E-TRADING SYSTEMS E-TRADING SYSTEMS UPDATEUPDATE

November 2003November 2003

THE FIA THE FIA IT DIVISIONIT DIVISION

PRESENTSPRESENTS

FIA Expo ConferenceFIA Expo Conference

AGENDAAGENDA

I. IntroductionII. Our PanelistsIII. Setting The Stage …IV. Let’s Ask The Experts

I.I. INTRODUCTIONINTRODUCTION

1.1. PURPOSEPURPOSETo discuss the near-term and potential future technological evolution of Electronic Trading Systems (ETS) and better understand how they are geared to global markets.

INTRODUCTION … ContinuedINTRODUCTION … Continued

2.2. SCOPESCOPEAA moderated discussion with technology leaders from domestic and international exchanges, interspersed with questions from the audience. Immediately followed by informal conversations with our distinguished panelists at the FIA IT Division reception today (5:45).

II. II. ABOUT OUR PANELISTSABOUT OUR PANELISTS

Bryan Durkin, Senior Vice President, Chicago Board of Trade Sam Gaer, Chief Information Officer, New York Mercantile

Exchange Mark Hemsley, Managing Director, Euronext.liffe Market

Solutions Scott Johnston, Managing Director and Chief Information

Officer, Chicago Mercantile Exchange Juerg Spillman, Deputy Chief Executive Officer, Eurex Jan Tilfors, Product Strategy, OM Technology

Moderated By: Gerald Tellefsen, Chairman, Tellefsen Consulting Group and Secretary, FIA Information Technology Division

III. III. SETTING THE STAGESETTING THE STAGE

Internationally, many exchanges have been electronic for many years with the U.S. rapidly beginning to catch up.

Some exchanges “build” their ETS, others buy it:

BUILD–NYMEX–CME–TSX–EUREX–Archipelago–ICE

BUY–NYMEX–CME–CBOT–KCBT–Euronext.Liffe

SETTING THE STAGE … ContinuedSETTING THE STAGE … Continued

Most non-domestic exchanges are all electronic, while numerous U.S. exchanges are a combination of open outcry and ETS.– Some U.S. markets already have more than

half their volume traded electronically.– Other markets (e.g., ags) do not appear to fit

easily into an electronic trading environment. Believe it or not, the NYSE has been

electronically trading odd lot equities and corporate bonds for decades.

WHERE IS THE BUSINESS?WHERE IS THE BUSINESS?

For Futures, it used to mainly be in the U.S.A. – but not any more!

Eurex

BM&F

CBTCME

NYMEXLIFFE

NYBOT

0

100

200

300

400

500

600

700

800

1998

1999

2000

2001

2002

Volume In

Millions of Contracts

1998

1999

2000

2001

2002

Percent Change

EUREX 209.6 339.4 409.9 674 801 385% BM&F 87.0 55.9 82.9 98 102 17%

Chicago Board Of Trade (CBT)

281.1 254.5 233.6 260 344 22%

Chicago Mercantile Exch (CME)

226.6 200.7 231.1 412 558 245%

New York Mercantile Exch (NYMEX)

95.0 109.5 104.2 100 134 41%

Euronext--LIFFE) 194.4 120.0 131.0 216 696 257% New York Board of Trade

(NYBOT) 21.3 21.4 20.1 23 21 (.3%)

SETTING THE STAGE … ContinuedSETTING THE STAGE … Continued

The Philadelphia Stock Exchange will launch PHLX XL, a hybrid ETS. Market makers will deliver streaming quotes, allowing easier access to PHLX markets and leveraging of open outcry markets.

Boston Stock Exchange to launch the “BOX” electronic options exchange after SEC approval.

e-CBOT to begin launch at the Chicago Board of Trade in November, 2003, to be fully rolled out by February, 2004.

New York Stock Exchange is being challenged …

SETTING THE STAGE … ContinuedSETTING THE STAGE … Continued

ETS acceptance can be stressful … ‘traders on the floor of London’ IPE have staged a revolt and are refusing to use electronic trading screens that they say will cost them their jobs …”

LIFFE CONNECT to replace the CBOT a/c/e platform by November, 2003.

EUREX U.S. scheduled to begin trading U.S. markets internationally in February 2004.

The NYMEX acquires the TradinGear ETS in early 2003.

CME e-mini products are a huge success. ISE captures market share lead in equity options

in two years.

… TO SUM IT UP …

THERE IS A LOT THERE IS A LOT GOING ON!GOING ON!

IV. LET’S ASK THE IV. LET’S ASK THE EXPERTS!EXPERTS!

Bryan & Mark:

What are your major What are your major concerns involving the concerns involving the conversion to e-CBOT?conversion to e-CBOT?

SAM:

What is on your drawing What is on your drawing board for the NYMEX board for the NYMEX ACCESS upgrade or ACCESS upgrade or replacement?replacement?

JUERG:

How will the Eurex U.S. ETS How will the Eurex U.S. ETS differ from the a/c/e platform differ from the a/c/e platform used by the CBOT?used by the CBOT?

JAN:

OM has probably installed OM has probably installed more trading systems than any more trading systems than any other organization, what is other organization, what is your next generation ETS your next generation ETS going to look like?going to look like?

SCOTT:

How easy or difficult would it How easy or difficult would it be for GLOBEX to handle be for GLOBEX to handle multiple non-futures products multiple non-futures products – and how would you do it?– and how would you do it?

For all exchanges:

What is your ETS user What is your ETS user connectivity strategy?connectivity strategy?

Is there much more Is there much more functionality you can functionality you can add to your ETS or is it add to your ETS or is it generally, “fixed?”generally, “fixed?”

How do you monitor capacity How do you monitor capacity planning and implement planning and implement capacity upgrades as your capacity upgrades as your ETS volumes have ETS volumes have increasedincreased??

What is the current size What is the current size of your IT staff dedicated of your IT staff dedicated to the development/ to the development/ maintenance and maintenance and operation of your ETS?operation of your ETS?

How can new technologies How can new technologies decrease (or increase) the time decrease (or increase) the time and costs required to build and and costs required to build and maintain your ETS?maintain your ETS?

How does your ETS How does your ETS differentiate your exchange differentiate your exchange from others?from others?