a deal
Electronic Market – Instant without time lag in the dissemination of trade information
Oral Confirmation of deal which is reported on NSE-WDM by broker
Electronic confirmation of deal reported on NDS real-time & more authentic.
No central Counter party to provide guaranteed settlement
CCIL acts as a central counter party provides guaranteed settlement
Physical SGL form submitted by seller to buyer
Paperless settlement – thru electronic SGL transfer
Inefficient price
discovery
Heavy Broker
bias
Lack of reporting Discipline by
member participants
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Order Matching System for GILTS Market
Introduced August 2005, promoted by Reserve Bank of India (R.B.I.), hosted
& managed by Clearing Corporation of India Limited (CCIL)
Transition from Over the Counter (OTC) Market to Online Trading platform
Screen based online anonymous order matching system
Aims to build a broad based, dynamic, transparent & liquid debt market
Advantages of NDS – OM to Participants
Nurtures a deep, liquid &
vibrant market
Efficient price discoveryBased on a price -
time priorityBuilt using real-time
messaging architecture
Straight through Processing feature
Creates a dynamic market in terms of instruments
/processes /participants
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7208.72
4968.81
0
1000
2000
3000
4000
5000
6000
7000
8000
NDS - OM RBI - NDS
Vo
lum
e (U
S $
Mil
lio
n)
Comparative Gilts Market Volume (from 1st Aug ’05 to 31st Aug ‘05)
NDS – OM System went live on 1st August 2005
Volumes Surpassed in the First Month of Operation
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Transparency Improves Price Discovery
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Order Matching Provides Competition over Negotiations
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Road Ahead: NDS – CALL & NDS Auction
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Automating Call Money Market
Quote-driven Mode
Facilitates online dealing
Deals concluded through Negotiation
Contracts identified: Call, Notice & Term
System facilitates STP to RTGS environment
Risk Management – Regulatory &
Exposure Limit
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Electronic Markets Bring Transparency over Telephone Markets
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Automating T Bill Auctions
French/Dutch Auction
T - Bills 91 days, 364 days
Provides an open or closed bidding platform
Price/Yield Screen Based
Auction System
Risk Management
Open Market Operations: Sale
by RBI
Open Market Operations: Purchase
by RBI
Issue of securities Through Tap Sales
Floatation: Issue of Securities with pre
announced coupon rate
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Bid Management
Market information
Reports
T – Bill Auctioning System
Member Member Member
Bid Entry Bids Confirmation
Market Information
Reports
T – Bill Auction System
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1 Introduction to Tata Group and TCS
3 Indian Financial Markets- Growth Story
4 Financial Markets Institutions
5 Innovative Money Market Instruments
6 FX Market Trading and Settlement Infrastructure
7 Gilt Market trading Practices
2 TCS Products for Financial Services
8 Indian Commodity Derivatives Market
Agenda
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Commodity Derivatives Market in India
Commodities Derivatives Trading in India received a fillip in 2003 with abolition of ban
on futures trading. Currently options trading is not permitted
Regional as well as National exchanges exist
Major National exchanges with order driven anonymous electronic trading
National Commodity & Derivatives Exchange Limited (NCDEX)
Multi Commodity Exchange Limited (MCX)
National Board of Trade (NBOT)
National Multi Commodity Exchange (NMCE)
TCS is the IT partner of NCDEX (the largest commodity exchange) and has customized
the trading , clearing and settlement and risk management systems
Major product categories include
Agriculture commodities – pulses, oils& oilseeds and others
Precious metals and other metals
Energy products – Brent crude to be introduced in September
Facility to dematerialise Warehouse receipts through NSDL & CDSL
Emerging concepts –National Collateral Management Services Limited to provide risk
management, storage & certification and electronic holdings of commodities
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Commodities Trading Volumes in India
30700
135900
83300
020000400006000080000
100000120000140000160000
Financial Years
Volu
mes
(in
mill
ion
USD
)
FY(03-04) FY(04-05) FY(05-06)**
Commodities Derivative Market - Growth
** Data available for first 4 months of FY(05-06)
Source :Business Standard
Growth of Equity V/s. Commodities Market
273780
190600
30700
83300
0
50000
100000
150000
200000
250000
300000
FY (03-04) FY (05-06)**
Financial Year
Vol
umes
(in
mill
ion
US
D)
Equity Trading Volume Commodities Trading volume
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To Summarise
Technology enabled transformation of financial markets provide ample opportunities for growth
Planning and handling these growth pose technological challenges Technology management is crucial to the success of the business of financial markets Proven and matured technologies provide operational efficiency
Technology can improve efficiency, service and lower costs…. But only if:
it is part of an integrated organizational strategy it is used to enable new ways of working identify and acquire the correct technologies
look for a “Sympathetic” model that links:
to cost structure
rewards based on continuous improvements
the solution provider into organizational success
Experienced Technology partner brings in added value to the organization
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Thank You
Jagdish R Bhandari,Vice President
+91 22 5550 [email protected]