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Sydney

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Sydney

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  1. Sydney 5 November 2007

  2. WELCOME Sydney FISD Local Meeting 5 November 2007

  3. Thank you to our host…Australian Securities Exchange

  4. Notice to Members of the Media: Please be advised that quotation or attribution of any speaker must be granted directly by an individual speaker. Because companies operate with potentially different policies, and to give presenters the freedom to speak candidly, we assure them that presentations and comments are off-the-record unless express permission is granted by an individual to use information from a presentation or a quote from this conference. Sydney Local Meeting - 5 November 2007

  5. Today’s Agenda Outlook for Asian Markets in the Aftermath of the Sub-Prime Turmoil ---Iain McDonald, Dow Jones Member Update ---Frank Hoer, ASX Member Update ---Alex Clamen, ASX FIX Update ---Michael Corcoran FISD Briefing ---Liz Cummings FISD Briefing ---Nick Merritt Networking Reception Sydney Local Meeting - 5 November 2007

  6. Sydney 5 November 2007

  7. Outlook for Asia Markets in the Aftermath of the Subprime TurmoilIain McDonaldDow Jones Newswires Sydney Local Meeting - 5 November 2007

  8. Dow Jones Newswires Mission The world’s premier independent provider of real-time, market-moving financial news and analysis for financial professionals and their clients. Sydney Local Meeting - 5 November 2007

  9. Dow Jones Newswires Overview • Delivers equities, fixed income, foreign exchange, commodities and energy news & analysis. Proprietary trading ideas. • 24 hours a day, seven days a week • 438,000 subscribers, excluding Website users • Available through various distributors as well as email delivery and Dow Jones Websites. • License content sets to financial firm intranets and customer extranets. Sydney Local Meeting - 5 November 2007

  10. Real-Time News And Analysis • Thoughtful coverage of markets and economies around the globe • Instant analysis of breaking news and events. Going beyond the “what” is happening to the “why” it is happening, and the “what happens next.” Using the popular Market Talk format and regular market-based columns • Giving readers the material they need to make quick investment decisions • Tapping market experts for their views Sydney Local Meeting - 5 November 2007

  11. DJN Editorial Resources • 1,800 editors and reporters • 850 DJ Newswires - 90 bureaus (200 staff members in Asia-Pacific with 19 bureaus in 15 countries in the region). • 740 Wall Street Journal, including its overseas editions. • 210 other DJ publications (MarketWatch, Barron’s, SmartMoney). Sydney Local Meeting - 5 November 2007

  12. Dow Jones Newswires Services • Flash Headlines: Single lines of information containing potentially market-moving news that subscribers must see immediately. • Spot News: Breaking news that is written about as it happens. • Market Talk: Brief, real time commentary about events affecting the markets. Updated constantly throughout the day and one of the most popular features of DJN. • Market Comments: Midday or end-of-day summaries on what specific markets are doing. Wraps up coverage included in Market Talk throughout the day. Broader market wraps on days when markets are particularly volatile • Enterprise Stories or Columns: These stories provide in-depth, forward looking analysis and perspective on spot developments, trends and major news. Includes columns filed on a regular basis, like Money Talks, Taking Stock and FX Asia. Sydney Local Meeting - 5 November 2007

  13. August Market Crisis • U.S. subprime mortgage-related worries had been around for a while, but snowballed in August, sending credit and stock markets around the globe into disarray, hurting risk appetite and leading to the Federal Reserve’s so far 75 basis points interest rate cut • It was a busy, challenging and exciting time to be writing about financial markets. Each day the story changed - sometimes several times within the one day. Markets were extremely volatile. Sydney Local Meeting - 5 November 2007

  14. How we covered markets in August • Provided 24-hour, global coverage and analysis of a constantly evolving story. • Delivered “scoops” as the credit crisis unfolded in the U.S. and in places like the UK and Australia. Far ahead on Aussie FX intervention, Adelaide Bank rumor denial • Focused on how funds and banks were coping. Looked for points of tension in credit markets. • Detailed analysis of the effects on stocks, currencies, bonds, derivatives, energy and commodities. Frequent pan-Asian market update stories • Flows – where is the money coming from? And where is it going? • Market columns from experienced writers Sydney Local Meeting - 5 November 2007

