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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
0
20000
40000
60000
80000
100000
Hit
s
CF
EQ
FI
FX
FIX Client Connectivity by Connection
0
50
100
150
200
250
Jan-
01
Feb-
01
Mar
-01
Apr
-01
May
-01
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Jul-0
1
DateTotal (Excl SAFE) SAFE FIXWEB ERs
FIXWEB OR VENDOR SOLUTION DIRECT ERs
DIRECT OR
0
10
20
30
40
50
60
70
1999 2000 20010
10000
20000
30000
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No. of systems in use directly by clientsRegistered Clients
FX E-Commerce Volumes
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1/3/
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7/3/
2001
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nts
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Tra
des
/day
Volumes TPTrader Idealer
Keylink TPOrders Fx2B
FI Client Sites Users per Week-- All Sites and CreditDelta --
0
100
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900
5/1
/00
7/1
/00
9/1
/00
11/1
/00
1/1
/01
3/1
/01
5/1
/01
7/1
/01
All
FI S
ite
s (e
xclu
din
g I
BO
L F
I H
om
e)
0
20
40
60
80
100
120
Cre
dit
De
lta
All SitesCreditDelta
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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
50.0
100.0
150.0
200.0
250.0
300.0
1998 Act 1999 Act 2000 RTB Act 2001 RTB FC2002 RTB Plan
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
Direct Costs LOB Servers Equipment in LOB Cost per SpecInt
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Out-sourced E-mail
September 24.XLS*Page 11?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
-
5,000
10,000
15,000
20,000
25,000
30,000
1999 2000 2001 2002
0
1020
3040
5060
7080
90
E-Mail Users Total Costs in '000 Cost Per user/Month
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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.
0500
1,0001,5002,0002,5003,0003,500
Dec'99 Dec'00 Mar'01 Jun'01 Sep'01 Dec'01(Est)
Mar'02(Est)
Jun'02(Est)
Sep'02(Est)
Dec'02(Est)
Cap
acity
(Gig
abit/
Sec
)
0.020.040.060.080.0100.0120.0140.0
Do
llars
('00
0) p
er D
S-3
Eq
uiv
alen
t
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
$55.5$52.5
$35.2
$15.4
$7.9
$18.8
$0.0
$0.0
$6.5
$0.0
$0.0
$0.0
$10.3 $15.6
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
1999 2000 2001 2002
US
$ In
M
illio
ns
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
No Consolidation
Amortization
Swiss SLA's
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
AggregatesTrade Valuation, Revaluation
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
AggregatesTrade Valuation, Revaluation
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
AggregatesTrade Valuation, Revaluation
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