Abcd Current Uses of Computers in UK Business and Industry Presentation to the Computer Sciences...

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Current Uses of Computers in UK Business and IndustryPresentation to the Computer Sciences Course, University of Warwick by Simon WalkdenExecutive Director, Information TechnologyUBS Warburg

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Who Are UBS Warburg? UBS Warburg (www.ubswarburg.com) is the global investment

banking, securities and wealth management business of UBS AG, one of the largest financial services organisations in the world. UBS Warburg specialises in delivering market-leading advisory, research, distribution and transaction execution services to corporate, institutional and private clients globally.

UBS Warburg meets its clients' needs through six leading business areas: corporate finance; equities; fixed income; private banking; private equity (through UBS Capital); treasury products.

Well known for technical innovation, UBS Warburg's initiatives in connectivity, straight through processing and real time delivery include individualised online research, advisory and transaction services for institutional and private clients. In January 2000, UBS Warburg were joint lead managers on the first ever bond to be marketed and subscribed via the internet, using their DebtWeb facility, one of a suite of e-commerce sites developed entirely in-house.

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http://www.ubswarburg.com

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http://www.ubswarburg.com

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Investment Bank On Line

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Demand for Client Connectivity is Growing

Composite Page Hits

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Raw Statistics

18,000 Full-Time Equivalent Employees

25,000 People engaged in an employment type relationship

50 Countries— 23 Europe, Middle East and Africa— 13 Asia Pacific— 14 The Americas

Headquarters is in London – 6,000 FTEs

Parent Bank is in Switzerland

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Immediate Implications for IT

We have our own world-wide network

Require an international language standard desktop, principally European but also Asian Languages

Electronic mail, IRC ‘chat’ and video communications over the network

— OpenMail, Interchange, Avistar

Integration with travel services!

IT must service remote working

Core systems have to be multi-currency, multi-legal entity and sometimes multi-lingual (though the Bank’s standard is English)

Global focus

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Managing the “IT Factory”

5,000 technologists

891,000 help desk calls

7,000 market data users

227 sites supported

3,000 major releases per year

41,500 client server devices

60,000 ports

2,000 hubs

400 routers

5,500 UNIX servers

1,800 NT servers

1,300 MIPS

Availability management

Monitoring and reporting

Full unit pricing

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Distributed Computing Costs

Trends.xls*Trends?Chart 15

SpecInt=Unix MIP

In 2001 SCM Programme saved US$15.2mm in capital spend and depreciation

US$ mm 1999 2000 2001 2002 2003Capital Spend 66.2 62.2 49.0 44.0 39.0 Depreciation N/a 84.0 76.2 55.7 49.0

98.8

136.7161.7

174.5

140.8

49.2

96.8

96.8

92.045.0

48.049.2

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100.0

150.0

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120.0

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Direct Costs LOB Servers Equipment in LOB Cost per SpecInt

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Out-sourced E-mail

September 24.XLS*?Chart 1

RTB costs will decrease from US$20mm in ‘99 to US$5.5mm in 2002 (for like for like services)

A pilot Exchange 2000 infra has been installed and we are planning to complete the full migration by the end of Q1 2002

Outsourcing arrangement is based on a unit cost with a downward sliding scale for additional volume as our demand increases

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UBSW Network Costs versus Bandwidth

Cost / Bandwidth ratio is decreasing about 5% per month. Increasing demand for bandwidth due to applications with larger

appetite for bandwidth plus migration of traffic from traditional carriers to internal network.

Increased use of voice/data with UBSWNet saves additional money compared to traditional carriers, bandwidth efficiently shared.

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1,0001,5002,0002,5003,0003,500

Dec'99 Dec'00 Mar'01 Jun'01 Sep'01 Dec'01(Est)

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UBSNet Capacity in '000 Leased Line in '000 USD Dollars ('000) per DS-3 Equivalent

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IBM Mainframes Consolidation‘Drastically cuts total and unit costs while...

