Learn what the Dodd-Frank real-time reporting requirements mean for you and how to ensure you're compliant.

1. Dodd Frank Real Time Reporting
A.J. Aronoff - Connectivity Practice Director, Prolifics
Mike McChesney - Websphere Business Agility Tiger Team
WebSphere Powers
Smarter Banking

2. Building a Smarter Planet: Banking & Financial Markets
Business Agility in Banking
Dodd Frank Real Time Reporting
Mike McChesney
Websphere Business Agility Tiger Team
WebSphere Powers
Smarter Banking
© 2013 IBM Corporation

3. Business Agility for Smarter Banking
Agenda
1
Real Time Reporting Update
2 Case Studies
3
© 2013 IBM Corporation WebSphere Powers Smarter Banking 3 3

4. Business Agility for Smarter Banking
Top of mind risk and compliance business issues
What’s keeping executives up at night?
• Aligning risk exposure with • Risk adjusted forecasting • Reducing risk exposure • Ensuring regulatory
business objectives and risk-based resource • Ensuring regulatory compliance
• Risk management across allocation compliance • Managing through
market, credit, operational • Better financial risk • Reducing control testing regulatory change
domains management (e.g. market, and internal audit burden • Managing regulatory
• Ensuring adequate regulatory credit, liquidity, stress • Reporting on risk exams, audits and
and economic capital and testing) exposure against business requests (e.g. FFIEC)
liquidity • Regulatory requirements objectives and IT KRIs • Reducing cost for
• Quantifying risk exposure • Financial reporting (e.g. • Preparing for internal and policy and control
• Avoiding unexpected loss SOX, IFRS, FSA) external audits and RCSAs management
• Establishing risk appetite • Fulfilling compliance • Business continuity risk • Adherence to policy
• Risk Culture and Policy obligations (e.g. BSA/AML, • Vendor Risk and procedures
Communication SEC, FINRA, Dodd-Frank)
CRO CFO CIO/CISO CCO
© 2013 IBM Corporation WebSphere Powers Smarter Banking 4

5. Business Agility for Smarter Banking
Challenges In Planning for Compliance
What’s Keeping Your Peers Up at Night?
 Macro-Prudential Risk Regulations such as DFA are Enormously
Disruptive
– Impacting capital allocation & business / operating model
– Inherently rolling nature from Act to statutory code
 Even where firms have PMOs to demonstrate attainment and maintenance
of compliance, they wrestle with
– Collective decision making and consensus building amongst the
stakeholders
– Decisions are point in time and recursive
 Firms are struggling with truly understanding the economic and financial
impact AND are having challenges making it actionable
– McKinsey Day of Reckoning? ROE Capital markets businesses from
20% to 7%
 Impact on the business and the operating model
– Given the breadth of the enacting legislation, the related
management and reporting burdens and costs are significant.
– Demands on budgets are doubling, yet maintenance budgets are
being slashed.
– As compliance is pure cost, are there revenue-offset opportunities?
New regulations require a new model to achieving compliance.
© 2013 IBM Corporation WebSphere Powers Smarter Banking 5

6. Business Agility for Smarter Banking
Innovative firms can drive significant strategic benefits by
capitalizing on the magnitude of the required investment
Followers Innovators
Achieve “Basic Dodd-Frank Achieve “Strategic Value”
Compliance”
Strategic
Strategic business
investment for value
business value Helps unlock the
strategic business
value
Required Government Required Government
investment for compliance & investment for compliance &
mandate cost savings mandate cost savings
Business Business
Investment Investment
value value
• Deploy minimal work-arounds and changes to • Identify and maximize opportunities to increase
comply with government mandates at the business value by using Dodd-Frank mandate
lowest possible cost as an opportunity to invest in innovation for cost
savings and growth
© 2013 IBM Corporation WebSphere Powers Smarter Banking 6

7. Business Agility for Smarter Banking
Dodd Frank Uncertainty Continues
Source: Davis Polk Regulatory Tracker
© 2013 IBM Corporation WebSphere Powers Smarter Banking 7

8. Business Agility for Smarter Banking
SEC Rulemaking for Real Time Reporting Not Finalized
From DavisDavis Polk Regulatory Tracker
Source: Polk Regulatory Tracker
© 2013 IBM Corporation WebSphere Powers Smarter Banking 8

