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Optimising Securities Processing Performance : 

Optimising Securities Processing Performance Software Daten Service GmbHRennweg 97-991030 Vienna, Austriawww.geos.biz+43 1 24056 5400

Contents : 

Contents Section Description Page 2 7 - 8 SDS company profile 1 1 - 6 3 9 - 20 TDW potential requirements 4 21 - 23 Conclusion and next steps 5 24 - 27 Section Industry challenges and drivers GEOS capabilities Appendix – Credentials/ 6 28 - 7

Software Daten Service: a subsidiary of T-Systems, specialising in the development of securities processing software. Its flagship product, GEOS, has achieved considerable pan European market success : 

Software Daten Service: a subsidiary of T-Systems, specialising in the development of securities processing software. Its flagship product, GEOS, has achieved considerable pan European market success Legal entity:Software Daten Service GmbH (SDS) Founded 1974 Subsidiary of T-Systems Enterprise Services GmbH since July 2004 Located in Vienna, Austria 238 employees / 219 FTE (YE 2007) Revenue: 23,2 M EUR (2007) Management: Helmut Saueregger (CEO) Christian Cvach (CFO) Franz Grohs (International) Client segments: retail banks private banks internet brokers transaction banks Core Local AddOn

GEOS Timeline: GEOS has developed through a number of European implementations into market leading product. After assessing market conditions and internal capabilities for a BPO offering, SDS have now focused purely on providing licensed software to market incumbents : 

GEOS Timeline: GEOS has developed through a number of European implementations into market leading product. After assessing market conditions and internal capabilities for a BPO offering, SDS have now focused purely on providing licensed software to market incumbents Core Local AddOn 1992 Initial Contract Austria Customer Acceptance 1st Client Germany 1st Production Austria 1st Client Switzerland 1st Production Germany 1st Client Ireland 1st Production Switzerland 1st Production Ireland Transaction- based model ITS founded 1997 1998 2001 2002 2003 T – Systems BPO model 2005 2006 2007 2004 1st Client Luxembourg 2008 Software licencing model taken to market

GEOS Customers: Pan European client base has grown steadily, building on the origins in the Austrian and German markets : 

GEOS Customers: Pan European client base has grown steadily, building on the origins in the Austrian and German markets Core Local AddOn

Proud of it’s reputation for exceptional service quality, cost efficiency and flexibility, GEOS…. : 

Proud of it’s reputation for exceptional service quality, cost efficiency and flexibility, GEOS…. ... is a processing system for securities and standardised derivatives ... is the solution designed to meet the current and future needs of banks and financial services providers ... can be used in various implementation scenarios - from improving specific functions within the full transaction life cycle process, to being used as a robust back office application … is highly flexible to adding new markets, products and clients Core Local AddOn

Contents : 

Contents Section Description Page 2 SDS company profile 1 3 TDW potential requirements 4 Conclusion and next steps 5 Section Industry challenges and drivers GEOS capabilities Appendix – Credentials/ 6 7

UK Securities Market Landscape; The UK is an evolving market where costs, customer demands and Banks internationalisation requirements are changing the dynamics of securities processing industry : 

UK Securities Market Landscape; The UK is an evolving market where costs, customer demands and Banks internationalisation requirements are changing the dynamics of securities processing industry Volume of transactions is increasing, despite the fall in actual values The growth in online, execution only, dealing is flattening fee structures and driving down revenues and profit margins Sector consolidation in the market through joint ventures and acquisitions is expected to re-shape the market as cost and complexity of maintaining legacy systems increases There is a growing demand from customers for an increasingly diverse range products and associated support such as information and products from different geographies On-line customers are demanding more sophisticated services such as XXXXXXXX Standardisation of processes between geographies is driving Banks requirements for internationally compatible solutions Core Local AddOn

Key Challenges being faced : 

Key Challenges being faced Higher volumes increase demands on infrastructure Likely impact on the contact centre increase customer complaints Possible increase in error rates raised operational risk exposure Core Local AddOn Supporting clients increasing needs Continuous availability Consolidation of reporting Reduction in database processing Providing technical solution for differing levels of clients Cost of maintenance Development of heritage systems Scalability Clients more varied in their investment needs Executing in domestic and overseas markets Standardized derivatives as well as equities Diverse legal requirements WG wants replace the wording on 2nd point

Contents : 

