1. Strictly Private and Confidential 1
The Spirit of Trade
Richard Baker
Chief Executive Officer
2. Regulatory Reform
Opportunity for change
Swaps instruments are now
subject to new global
regulatory reform. In October
2012, the Dodd-Frank Wall
Street & Consumer Protection
Act became enforceable via
the CFTC Swaps regulation.
Swap Participants globally are
required to be registered in
various guises and trade,
report and clear trades under
new rules.
Globally, regulators are
tightening rules and
emulating the Dodd-
Frank Act.
Strictly Private and Confidential 2
Regulation
Time
2011 2012 2013
MiFID / EMIR / ISOCO
G20 Impact of CFTC Rules
Swaps / Futures Evolution
G20 Nations
Implement ISOCO Principals
For OTC Derivatives
Wall Street Reform and Consumer Protection (Dodd–Frank) Act lays the foundation defining a new mode of executing, trading, reporting
and clearing swaps contracts. A SEF embodies the key characteristics of this new world – a “facility, trading system or platform in which
multiple participants have the ability to execute or trade swaps by accepting bids and offers made by other participants that are open to
multiple participants in the facility or system”.
Cleartrade Exchange comfortably satisfies this definition
Dodd-Frank Act
CFTC SWAPS RULES
2010 - Oct 2012 +
Demand Curve of Regulation
$700 Trillion
Derivatives Market
What size market can
we expect to see ?
3. What Dodd Frank did to me !
• Global regulatory reform of the derivatives market will see the emergence of new
execution venues emulating listed exchange traded markets.
• Cleartrade Exchange (CLTX) has been the first to operate a Regulated Central
Market and evolve the off exchange market as well as offer lower cost and agility
when compared to full listed exchanges.
Strictly Private and Confidential 3
OFF EXCHANGE
OTC Derivatives
ON EXCHANGE
LISTED
FUTURES
Central Markets/
Execution Venue
Derivatives
Cleared
4. Introducing The Cleartrade Exchange
Cleartrade Exchange provides seamless transaction flow of Futures & OTC
derivatives from electronic execution through to clearing house(s), and back...
4Strictly Private and Confidential 4
Cleartrade Exchange Timeline
Market Study
Regulated Market
2009 2010
(FEB) Cleartrade Exchange
Incorporation in Singapore
Technology
Design & Build
2011
Credit Filter& 1st Clearing House
1st IDB RMO License
Over
400,000
LOTS
Processed
Live Trading &
3 Product Families
Member
Onboarding
2012
Container
Freight
PaaS
Launched
DMA &
Mobile Apps
Fuel
Oil
6. The Derivative Value Chain
The Derivative Value Chain captures the workflow of the market. We seek
differentiation through points of control.
Strictly Private and Confidential 6
Bid / Offer
“Price Discovery”
Matching
“Trade Efficiency”
Trade Management
& Reporting
“Trade Transparency”
Clearing
“Risk Management,
Position & Open Interest
Disclosure”
• Electronic Order books multiple
instruments
• Price Discovery
• Event Ticker
• Liquidity generation through
depth & spreads
• Graphing & Analytics to
forecast order interest
• Auction/RFQ/Routing
• Market Making
• Smart Order Management
• Electronic Order Matching
• Hit & Lift matching
• Risk, Credit, Position and
Netting Management across
multiple clearing houses
• CCP account management
• Multi-commodity trades
(complex strategies)
• Trade Event Ticker
• Trade novation to CCP
• Clearing ID Tag management
and reporting
• Recap production/Finance
integration
• Trade Repository store/retrieve
• STP connections to multiple
clearing houses
• In line credit/position/margin
filer integration to order books
• Trade Reconciliation and Risk
Management
Derivative – A financial instrument derived from a physical underlying commodity
that offers risk protection and allows innovative investment strategies.
7. The impact of Dodd Frank (OTC Swaps)
New defined regulated “roles” and “trade flow”
Strictly Private and Confidential 7
Introducing
Broker
ExecutionVenue
(SEF/DCM/FBOT)
Swaps Dealer
Major Swaps
Dealer
USPerson
SwapsParticipant
Clearing
House
(CCP)
On October 12th 2012, CFTC rules for Swaps became law. This has a global impact because of the definition of
a US Person, the requirement for trade reporting and clearing and the international reach of the CFTC.