9. Business Agility for Smarter Banking
Complex Compliance Challenges
 Dodd-Frank Act is 848 pages with 398 rulemaking requirements.
 Two 85 page rules for real time reporting from CFTC and SEC with hundreds of
comments from a wide array of interested parties.
 Phase in with 6 categories of time delay based on asset class, counterparty or
swap type.
 Time delay rule covers 7 pages.
 5 pages of rules on data definitions.
 Different thresholds and time delays required by CFTC and SEC.
 Need to track reportable events against time based or event based criteria.
 Real time reporting including time stamping to the second using UTC (vs.
Greenwich mean) coordinated universal time.
 What’s next?
Cre dit lines © 2013 IBM Corporation WebSphere Powers Smarter Banking 9 P
All a ss t cla ss s
e e
History All instr ume nt s Mark

10. Business Agility for Smarter Banking
Other Challenges (Complex Rules)
 Additional (50-100) data elements to be reported to the SEC.
 Oral or phone trades systematized based on time on phone when “material terms” agreed to.
 Pricing reporting challenges based on pricing definition-spread/basis points/discount or premium.
 Reporting “as soon as technologically practicable.”
 If a data field for a particular swap is a relevant term of the publicly reportable swap transaction,
the reporting party must provide sufficient information to publicly disseminate transaction and
pricing data.
 The Commission understands, further, that the SBS market is almost entirely institutional, and
large institutions have in place the systems and processes necessary to support trading and
risk management of complex structured products. In many cases, trade details will already be
systematized and little or no manual intervention would be necessary to aggregate or send
the transaction data. In such cases, where it is technologically practicable for a reporting party
to report the SBS transaction information required by proposed Rule 901(c) in one second, then
it would be required to report the SBS transaction to a registered SDR in one second.
 Would require the reporting party to electronically transmit the information required to be
reported… in a format as required by the registered SDR. In addition, …would require a registered
SDR to have policies and procedures that specify the data format (which must be an open-
source structured data format that is widely used by participants), connectivity
requirements, and other protocols for submitting information.
© 2013 IBM Corporation WebSphere Powers Smarter Banking 10

11. Business Agility for Smarter Banking
Agenda
1
Real Time Reporting Update
2 Case Studies
3
© 2013 IBM Corporation WebSphere Powers Smarter Banking 11
11

12. Business Agility for Smarter Banking
Depository Trust and Clearing Corporation (DTCC)
Keeping up with growth while keeping markets on firm ground
Business challenge:
“Our ability to expand capacity
The dominant provider of investment processing services in the U.S., DTCC sought
demonstrates our commitment to
to parlay its record of service innovation and cost leadership by expanding globally.
prepare for unprecedented growth
To meet the additional processing demands and new service development
requirements of these new markets, DTCC needed scalability, reliability and and other risk factors affecting the
flexibility in its processing platform. global marketplace. IBM's technology
and vision have been essential to our
Solution: success in doing this.”
DTCC teamed with IBM to re-architect its core processing infrastructure to enable it
— William B. Aimetti,
to push its already world-leading transaction capabilities even further to President and CEO, DTCC
accommodate DTCC’s global growth vision. By re-architecting its systems and
doubling its unmatched processing capabilities, DTCC has been able to enter new Solution components:
global markets while developing new services. IBM’s assistance in moving the  IBM Global Business Services
company toward SOA is a key part of DTCC’s drive toward increased flexibility.  IBM WebSphere® Application Server
 IBM WebSphere MQ
Benefits:
 IBM DB2®
 77% increase in overall transaction processing capacity, enabling TCC to handle
 IBM Tivoli® Composite Application
3x the highest volume ever recorded Manager
 100% rate of reliability, with $1.5 quadrillion in trades settled annually  IBM System z
 25% reduction in cost per transaction, giving DTCC the lowest cost per transaction
in the world
 Rebates of excess transaction fees of more than $580 million
© 2013 IBM Corporation WebSphere Powers Smarter Banking 12

13. Business Agility for Smarter Banking
An international financial firm
Employs real-time monitoring and pattern recognition to identify suspicious behavior
The need:
With many unique business units, each employing independent processes and Solution components:
standards, this international financial firm was plagued by inefficiencies. In particular,  IBM WebSphere® Application
the organization could not effectively coordinate its anti–money laundering and Server
anti–terrorist financing efforts enterprise wide. Some business units lacked any  IBM WebSphere MQ
viable plans at all. To comply with international regulations and standards, the
organization needed to establish a common strategy.  IBM System z9®
Enterprise Class
The solution:  IBM System z10™
Working closely with IBM Business Partner, the company implemented a unified Enterprise Class
monitoring solution that tracks global financial transactions in real time,
automatically detecting suspicious behavior. The solution, leveraging IBM
WebSphere® software and hosted on IBM System z® hardware, compares
incoming transactions against regularly updated sanctions and watch lists. It also
evaluates transactions for operational (e.g., credit) risks.
What makes it smarter:
 Monitors the transaction stream in real time, improving the efficiency and quality of anti–money laundering and
anti–terrorist financing efforts
 Standardizes and automates the identification of suspicious activity with deterministic detection and artificial
intelligence techniques
 Improves monitoring without compromising throughput, enabling the firm to screen over one million transactions per
day, with less than 0.5 percent false alerts
© 2013 IBM Corporation WebSphere Powers Smarter Banking 13