Contents Section Description Page 2 SDS company profile 1 3 TDW potential requirements 4 Conclusion and next steps 5 Section Industry challenges and drivers GEOS capabilities Appendix – Credentials/ 6 7

GEOS the solution : 

GEOS the solution Automation Securities processing based on Straight Through Processing Integrated exception handling Communications interface efficiency Core Local AddOn Scalability For small specialist banks to large transaction bank, Consolidation of reporting Efficient Cash management Elimination of overnight batch processing Flexibility Modular architecture is compatible for all environments. Very configurable Adaptable for both model A and B clients. Agile and granular, so ideal for tailoring back office services Efficiency Immediate economies of scale Multi currency, multi entity single platform capability Standardisation of domestic and overseas business operations

GEOS software as business enabler (1)Straight Through Processing of securities based on automation and exception handling : 

Automation Efficiency Scalability Flexibility STP as a basic design element across all areas of securities processing Fully automated processes within a legal entity and for market participants, thus increasing security and efficiency Integrated exception handling automatically identifies and helps to resolve exceptions Communication to the outside world based primarily on SWIFT or FIX-interfaces and supports STP for order routing and trade processing GEOS software as business enabler (1)Straight Through Processing of securities based on automation and exception handling Automation is made possible: workflow model reference data data feeds Core Local AddOn Industry Recognised Solutions

GEOS software as business enabler (2) Economies of scale through handling multiple legal entities within a single installation : 

Automation Efficiency Scalability Flexibility Multiple legal entity capability guaranteed through separation of data - firewalls protect sensitive customer data of different legal entities system parameterization at legal entity level Servicing agent for operation of a central back office Top level authorisation to work on behalf of all legal entities Economies of scale through increased transaction volumes Allows cross-border back office operations Shared Service Centres and Outsourcing Providers can provide: High-quality financial instruments master data Back office services Market access (brokerage) GEOS clients can offer each other brokerage and custody services GEOS software as business enabler (2) Economies of scale through handling multiple legal entities within a single installation Core Local AddOn

GEOS software as business enabler (3) From small specialist banks to large transaction banks : 

GEOS software as business enabler (3) From small specialist banks to large transaction banks Automation Efficiency Scalability Flexibility Unlimited transaction volume Three times the transactional volume requires less than 1.5 times Greater cost-effectiveness unit costs drop while transaction volumes rise GEOS supports multiple scenarios of in-and outsourcing and shared services. Banks on the same implementation can run highly efficient business relationships like back office services custody and brokerage services Flexible extensibility through use of parallel architecture Core Local AddOn Scalability statistics

GEOS software as business enabler (4) GEOS Core, Local, AddOn offer flexibility and compatibility : 

GEOS software as business enabler (4) GEOS Core, Local, AddOn offer flexibility and compatibility Automation Efficiency Scalability Flexibility Component based architecture gives flexibility to tailoring solutions: GEOS Core: Position keeping, CA, trading and settlement. GEOS Local: Country-specific, e.g. tax, regulatory reporting GEOS Add On: Optional modules, e.g. order mgmt, reconciliation. Implementation partners can quickly configure the GEOS local and GEOS Add On layers to meet client requirements for any location Some compatible vendor independent infrastructures GEOS has worked with: IBM mainframe, HP, Sun, zOS, LINUX, Solaris Services and business relationships can easily be changed, giving the banks a high flexibility to adapt to future business needs. Back office services on behalf of the client bank (“Model A”) in the name of the service provider (“Model B”, Custody) The client bank can define on a granular level which activities are outsourced, and which are retained in-house. Core Local AddOn

System environmentGEOS at the heart of your operation, generating efficiency, promoting connectivity. : 

System environmentGEOS at the heart of your operation, generating efficiency, promoting connectivity. Market Side Securities Master Data Providers Front Office Core Banking Applications Core Local AddOn Order management and settlement Position keeping and corporate actions Supporting systems Fees and taxes/conditions Securities master data Exception Handling Authorisation profiles Parameterisation

GEOS Business Benefits; DAB Bank experience is typical of the impact that GEOS expertise can bring to your business…….. : 

GEOS Business Benefits; DAB Bank experience is typical of the impact that GEOS expertise can bring to your business…….. DAB Bank slashes transaction prices by up to 40 percent DAB Bank has been able to significantly reduce its transaction costs. As a result, its customers are benefiting from a drop in transaction prices of up to 40 percent. HSBC Trinkaus & Burkhardt uses GEOS, a cutting-edge securities processing software solution. Jens Hagemann, member of the management board of DAB Bank, applauds the system's outstanding price-performance ratio, particularly when handling orders of up to EUR 1,500. His aim is to acquire 10,000 new customers by the end of the year, at the same time increasing the number of transactions by 2 percent. DAB Bank has been able to buck the current market trend, according to Hagemann, with balance-sheet figures for the third quarter already showing an upward trend. As of the third quarter, Germany's third largest online broker had a portfolio of around 459,500 securities accounts, with the number of transactions per securities account standing at 7.09.