...migrated to world class technology’

1000 MIPS Peak Utilization

Old Technology in 4 Locations:London, Stamford, Singapore, Frankfurt

Questionable Disaster Recovery

2000 MIPS Peak Utilization

World Class Technology and Performance: IBM’s Z-900 Processors, EMC’s 8700 Series Storage

Solid Disaster Recovery

1999 2002

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Data Center Costs Actual

Gross Cost/MIP No Consolidation

Gross Cost/MIP Actual Case

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The Last Decade of UBS Warburg

Swiss BankCorporation

O’ConnorAssociates

Swiss BankCorporationSwiss BankCorporation

SBCWarburg

SGWarburg

Dillon Read

SBC WarburgDillon Read

UBSWarburg

Union Bankof Switzerland

PaineWebber

1993

1995

1997

1998

2000

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The Implication of History on Computing

IT Solutions can be amongst the reasons for acquisition (e.g. O’Connor)

You get to do a lot of systems integration work!

Learn your end to end business processes and decide your solutions on that fit - otherwise the systems integration gets horrendous.

You have to have all embracing technical standards, because somebody you acquire will have brought the technology in.

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The Business Constituents

Equities, e.g.— Securities (Stocks): Ordinary

Shares, Preference Shares— Convertible Bonds— Derivatives: Options, Warrants,

…— … and Research

Fixed Income, e.g.— Government Bonds— Corporate Bonds— Interest Rate Swaps ...

Treasury Products, e.g.— Foreign Exchange— FX Options— Overnight Money Markets ...

Corporate Finance— Mergers and Acquisitions— Initial Public Offerings (IPOs)— Leveraged Finance…

Private Equity— Venture Capital

Private Banking— Wealthy Individuals

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Corporate Finance and Private Equity

The impact of the Internet has altered the relationship between the IT Department and these Business Units

Supplier (Conventional)— supply a system that list major shareholders in UK listed

companies

Partner (New Opportunities)— sell the application as a hosted service to listed companies in the

UK— create internet application for online application for new issues

Advisor (New Economy)— due diligence technology reviews on companies in which we

invest capital and private equity— give leads on small technology companies who are considering

flotation (IPO)

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IRIS Application - Screen Shot One

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IRIS Application - Screen Shot Two

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IRIS System - Client-Server

PC

iris_security

iris_login

iris_p2

PC

1

2

3

1

2

3

Firewa ll

E xterna l In terna l

ln4p641syb

1. Log into iris_login server tovalidate user is allowed to

connect

2. Log into iris_security to getIR IS login nam e and password

3. Log into iris_p2 using thelogin nam e and password from 2

Disconnect

D isconnect

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DealKey - Internet Application

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Investment Bank On Line

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DealKey - the Deal Board

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DealKey - Internal Sales Function

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DealKey - Specific Offering

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DealKey - Online Application for New Issue

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Equities, Fixed Income and Treasury Products

Equities, Fixed Income and Treasury Products is execution business, rather than advisory business (cf Corporate Finance)

The execution is an extended process from the order, through execution, through settlement, to booking

Overriding requirement is to manage risk, as risk is where the Bank’s profits are made or lost

Specialised business systems, working ‘straight through’.

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Straight Through Process

Sales and

Order Systems

Risk Management

Systems

Settlement

Systems

Risk Control

Systems

Financial Control

Systems

Trades

AggregatesTrade Valuation, Revaluation

Trades

Settlements

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Risk Systems

Sales and

Order Systems

Risk Management

Systems

Settlement

Systems

Risk Control

Systems

Financial Control

Systems

Trades


Trades

Settlements

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Risk Management

The price of shares can go down as well as up!

In the course of servicing customers dealing in Stock, Bond and Money markets, UBS Warburg holds stocks of these products

Risk management goes through, asset by asset, the impact of market fluctuations

— market movement calculations can be complex for synthetic and derivative products

— profits and losses arising from market daily movements are booked in the company accounts

— impact of market movements and trends in exposure are reviewed to influence proprietary trading activity

— balancing trades in the derivatives markets are made to hedge or offset risk

Micro-level management of risk

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Risk Control

Macro-level management of risk

Alignment of the investment bank’s capital and policies to the overall risk profile

It monitors— market risk— counterparty risk— country risk— settlement risk— operational risk

May introduce policy, e.g. limit trading over Year 2000 or in a specific developing country with internal monetary problems

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Risk Systems

Risk systems are therefore based on:— internal position keeping element— market price feed— mathematical models— reporting solution

These are normally implemented on Sun Solaris servers.— Models are highly specific to products, therefore the applications

become distributed by product. Those models are set up on compute servers written in c or c++.