14. Business Agility for Smarter Banking
Top 5 North American Bank
Increases cross-selling results
through deep customer insight and automated decisioning
Dramatic increase in offer acceptance leads to $14M new revenue in 2.5 months
The need:
One of the largest financial services providers in the world recognized it was losing Solution components:
revenue opportunities within its customer base, as it was unable to present the  IBM WebSphere® Operational
right offer at the right time to customers. Decision Manager
Offers were sometimes proposed for which customers could not qualify, damaging  IBM WebSphere Application
customer satisfaction. Decision logic was scattered and inconsistent across Server
channels, creating a lack of enterprise control.  IBM WebSphere MQ
The solution:  IBM DB2®
Using components from the IBM Banking Industry Framework for customer care
and insight, the bank revamped its decision support systems to use customer profile
data and compliance policies to generate pre-approved offer recommendations of high interest to customers in real time.
The system calculates risk, distribution amount, eligibility and limits with consistency across channels and speeds
application upon offer acceptance.
What makes it smarter:
 Employees are equipped to make intelligent product recommendations in real time. Result: $14 million in
new business in 2.5 months.
 Customer experience is enhanced with pre-approved offers that better match needs. Result: Offer acceptance increased
from 3% to 20%-30%.
 Share of wallet is increased with improved risk management, and speed to market for new offers / products is increased
improving competitive results.
© 2013 IBM Corporation WebSphere Powers Smarter Banking 14

15. Business Agility for Smarter Banking
We Can Help
From the CFTC rule:
“As soon as technologically practicable” means as soon as possible, taking into consideration
the prevalence, implementation and use of technology by comparable market participants.”
The prevalence, implementation and use of technology by comparable market participants
can be delivered using an appropriate software stack from IBM.
 Real time-low latency
 High availability
 Complex rule and event processing across lines of business and platforms
Credit lines P
All asset classe s
History All instr uments Mark
Lendi© 2013 IBM Corporation
ng WebSphere Powers Smarter Banking ng
Tradi 15
Limits transactions transactions P

16. Business Agility for Smarter Banking
Thank you
© 2013 IBM Corporation WebSphere Powers Smarter Banking 16

17. Dodd Frank Real Time Reporting
A.J. Aronoff - Connectivity Practice Director, Prolifics
Mike McChesney - Websphere Business Agility Tiger Team
WebSphere Powers
Smarter Banking

18. Agenda
1. Risk And Compliance Issues
2. Keep Me in the Green
3. SPOF: Single Point of Failure
4. MQ Monitoring (Find problems & solutions)
5. MQ High Availability (no stranded messages)
18

19. Accomplished IBM Software Partner
AWARDS: SKILLS and RESOURCES:
 2013 IBM Beacon Award Outstanding Technical  Serviced over 1500 IBM software accounts in the past 8 years;
Vitality implemented over 300 portals
 2013 IBM Collaboration Solutions Distinguished  Conducted migrations to WebSphere from other technologies for
Business Achievement over 140 clients encompassing more than 2,000 applications
 2012 Outstanding Business Agility Solution Award  Prolifics boasts over 400 J2EE, WebSphere, ICS, Security, Business
Analytics, ECM, Tivoli, Rational certifications for architecture,
 2012 IBM Smart SOA Impact Award Winner
development, administration, and project management
 2012 Global WebSphere Community Customer
 IBM’s highest technical rating (Level 5)
Recognition Award Winner
 Highly Accredited - IBM Tivoli “AAA Accredited;” IBM Cloud
 2012 ICS Award for Best Industry Oriented Social
Certified; Accredited with Ready for Rational; IBM Authorizations
Business Solution for Security, Insurance, Finance, Healthcare & Life Sciences,
 2012 IBM Awarding Client Excellence (ACE) Banking, Energy & Utilities, Social Business and Enterprise Content
Award Winner Management.
 2010 Impact Best BPM Solution Award  15 Technical Staff are "IBM Champions"
 2010 Lotus Best End-User Solution Award  Prolifics has worked with internal development teams multiple
times for the development of IBM technologies.
 2010 Lotus Best Industry Solution Award
 Strategic relationship gains internal access to IBM’s resources,
 2009 Rational Solution Award
labs, and product development teams
 2008 Outstanding SOA Solution Award
 2008 Overall Technical Excellence Award
 2007 Overall Technical Excellence Award
 2007 Impact SOA Process Solution Award
 2006 Best Portal Solution Lotus Award
 2005 5-Star Partner Award
19