Single shared service center for all domestic clients can service multiple local divisions From a centralised environment, all domestic entities can be serviced efficiently : 

Custodians Single shared service center for all domestic clients can service multiple local divisions From a centralised environment, all domestic entities can be serviced efficiently Back Office Service Centre Div1 CREST Custodians Custodians Back Office as Service Client Institution Div2 Div3 A centralised back office offers services to multiple divisions Individual offerings e.g. brokerage and custody services, can be prepared for their clients All divisions share the same GEOS platform All entities share a single platform of GEOS Model B relationships are easily accommodated

Single shared service center for domestic and overseas entities A centralised environment, can operate to support entitiesat home and abroad : 

Custodians Single shared service center for domestic and overseas entities A centralised environment, can operate to support entitiesat home and abroad Back Office Service Centre overseas Div1 Div1 CSD CREST Custodians Custodians Back Office as Service centre to domestic and overseas divisions Div2 Div3 TDW back office offers services to multiple domestic and overseas entities TDW offers brokerage and custody services to their clients Clients may use their own market access and custody network and/or use TDW as broker and/or custodian

Slide 20: 

Local market characteristics CREST and LSE Stamp Duty creates a large overhead for Operations departments of UK brokers with considerable reconciliation issues and Inland Revenue obligations Registration requirements shares are registered, whether held by nominee or the individual Special purpose tax vehicles, PEPs, ISAs, SIPPs require special regulatory and fiscal administration Requirement to handle a significant number of physical certificates in paper form as many investors still “like to have” paper certificates Broad requirement for more sophisticated services for on-line traders – e.g. CFDs, margin accounts, limit orders Custodians Single shared service centre for domestic and overseas entities. Accommodating both model A and model B relationships Bank Back Office as Service Client Overseas branch Div 1 CSD CREST Custodians Custodians Bank Back Office as Service Client Institution Div2 others Custodians Custodians Custodians Custodians Overseas Other Single serviceTDW back office offers services to multiple entities Other ‘white label’ relationships can be segregated and run through the same platform Clients use their own market access and custody network and/or use TDW as broker and/or custodian All entities share a single platform of GEOS

Slide 21: 

At the heart of development GEOS will tailor its technology to meet client requirements to meet the UK market Specific market challenges including: regarding CSD I.e CREST and LSE any fiscal administrative issue Special purpose tax vehicles PEPS, ISAs, SIPPs Physical delivery of share certs Stamp Duty Reserve Tax considerations Broader requirement for more sophisticated services for on-line traders CFDs, margin accounts, limit orders GEOS / Capco will leverage extensive market experience and knowledge in defining the solution GEOS Development; Whilst GEOS is a highly flexible solution, development would be required to meet the requirement of the UK market Local market characteristics CREST and LSE Stamp Duty creates a large overhead for Operations departments of UK brokers with considerable reconciliation issues and Inland Revenue obligations Registration requirements shares are registered, whether held by nominee or the individual Special purpose tax vehicles, PEPs, ISAs, SIPPs require special regulatory and fiscal administration Requirement to handle a significant number of physical certificates in paper form as many investors still “like to have” paper certificates Broad requirement for more sophisticated services for on-line traders – e.g. CFDs, margin accounts, limit orders

Slide 22: 

UniCredit Bank Austria (BA) planned to provide securities services to its Romanian subsidiary, Unicredit Tiriac Bank In a first step, BA intended to introduce own products (funds) to the Romanian market BA decided to use GEOS as a single platform for cross border services BA subsequently planed to establish a Romanian client institution, which would use BA in Vienna as a counterparty and custodian Live date is scheduled for December 2008, after a project run time of 4 months For the initial phase, no change to GEOS is necessary – it is able to handle planned transactions For a later phase, three minor changes are planned – which will be delivered within the 4 month timeframe Adaptation of the GEOS-based platform to the requirements of Tiriac Bank will be done by Wave-IT (Bank Austria’s IT subsidiary) Internationalistion Case Study – UniCredit Bank Austria in Romania; GEOS in the Romanian market demonstrate the capability required for the UK market