  15. Market Columns • Volatility Mark II To Be Courtesy Of China? 30 August 2007 With all eyes on the U.S. economy and the fallout from housing sector weakness, some are starting to wonder when the next shoe may drop - and where. • Widespread Selling A Stock Picking Opportunity 29 August 2007 For all the lip service paid to decoupling, stock traders in Asia certainly don't seem to be willing to put their money behind the concept. • A Fresh Headwind But Not The Beginning Of The End 28 August 2007 Asia's stock markets and currencies have a big headwind Wednesday in the form of a slump on Wall Street, but this latest wobble doesn't mean we are yet living in extraordinary times. • Hey Mate, What's The Hurry With The Carry Trade? 23 August 2007 Risk aversion is slowly receding, pulling the yen back down with it, and the gap between interest rates in Japan and overseas is still tantalizingly large. • Check The Money Supply Speedometer Too 15 August 2007 Any boy racer will tell you that it's not just the size that matters, it's also the speed. And so it is with high octane money supply in Asia where economies are also in top gear. • Investors May Find Value Among CDO Wreckage 5 August 2007 As a lot of dust continues to be kicked up around the U.S. subprime and structured credit markets, and specifically the collateralized debt obligation market, it's understandable that investors are fleeing without much discretion. Sydney Local Meeting - 5 November 2007

  16. Sydney Local Meeting - 5 November 2007

  17. Sydney Local Meeting - 5 November 2007

  18. Outlook For Asian Markets • Global economy still in good shape, but U.S. housing slowdown hurting U.S. • Debate on whether Asia is decoupling • Fed’s Sept 75bp cut both insurance policy, preemptive measure. • Further easing not assured. The question remains the health of the U.S. consumer. Stagflation appears highly unlikely. Sydney Local Meeting - 5 November 2007

  19. Outlook For Asian Markets • Our general view: less sophisticated financial markets a positive, Asia to outperform on fundamentals • “User-friendly” risky assets such as equities to benefit most from fund outflows from CDOs, ABS, etc. Fund flows to Asia set to continue. • Relative-value strategies, rather than directional exposure, preferred for most asset classes, especially fixed income Sydney Local Meeting - 5 November 2007

  20. Outlook For Asian Markets Foreign Exchange Market: - Further USD weakening after G7 meeting but dollar may reassert strength in 2H08. • USD fall likely more pronounced vs Asian units, on stronger local fundamentals, currency appreciation hopes: intervention risks remain though central banks may tolerate some currency gains. • G7 singling out China on the yuan. Periodic rumors of one-off revaluation but this seems unlikely. Given strong economic data, though, China may let the yuan rise faster. Sydney Local Meeting - 5 November 2007

  21. Outlook For Asian Markets Fixed Income Market: • Generally bearish in Asia over local-currency bonds, high-grade credits. Cautiously bullish over high-yielders. • Directional bets extremely risky given policy uncertainty. Curve trades, swap spread plays preferred. Sydney Local Meeting - 5 November 2007

  22. Outlook For Asian Markets Stock Markets: • Fund inflows have led to repeated record highs in Korea, HK, India, Australia and Singapore • Considerable amount of demand from real money coming from structured debt markets • Valuation concerns growing, especially in China. What happens if the China bubble bursts? Beijing’s policy response is key, here • Room for further Asian rallies though investment may become more selective near term • Techs cutting capex which may help that sector Sydney Local Meeting - 5 November 2007

  23. Outlook For Asian Markets China: • Economy still in robust shape, inflation in uptrend but may slow 2H08: at least 1-2 hikes in interest rates, RRR before end of 1Q08 • No major breakthrough for CNY regime: 5% annual appreciation rate remains consensus • Shanghai stocks expected to set new highs, 8,000 within reach: liquidity, liquidity, liquidity • More financial sector reforms. Derivatives to play bigger role • Focus on sovereign wealth fund, corporate expansion overseas Sydney Local Meeting - 5 November 2007

  24. Outlook For Asian Markets Sydney Local Meeting - 5 November 2007

  25. Thank you! Sydney Local Meeting - 5 November 2007

  26. Sydney 5 November 2007

  27. An Overview of the FIX Protocol as an Enabler for Electronic Trading Michael Corcoran, Member FPL Asia Pacific Regional Committee, Sales Director, ITG Australia Sydney Local Meeting - 5 November 2007