Own
Exchange
Clearing
Trade Repository
Regulators (CFTC & SEC in the USA) all G20 nations following
US Person
FCM/GC
M
Direct
Members
8. Strictly Private and Confidential 8
Execution to Clearing : Price Discovery : Trade Reporting : Risk Management
EDGE Execution Platform
Orders, Routing, RFQ’s, & Trade
Management, Credit Matrix,
Recap Engine
Rules & algorithmsDMA
TRADE HUB
Post Trade Reporting and Management
FIX5.0
HUBAPI
LCH
NOS
SGX
Trade Hub
Web interface
(Trade &
Recap reports)
Cleartrade
Clearing
Operations
3rd Party
Trading Screens
STP Gateway
Credit
Matrix
Principals
GCM’s
Cleartrade Screens
Broker – Trade - GCM
Link to Broker
Trade / recap
Management
Systems
CME
Cleartrade Mobile
Price & Trade Discovery
Cleartrade Credit Matrix for GCM’s
Set financial margins by account
import positions, Net P&L risk view
Quote Vendor
Feeds
EDGE
Execution: Pre & Post Trade
Processing : Marketplace
management,trading rules and
algorithms
EDGE
API
The Cleartrade Platform
the infrastructure of a
regulated marketplace
WAVE
9. Brokers
Traders
LCH SGX NOS *CME Order Matching | Trade Processing
| Recaps | Clearing | Reporting
Regulated MarketPrivate Market Solution
*For Private Market Trades only
Cleartrade Exchange Open Market
Direct Market Access (DMA) Connectivity Gateway
TRADE REPOSITORY
DMA
CLTX Services
MOBILE PRICE DICOVERY
MARKET DATA
CREDIT MATRIX FILTER
10. Trades Window Transparency Window
User Definable Contract LayoutsQuick Trade / Order Entry
How we translate the rules…
Screen Familiarization
11. Contract Widget Bar
“Pick” contracts and drop on market to trade
Market Contracts for Trading
Anonymous “bids & offers”, dynamic spreads
and ratios across all asset classes
“Market Events” – pre trade market activity
Anonymous order activity for whole market
and market depth tool
Trader Member
Principal
“Clearing
Open/Close”
“Quick Trade”
Presets
Hot Keys
“Trades Tape” – post trade
Anonymous trade history for whole market
Detailed history for own trades
12. Trade Repository
a trade reporting portal
Strictly Private and Confidential 12
55,484 Trade items
(27,742 matched buy/sell
trades)
processed since June 2011
2,602 matched trades average
per month items in 2012
52,975 lots average
per month items in 2012
31,230 Trade items
(15,615 matched
buy/sell trades)
in CY2012
14. Going Mobile… in 3 months
• Defined user role profiles
– traders, brokers
• Defined data sets to be distributed via API
– Static snapshots, updates, layouts, real-time & delayed
• Defined device support (IOS/Android/Blackberry)
– No touch of apps on device for CLTX, a managed service
– Integrated via Web services API to Exchange feeds
– Dynamic population of contact data
Strictly Private and Confidential 14
Definition
Phase
User Interface
Design & Showcase
Service Build &
Integration
April 26th June 1stApril 1st
15. On Device User Interface
emulates the desktop experience
Strictly Private and Confidential 15
Configuration Menu
“A tick list of contracts to
monitor”
Select contract tabs
to view prices and volumes
Configuration and Price Selection
16. On Device User Interface
emulates the desktop experience
Strictly Private and Confidential 16
Trade Event
Real-time reporting of exchange
trades
Order Activity & Trade Events
Market Event
Real-time reporting of exchange
orders on the market
Transparency + Liquidity = CONFIDENCE
17. Marketing
Strictly Private and Confidential 17
Mobile is an integral component of the CLTX Platform and
our commitment to price and data transparency
18. The Results thus far…
Strictly Private and Confidential 18
Over 1800 Users
of the Service
“Reaching new markets, new customers and
extending our brand in a highly competitive landscape”
20. Cleartrade Exchange
Mobile Roadmap priorities
Strictly Private and Confidential 20
• Move to a Single Sign on Authentication
Model across CLTX assets
• Expand data offering with inclusion of
new contracts, daily reports, open
interests positions and volumes
• Adoption of Mobile Wave 4.0 (May’13)
• Support Hybrid HTML5.0 and Native
App experience across price view, trade
hub and data center
• Evaluating Broker Block Trading
Application (Sept’13)
21. FREIGHT METALS AGRICULTURE FUEL OIL
THE COMMODITY DERIVATIVES MARKETPLACE
• Regulated Futures
and Swaps
Contracts
• Over 40 contracts
across Freight,
Metals, Fuel Oil
and Agriculture
• Straight through
processing to
multiple clearing
houses
• Market data
access via major
quote vendors,
web and mobile
• Electronic Execution
via Web GUI
• Trade Reporting
• Hybrid Voice &
Screen Trading
• Real-time Credit
Margin Management
• Broker specific
features and
incentives