Contents : 

Contents Section Description Page 2 SDS company profile 1 3 TDW potential requirements 4 Conclusion and next steps 5 Section Industry challenges and drivers GEOS capabilities Appendix – Credentials/ 6 7

Core / Local / Add On : 

Core / Local / Add On Conceptual TDW Business Objectives: Although currently unsubstantiated, our perception of the evolving TDW business objectives is that there will be potentially significant operational impacts Business Objectives Increased volumes; Organic and white labelled channel growth Acquisition of new direct customers Acquisition of new client banks – potentially doubling volumes Reduced costs; Reduce like for like cost per trade – direct (operational costs) and indirect (e.g. error rates) Reduce Technology maintenance spend – freeing up more for enhancements Meet changing client expectations: Require the provision of products from a greater range of markets Greater product range – to include more sophisticated products / new geographies Delivering faster, more accurate trades Expand into international markets: Flexible platforms capable of operating in multiple markets and geographies Rapid, cost effective delivery / implementation and ongoing cost management Operational Impact Increase volumes; Impact on current processing capability – delivering against agrees SLA’s Knock-on impact of volumes on support functions – e.g. call centre volumes, error handling, risk department Handling multi entity clients Reduce costs; Limited / no systems development budget leading to un-met customer demand Reduced service standards / delivery capability Meet changing client expectations: Investment required in a long term unsustainable / unsuitable heritage platform Increased pressure on support functions – e.g. risk management Changing servicing needs for new products Expand into international markets: Development of existing platform for new markets and geographies Changing custodial requirements Creating overseas platform for localised trading

Core / Local / Add On : 

Core / Local / Add On Addressing Operational Impacts: GEOS has a proven capability and delivery track record to minimise operational impacts both in the current and future markets. GEOS capability match Increased volumes; Multi entity compatible with limitless processing capability Exceptionally high STP rates Able to cope with rapid processing volume growth Reduced costs; Fully serviced software No development budget requirments Excellent service delivery and systems availability Meet changing client expectations: Flexible software which can be deployed to suit different environments Programme of continual software development in place Expand into international markets: Multiple geographies already covered – with proven capability to quickly deploy in others Provides core hub to multi national entities Operational Impact Increase volumes; Impact on current processing capability – delivering against agrees SLA’s Knock-on impact of volumes on support functions – e.g. call centre volumes, error handling, risk department Handling multi entity clients Reduce costs; Limited / no systems development budget leading to un-met customer demand Reduced service standards / delivery capability Meet changing client expectations: Investment required in a long term unsustainable / unsuitable heritage platform Increased pressure on support functions – e.g. risk management Changing servicing needs for new products Expand into international markets: Development of existing platform for new markets and geographies Changing custodial requirements Creating environments for localised trading from overseas

Contents : 

Contents Section Description Page 2 SDS company profile 1 3 TDW potential requirements 4 Conclusion and next steps 5 Section Industry challenges and drivers GEOS capabilities Appendix – Credentials/ 6 7

Core / Local / Add On : 

Core / Local / Add On Delivery mechanism Represents an opportunity to create an industry leading presence supported by industry acclaimed technology GEOS Technology platform that is best of bread to meet your company objectives, help enhance your operational capability, and give you scalability, flexibility and cost efficiency Capco Capco’s proven expertise in implementation of financial service applications; bringing industry knowledge and innovative solutions to meet your challenges TDW Reducing unit costs to realize efficiency and productivity gains, enabling them to increase their competitive edge and advance the consolidation of its marketplace

Core / Local / Add On : 

Core / Local / Add On Subject to identifying shared business goals, instigate an initial feasibility study to create an outline business proposal Instigate a 2 weeks study with the purpose of developing an outline business case for the deployment of a GEOS platform to support TDW business objectives. The study should identify and highlight the business and technical fit as well as the advantages of deploying a GEOS based software platform. The study should staffed by representatives from TDW, SDS and Capco. Key steps are to include; Understanding and confirming anticipated TDW Business Requirements Mapping future business requirements against existing technical and operational infrastructure Identifying and confirming potential business and financial benefits of a GEOS solution And, subject to initial outputs, develop; An understanding of technical requirements and fit high level implementation proposal and plan business case opportunity The output will be a documented high level business case identifying business fit, outline implementation plans and headline financial and business benefits. Next Steps