  28. Agenda The Changing Industry Landscape What is FIX? The FIX Adapted for STreaming (FAST) ProtocolSM Sydney Local Meeting - 5 November 2007

  29. The Changing Industry Landscape Sydney Local Meeting - 5 November 2007

  30. The Evolving Global Landscape Ever increasing pressure to cut costs and increase operational efficiencies Increased regulatory pressures with the introduction of Reg NMS in the US and MiFID in Europe Changes in global market structure, the demutualisation and consolidation of exchanges as they become for-profit entities and the growing number of alternative trading venues The growing popularity of algorithmic trading, DMA and the increasing search for ‘dark’ liquidity Increased electronic trading across multiple asset classes throughout the trade lifecycle Skyrocketing market data volumes generated by ever increasing trading volumes and regulatory initiatives Sydney Local Meeting - 5 November 2007

  31. The Australian market • Widespread usage of IRESS which has grown as a predominantly domestic system • Market structure still focused around a central exchange • Liquidity issues driving increased demand for investment offshore, particularly into Asia • Also growing focus from non-Australian domiciled business on investment into Australia • Developing use of algorithmic trading and ‘dark’ liquidity pools driving volumes • Rapid increase of international trade and market data flow into and out of Australia • Need for a common messaging standard that is inter-operable between buy and sell side, service and market data providers across all countries Sydney Local Meeting - 5 November 2007

  32. What is FIX? Sydney Local Meeting - 5 November 2007

  33. FIX – the Enabler FIX is the enabling technology for electronic trading. A common standard for transmitting trade information and data A specification of what and how to communicate A document, not a piece of software, network, or a service The protocol is truly open, specs are freely available to the public Multi-asset, industry-driven – now covers equities, derivatives, fixed income and foreign exchange markets Evolving – market participants suggest changes to FIX and use it to run their businesses • FIX organisation and process is very pragmatic • Focused on meeting “real world’ needs in an efficient, community driven model Sydney Local Meeting - 5 November 2007

  34. Sydney Local Meeting - 5 November 2007

  35. The Benefits of Using FIX FIX is a common, international language Virtually every major stock exchange and investment bank uses FIX for electronic trading, as do the world's largest mutual funds and money managers and thousands of smaller investment firms. FIX has over 200 member firms worldwide. Why? Implementing FIX for electronic trading delivers: Increased trade efficiencies Quality execution Enhanced transparency Reduced operational risk Significant Return On Investment (ROI) Sydney Local Meeting - 5 November 2007

  36. The Benefits FIX Presents A global protocol - FIX is the pre-eminent global messaging protocol for the pre-trade and trade environment up to pre-settlement for securities Multi-asset class - FIX is an open standard for multiple security classes, facilitating greater STP Enhanced, unconflicted connectivity - FIX provides seamless connectivity to multiple counter-parties and enhances price transparency and access to liquidity. It is a solution that reduces reliance on broker and vendor proprietary solutions Real-time - It enables accurate real time updating of portfolio and trading management systems for pre-trade, trade and pre-settlement Industry-driven, not-for-profit - The FIX Protocol is owned and maintained by FIX Protocol Limited. Representatives from these firms dedicate time and resource to ensure that the FIX Protocol is continually enhanced to meet the ever evolving needs of this sector. Sydney Local Meeting - 5 November 2007

  37. FIX Adapted for Streaming (FAST) ProtocolSM

  38. The FAST ProtocolSM The FIX Adapted for STreaming (FAST) ProtocolSM was developed by the FPL Market Data Optimisation Working Group in response to the skyrocketing trading volumes that have emerged from the growing popularity of automated and algorithmic trading. FAST Specification 1.1, the version recommended for adoption by the FPL Market Data Optimisation Working Group was launched in January 2007 The FAST ProtocolSM is a data compaction methodology that optimises communication in the electronic exchange of financial data, radically reducing message size and bandwidth utilisation, without negatively impacting latency It has been designed specifically for the high-volume securities markets. FAST thrives on large quantities of data that share similarities in content and structure, presenting significant opportunities for the global capital markets Sydney Local Meeting - 5 November 2007