— Companies such as Reuters and Bloomberg have traditional market pricing services based on Unix and IP communications

— Sybase DBMS is used for position keeping on the database server— The Unix comms server, compute server and database server

work together to provide the risk system.— Windows client is used to look up results on the database server

in a traditional client-server arrangement

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Settlement Systems

Sales and

Order Systems

Risk Management

Systems

Settlement

Systems

Risk Control

Systems

Financial Control

Systems

Trades


Trades

Settlements

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Settlement Systems

Record Trades

Authoritative Statement of Settled and Unsettled Trades

Trade Confirmation and Dispute Handling

Settlement and Fails

Handles Cash Flows through the Product Lifecycle— Dividends on Shares— Other Corporate Actions— Interest Payments on Bonds or Swaps— etc

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Settlement Systems

Transaction-oriented functionality today

Typically mainframe based - CICS and DB/2 preferred

Moving to workflow orientation

Retaining mainframe orientation based on MQ series infrastructure and emerging products from IBM

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Custody and Collateral

Stocks, Bonds and Cash may all be used for collateral purposes

Custody of customers’ stocks, bonds and cash may also be used as collateral

Each may be leant to short-term borrowers for a fee— Overnight money market— Stocks for ‘short’ deals

These systems lag behind in the globalisation of the investment bank’s processes and there is little consistency in the technology or applications used

As this is being addressed, new applications are employing Java 2 Enterprise Environment framework

— Enterprise Java Beans for positions, lending offers and borrow requests

— Rendering through JSP and servlets

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Financial Systems

Here we move into the back office world

Looking to purchase commercial products to fulfil business need

Enterprise Resource Planning (ERP) software dominates

Users of SAP software— SAP R/3 for financial accounting and management accounting— SAP R/3 for inventory management— SAP R/3 for projects, time recording and internal billing

In 1997, investment bank had 42 different general ledger systems doing financial accounting and management. We have replaced 39 of these with a single instance global general ledger based on SAP R/3.

Approximately 130 Business Systems Feed the General Ledger

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Financial Systems

Sales and

Order Systems

Risk Management

Systems

Settlement

Systems

Risk Control

Systems

Financial Control

Systems

Trades


Trades

Settlements

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Global General Ledger System

Rules Engine

(Ac Posting Generator)

Interface System

(Ac Allocation/

Suspension)

Ledger

(Balance Sheets &

Profit Centres)

Warehouse

(Regulatory Reporting)

Accounting Entries

Accounting EntriesBusiness Events

Accounting Postings

Static

Data

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Global General Ledger System

Interface System - built in house; Solaris and Sybase

Rules Engine - from OST Business Rules with UBS sponsorship; Unix and various DBMS and middleware adapters

SAP R/3 - from SAP AG; Sun Solaris multi-domain Enterprise 10000 and Oracle DBMS

Warehouse - co-developed with PriceWaterhouse Coopers; Sun Solaris E10000

Availability Requirement— Regulatory Reports must be submitted monthly in most countries

and daily in the United States— Daily Business Unit Balance Sheets required— 4 Terrabytes Data

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Technical Infrastructure for Stored Data

SAPDB

SB0 SB1 SB2 SB3 SB4 SB5 SB6 SB7 SB9 SB10

SB11

SB12

SB13

SB14

SB15

SAPApp 1

Sun E10,000

Data W arehouse

SB8

SAPApp 2

In terfSystem

Free

P rim ary S ite - C entra l London

Disaster Recovery Architecture

R ecovery S ite - D ocklands

DarkD ark F ibre L inks

4TB Redundant S torage

4TB Redundant S torage

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Questions and Answers

Current Uses of Computers in UK Business and Industry

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Abcd Current Uses of Computers in UK Business and Industry Presentation to the Computer Sciences...

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