Core / Local / Add On : 

Core / Local / Add On Conclusion – key reason why GEOS The highest levels of automation and flexibility combine to provide an efficient route to meet your the scale for business’s objectives Proved capability – in multiple markets Demonstrable financial and business benefits Unlimited volume – high volume and fully scaleable to accommodate rapid expansion Fully automated High STP – positive impact on operational support Full functional – with optional modules to meet client requirements. Multi legal entity International Flexible solution Simple transparent pricing structure

Conceptual ApproachPhase 1 instigate an initial feasibility study to create an outline business proposal : 

Conceptual ApproachPhase 1 instigate an initial feasibility study to create an outline business proposal Week 2 Confirming potential business benefits of a GEOS solution Identifying potential financial benefits of a GEOS solution Feedback to the Board key findings from the business proposal opportunity Identify mapping for new model against existing technical and operational infrastructure Outline of TDW business proposal and the benefits of GEOS solution Existing model architecture Key actions Outputs Week 3 Identify required project resources and confirm availability high level implementation proposal and plan Refine business proposal based on Board members’ feedback Presentation of business proposal to the Board High level business case identifying business fit, outline implementation plans headline financial and business benefits. Identify key stakeholders that are required for workshop Run workshop with key stakeholders Understanding and confirming anticipated TDW Business Requirements Interviews to understand technical requirements and fit Week 1 Board commitment of stakeholder availability Review of the workshop for validation by attendees

Contents : 

Contents Section Description Page 2 SDS company profile 1 3 TDW potential requirements 4 Conclusion and next steps 5 Section Industry challenges and drivers GEOS capabilities Appendix – Credentials/ 6 7

Order management and settlement - highlights : 

Order management and settlement - highlights Import, generation and validation of securities orders Fully automated, rule-based order routing Types of orders: Trade orders (units and equivalent value) Delivery instructions Exercise / exchange / subscription / call Securities lending and repo OTC trading / fixed-price contracts Execution matching and trade generation Generation of cash transaction records and posting of client and market side Automatic generation of delivery instructions based on standing instructions Generation of settlement chains Core Local AddOn

Position keeping - highlights : 

Position keeping - highlights Real-time position keeping Client holdings, own holdings and custodian positions Handling of different target date types (trade date, contractual and actual settlement date,..) Online available balance Customisable display options Valuation using current prices Book cost, realised and unrealised profit/loss Collateral value Unlimited transaction history Claims and liabilities for repo and lending Core Local AddOn

Corporate actions - highlights : 

Corporate actions - highlights Highly automated corporate action processing based on Event data Predefined processing steps Customer-specific instructions with the option of manual intervention if necessary Central processing (for multiple legal entities) with automatic Execution of processing steps Automatic monitoring of delayed transactions for CAs Processing of custodian credits Internal and external reconciliation, incl. display of differences Core Local AddOn

Supporting systems : 

Supporting systems Securites master data (incl. corporate actions) Single master data base across multiple markets and geographies Cash transaction records: Rule-based, table-driven and customisable engine for conditions and the calculation of fees, taxes, interest etc. Posting logic for general and subsidiary ledger GEOSExplain: step-by-step trace log of rules and values Integrated exception handling: Single central point of control for all exceptions Role-based assignment of exeptions Direct access to relevant objects Core Local AddOn

GEOS core / local / add-on separation : 

GEOS GEOS core / local / add-on separation

Domestic client and for 3rd party relationships : 

Custodians Domestic client and for 3rd party relationships Bank Bank Office CREST Custodians Custodians Back Office as Service Client Institution Other bank1 Custodians Custodians TDW back office offers services to multiple entities TDW offers brokerage and custody services to their clients Clients may use their own market access and custody network and/or use TDW as broker and/or custodian All entities share a single platform of GEOS Div1 Other bank2 Requires work

Domestic, overseas clients and for 3rd party relationships : 

Custodians Domestic, overseas clients and for 3rd party relationships Bank Bank Office CREST Custodians Custodians Back Office as Service Client Institution Other bank1 Custodians Custodians TDW back office offers services to multiple entities TDW offers brokerage and custody services to their clients Clients use their own market access and custody network and/or use TDW as broker and/or custodian All entities share a single platform of GEOS Div1 Other bank2 overseas Div1 CSD Custodians Custodians Requires work