Transcript www.dcs.warwick.ac.uk

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Current Uses of Computers in
UK Business and Industry
Presentation to the Computer Sciences Course,
University of Warwick
by Simon Walkden
Executive Director, Information Technology
UBS Warburg
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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1
http://www.ubswarburg.com
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2
http://www.ubswarburg.com
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3
Investment Bank On Line
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4
Demand for Client Connectivity is Growing
70
FX E-Commerce Volumes
50000
FIX Client Connectivity by Connection
30
20000
18 0 0
10
0
2000
10 0 0
800
200
0
1999
300
600
150
100
50
0
Jan-01
Clients
10000
12 0 0
Trades/day
14 0 0
400
20
200
16 0 0
400
10 0
200
2001
V o lum e s
T P T ra de r
Ide a le r
Ke ylink
T P O rde rs
F x2 B
Total (Excl SAFE)
Date
SAFE
FIXWEB ERs
FIXWEB OR
VENDOR SOLUTION
DIRECT ERs
DIRECT OR
7/3/2001
6/3/2001
5/3/2001
4/3/2001
3/3/2001
No. of systems in use directly Registered
by clients Clients
2/3/2001
0
1/3/2001
0
Jul-01
500
Jun-01
30000
50
250
May-01
40
2000
Apr-01
600
Mar-01
40000
Feb-01
60
Composite Page Hits
FI Client Sites Users per Week
80000
CF
60000
EQ
900
40000
FI
800
20000
FX
-- All Sites and CreditDelta -120
All Sites
CreditDelta
100
700
600
80
500
60
400
300
40
200
20
100
7/1/01
5/1/01
3/1/01
1/1/01
11/1/00
9/1/00
7/1/00
0
5/1/00
0
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CreditDelta
All FI Sites(excluding IBOL FI Home)
Ju
ly
Au
gu
st
Ju
ne
M
ay
Ap
ri l
0
Ja
nu
ar
y
Fe
br
ua
ry
M
ar
ch
Hits
100000
5
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