  39. The FAST ProtocolSM The FAST ProtocolSM has many uses, in addition to presenting a solution within the market data arena; it may also be applied to other areas demanding high compression and low latency communication such as high frequency trading, Direct Market Access and exchange interfaces A number of leading industry players participated in the FAST ProtocolSM proof of concept testing which generated some very positive results and the FAST Protocol is now being actively explored and implemented by a number of market centres globally. Sydney Local Meeting - 5 November 2007

  40. Conclusion • To operate effectively in a global environment, common protocols for communication are required • FIX improves cross-border connectivity, enables real-time communication and brings operational efficiencies • It has been created and is maintained by the industry, for the industry Sydney Local Meeting - 5 November 2007

  41. Want to Find out More? Visit www.fixprotocol.org Sydney Local Meeting - 5 November 2007

  42. Sydney 5 November 2007

  43. About FISD • Financial Information Services Division of the Software and Information Industry Association • Global, neutral forum for the financial information industry • Broad areas of focus • Business issues – policies, commercial terms, contracts • Government affairs – e.g., MiFID (EU), Reg NMS (U.S.) • Securities processing automation – standards, technology • Executive Committee - Annual Elections - All members eligible to serve Sydney Local Meeting - 5 November 2007

  44. About FISD • Membership development • 140 member companies • Data Consumers - Banks, Brokerage, Buy-side • Exchanges and Markets • Data Vendors – Reuters, Bloomberg, Thomson, Telekurs • Service Providers – software, consulting, network providers • Events -networking -education • Role of Constituent Groups – Opportunity for members to meet with their colleagues in similar organizations • Exchanges • Consumers – Banks, Brokerages, and Investment Managers • Vendor – all other members • Data Vendor Sub-group Sydney Local Meeting - 5 November 2007

  45. FISD Events • Free to FISD Members • General Membership Meetings • London – 4 December (Holiday party) Thanks to our host: Reuters • Zurich – March 19 & 20Thanks to our host: Telekurs • NYC – 12 June - in conjunction with SIFMA conferenceThanks to our host: Reuters • FISD Issue Briefs • New York – 13 December (Holiday party) Thanks to our host: Credit Suisse • New York – February 2008 • London – May 2008 • Master Calendar: www.fisd.net/schedules Sydney Local Meeting - 5 November 2007

  46. FISD Working Groups Business Issues Agenda • Business Issues Policy and Practice Standards (BIPPS) • Billing and Invoice • Service Level and Communications • Anti-Piracy Securities Processing/Standards • Liaison status with International Standards Organization • MDDL: The XML specification to enable the interchange of information necessary to account, to analyze, and to trade financial instruments of the world's markets. • ISIN Standards • Business entity identification • Technology Track Sydney Local Meeting - 5 November 2007

  47. FISD Local Meetings in Asia/PacRim • FISD Executive Committee stresses increased involvement in region • Several events and meetings since 2004 • Asia Pacific Financial Information Summit – Hong Kong • Similar to 2006 Singapore event • Partnering with Incisive Media for two-day program • Seeking sponsors and ideas for sessions • Role of local meetings • Semi-annual series of events in major Asia/Pac financial centers • Open to FISD members and non-members for 2007 • Provide opportunity for Asian members to… • Engage more actively in FISD agenda • Address issues that are unique to the region • Brief local colleagues on developments within their organizations Sydney Local Meeting - 5 November 2007

  48. Asia Pacific Events • Local meetings • Spring 2008 • Asia Pacific Financial Information Summit • Hong Kong • Joint event with Incisive Media • Fall 2008 Sydney Local Meeting - 5 November 2007

  49. Training and Certification • Recent member focus on training and certification of industry staff members • Need better variety and quality of training courses on financial information topics • Industry would benefit from the creation of one or more market data credentials • Criteria for hiring and promotion • Staff development goals and opportunities Sydney Local Meeting - 5 November 2007

  50. Training and CertificationPotential FISD Roles • Leverage FISD’s role as a neutral player in industry • Facilitate delivery of training courses • Leverage FISD communication, logistic, and registration competencies • Course content and trainers are independent of FISD • Seek companies and individuals with interest and aptitude • Develop and administer qualification tests • Manage industry database of individuals’ credentials Sydney Local Meeting - 5 November 2007