20. Prolifics Customers
Financial Services
Healthcare Government
Retail & Distribution Utilities
Insurance Education
20

21. “Keep me in the Green”
 The almost universal message from anyone dealing with
compliance
 Keep me in the Green
 Everyone from Einstein to Erasmus has said that
“prevention is better than cure”
 Einstein’s quote:
 Brilliant people solve problems
Geniuses prevent them
 The goal of this presentation is avoiding problems
And finding a bit of a safe harbor
21

22. Dodd Frank Reporting Requirements
 The Dodd-Frank Act requires that swap transaction and pricing data be
reported “as soon as technologically practicable.” What does that mean
under the proposed rules?
 “As soon as technologically practicable” means as soon as possible,
taking into consideration the prevalence, implementation and use of
technology by comparable market participants.
http://www.cftc.gov/ucm/groups/public/@newsroom/documents/file/rtpr
_qa.pdf
 MQ for guaranteed delivery of messages and High Availability to
handle failures is the prevalent implementation and use of technology
by comparable market participants.
 Note: MQ H.A. is available via a special part number.
22

23. SPOF: Single Point of Failure
 SPOF (Single Point of Failure) is a 4 letter word. That is one of the
many many words heard after hurricane Sandy
 Every time there is a major outage, there are many lessons learned.
One company had a clause guaranteeing next day delivery of fuel
under any emergency. Sadly, (nor surprise) delivery proved to be
impossible during an emergency. (The employees save the day.
Preparation reduces anxiety.)
 SPOFs have included: redundant firewalls that didn’t failover, air
conditioners that melted & every other unimaginable occurrence
 For compliance, using multi instance or highly available
queue managers covers the clause for the prevalent
implementation and use of technology by comparable
market participants
23

24. WebSphere MQ & Message Broker Monitoring
Decrease Downtime w/ WebSphere MQ & WebSphere Message
Broker
Identifies common problems and automates corrective actions
Auto-discovery and immediate monitoring of complex environments
Drill-down to locate problem, identify root cause and resolve bottlenecks or
outages
Proactively Prevent Problems
Correctly configure and deploy
your WebSphere MQ infrastructure
Detect and repair problems as they
happen, or alert you to an imminent
concern
Provides key MQ and Message
Broker metrics for real-time and
historical data analysis
24

25. WebSphere MQ Performance and Availability Monitoring
Navigator Workspace chart
showing WMQ
shows threshold
monitoring agent violation values both
initial & current
Clicking on links takes you
to the problem area ‘Expert Advice’ gives help
for resolving out-of-box
situations
‘Take Action’ allows for
manual or automated
problem resolution
 Monitor WebSphere MQ health and status  Monitor availability of all Queue
 Monitor channel status and performance Managers
 Monitor queue status and performance  Monitor queue/channel thresholds
 Queue Sharing Group status  Automatically repair error conditions
25

26. MQ High Availability: Multi-instance Queue Managers
1. Normal MQ MQ
Execution Client Client
network
192.168.0.1 192.168.0.2
Machine A Machine B
QM1 QM1
Active can fail-over Standby
instance instance
QM1
networked storage
Owns the queue manager data

27. Multi-instance Queue Managers
2. Disaster MQ MQ
Strikes Client Client
network
Connections
broken from
clients
192.168.0.1 192.168.0.2
Machine A Machine B
QM1 QM1
Active locks freed Standby
instance instance
QM1
networked storage

28. Multi-instance Queue Managers
3. Standby MQ MQ
Connections
Comes to Life Client Client still broken
network
192.168.0.2
Machine B
QM1
Active
instance
QM1
networked storage
Owns the queue manager data

29. Multi-instance Queue Managers
4. Recovery MQ MQ
Complete Client Client Clients reconnected.
Processing continues.
network
192.168.0.2
Machine B
QM1
Active
instance
QM1
networked storage
Owns the queue manager data

30. Next Steps
 Prolifics is offering free Dodd Frank discovery calls that
take into consideration the prevalence, implementation and
use of technology by comparable market participants
 IBM and Prolifics are offering MQ High Availability Licenses
at large costs savings. Combination offerings (including
installation and configuration) are available as well
 MQ Advanced Developer licenses makes it easy to keep up
with the latest advances in MQ (including security and
Managed File Transfer).
 IBM offers tools to monitor your systems and support pacs
for recording transactions. Demos, discussion, software and
service combos are all available.
30

31. Contact – A.J. Aronoff
Connectivity Practice Director
Email - aj@prolifics.com