Availability management
 41,500 client server devices

Monitoring and reporting
 60,000 ports

Full unit pricing
 2,000 hubs
 400 routers
 5,500 UNIX servers
 1,800 NT servers
 1,300 MIPS
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Distributed Computing Costs
300.0
140.0
120.0
250.0
96.8
100.0
92.0
200.0
96.8
45.0
80.0
48.0
49.2
150.0
49.2
100.0
40.0
174.5
161.7
140.8
136.7
60.0
98.8
50.0
20.0
0.0
1998 Act
Direct Costs
1999 Act
2000 RTB Act 2001 RTB FC2002 RTB Plan
LOB Servers
Equipment in LOB
Cost per SpecInt
 In 2001 SCM Programme saved US$15.2mm in capital spend and
depreciation
US$ mm
Capital Spend
Depreciation
1999
66.2
N/a
2000
62.2
84.0
2001
49.0
76.2
2002
44.0
55.7
2003
39.0
49.0
SpecInt=Unix MIP
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Out-sourced E-mail
30,000
90
80
70
60
50
40
30
20
10
0
25,000
20,000
15,000
10,000
5,000
1999
2000
E-Mail Users
Total Costs in '000
2001
2002
Cost Per user/Month
 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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3,500
3,000
2,500
2,000
1,500
1,000
500
0
140.0
120.0
100.0
80.0
60.0
40.0
20.0
0.0
Dec'99 Dec'00 Mar'01 Jun'01 Sep'01 Dec'01 Mar'02 Jun'02 Sep'02 Dec'02
(Est) (Est) (Est) (Est) (Est)
UBSNet Capacity in '000
Leased Line in '000 USD
Dollars ('000) per DS-3 Equivalent
Capacity (Gigabit/Sec)
UBSW Network Costs versus Bandwidth
Dollars ('000) per DS-3 Equivalent
 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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IBM Mainframes Consolidation
‘Drastically cuts total and unit costs while...
$60.0
$60,000
$0.0
$0.0
$50.0
$50,000
$10.3
$15.6
$0.0
$40.0
$40,000
$7.9
US$ In Millions
$6.5
No Consolidation
Amortization
$30.0
$30,000
$55.5
Swiss SLA's
Data Center Costs Actual
Gross Cost/MIP No Consolidation
$52.5
$18.8
$20.0
Gross Cost/MIP Actual Case
$20,000
$35.2
$10.0
$10,000
$15.4
$0.0
$0
1999
2000
2001
1999
 1000 MIPS Peak Utilization
 Old Technology in 4
Locations:London, Stamford,
Singapore, Frankfurt
 Questionable Disaster Recovery
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2002
2002
 2000 MIPS Peak Utilization
 World Class Technology and
Performance: IBM’s Z-900
Processors, EMC’s 8700 Series
Storage
 Solid Disaster Recovery
...migrated to world class technology’
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The Last Decade of UBS Warburg
Swiss Bank
Corporation
O’Connor
Associates
Swiss Bank
Corporation
1993
SG
Warburg
SBC
Warburg
1995
Dillon Read
SBC Warburg
Dillon Read
Union Bank
of Switzerland
UBS
Warburg
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1997
1998
PaineWebber 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 ...
 Corporate Finance
—
—
—
Mergers and Acquisitions
Initial Public Offerings (IPOs)
Leveraged Finance…
 Private Equity
—
Venture Capital
 Private Banking
—
Wealthy Individuals
 Treasury Products, e.g.
—
—
—
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Foreign Exchange
FX Options
Overnight Money Markets ...
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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)
—
—
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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
Firewall
External
Internal
ln4p641syb
1
iris_login
PC
1. Log into iris_login server to
validate user is allowed to
connect
2
Disconnec
t
3
iris_security
2. Log into iris_security to get
IRIS login name and password
1
Disconnec
t
2
3
iris_p2
3. Log into iris_p2 using the
login name and password from 2
PC
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DealKey - Internet Application
Outer Firewall
80, 443
DealKey Phase 3
Architecture diagram
80, 443
Load balancing
router
Version 1.3 31/08/2000
80, 443
80, 443
Stronghold
Stronghold
User access
log file
SSO
DealKey
login
servlets
Usage
logging
agent
SSO
DealKey
login
servlets
Usage
logging
agent
9996
8081
9996
9996
8081
9996
8081
DMZ
User access
log file
8081
Domino
Domino
9996
DB Firewall
DealKey
transactio
n servlets
DealKey
transactio
n servlets
Domino DB
Domino DB
SSO Sybase DB
1352
25
9996
1352
25
9996
Inner Firewall
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1352
25
DK Internal
Domino
Server
UBSW Mail
Server
9996
DealKey
Sybase DB
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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
Trades
Risk Management
Systems
Settlement
Systems
Trade Valuation, Revaluation
Aggregates
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Trades
Risk Control
Financial Control
Systems
Systems
Settlements
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Risk Systems
Sales and
Order Systems
Trades
Risk Management
Systems
Settlement
Systems
Trade Valuation, Revaluation
Aggregates
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Trades
Risk Control
Financial Control
Systems
Systems
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.
—
—
—
—
—
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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
Trades
Risk Management
Systems
Settlement
Systems
Trade Valuation, Revaluation
Aggregates
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Trades
Risk Control
Financial Control
Systems
Systems
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
—
—
—
—
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Dividends on Shares
Other Corporate Actions
Interest Payments on Bonds or Swaps
etc
33
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
—
—
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Enterprise Java Beans for positions, lending offers and borrow requests
Rendering through JSP and servlets
35
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
Trades
Risk Management
Systems
Settlement
Systems
Trade Valuation, Revaluation
Aggregates
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Trades
Risk Control
Financial Control
Systems
Systems
Settlements
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Global General Ledger System
Business Events
Accounting Entries
Rules Engine
(Ac Posting Generator)
Static
Accounting Entries
Data
Interface System
(Ac Allocation/
Suspension)
Accounting Postings
Ledger
(Balance Sheets &
Profit Centres)
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Warehouse
(Regulatory Reporting)
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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
—
—
—
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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
Disaster Recovery Architecture
Primary Site - Central London
Recovery Site - Docklands
SAP
DB
SAP
App 1
SAP
App 2
Interf
System
Free
Data Warehouse
SB
15
SB
14
SB
13
SB
12
SB
11
SB
10
SB
9
SB
8
SB
7
SB
6
SB
5
SB
4
SB
3
SB
2
SB
1
SB
0
Sun E10,000
4TB Redundant Storage
Dark Links
Dark Fibre
4TB Redundant Storage
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Questions and Answers
Current Uses of Computers in UK Business
and Industry
[email protected]