e.meff 5 / July 2005 PRINT

MEFF will introduce a new version of its system for Members next October that will update Clearing functions. This new version allows the management of Give-ups by international standards, and also simplifies the handling and use of existing functions.

In addition to the standard sections of e.meff, this issue provides a summary of the most important new features offered by the new version, as well as information on training sessions for the new environment, how the Big Bang changeover to the new system will take place, the new Give-up contracts and details on the testing environment for Members and ISVs.

In the first seven months of 2005, the MEFF Board of Directors approved the application of eleven Members to join the market:

SUMMARY

Version 6.0 to be operative in October
(page 1)

New Members of MEFF
(page 1)

Give-ups management by international standards
(page 2)

Separation of Trading functions from Clearing functions
(page 2)

Greater flexibility in the configuration
(page 2)

Greater security
(page 2)

Training Sessions
(page 2)

The Big Bang
(pages 2-3)

The Give-up Contracts
(page 3)

Testing Environment
(page 3)

Training & Education
(page 3)

The Executing Broker will be able to request a Give-out of any trade and from any account, including the Daily Account.

The Member will be able to configure, from the MEFFGate or the MEFF Terminal, Give-up references and their associated mnemonics to be used by the Executors to request the Give-out. It will also be able to configure filters for the automatic acceptance of Give-ins by the Clearing Broker and their Clearing Members. The user will be able to maintain and modify the references and filters in real-time.

The state of the Give-up trades can be checked at any time to see if they have been accepted, rejected or if they are still pending.

At the time of accepting a Give-in, the Clearing Broker will be able to assign it directly to a destination account or to the Daily Account.

In this version the Trading and Clearing functionalities are separated in two different environments, sharing the same PC.

The trading environment will obtain the information and prices from the open contracts to be traded. It will also be able to manage orders and applications. The user interface will be the same as the current version.

The management of positions, exercises, expirations and queries related to clearing data will be done from the clearing function. For these functions the user interface is new and will be given the name MEFFTop.

The new MEFFTop Terminal has been designed so that it is very easy for the user to handle.

Great emphasis has been placed on the flexibility of the Terminal configuration, so that each user will be able to design and organise the screens in the way that will be most useful, saving them to be used later, even as his/her main configuration.

As MEFFTop is programmed in a Windows environment, it has a great variety of features such as the ability to filter and sort information by different categories, add or remove information, group by different fields and get subtotals of these fields.

The reports can be exported in various formats (MS Excel, text file, …). As far as MEFFGate is concerned (with the API based on protocol FIX), the necessary adjustments to support the new Give-up system have been done. Members should be aware that the separation of the trading environment from the clearing environment will also affect the applications used by MEFFGate.

All Members will have at least one user that can administer the permissions for different actions that each trader can take; thus it will be possible to identify who can or cannot make assignments, transfers, accept Give-ins, manage mnemonics and in the case of Clearing Members, who can or cannot view the data of their Trading Members.

The user who is authorised to administer permissions can assign permissions both for users (permissions that the user has) and for actions (which users have a specified permission). Furthermore, he can also authorise other users to administer permissions.

The implementation of a new version of the electronic clearing system involves an effort on behalf of the users in adaptation and familiarisation with the new environment. As on previous occasions, MEFF, mindful of this situation, has made all the necessary resources available to its members to make the transition as smooth as possible.

During April and May sessions have been held on version 6.0 for internal and external technical teams of the Members, with a presentation of the differences between the current version and the new one in relation to the transfer files of the MEFFTop Terminal, MIBOS and the MEFFGate interface, and in order to provide guidance on the impact that these changes may have on the applications already developed.

In a similar manner, MEFF has arranged training sessions through the month of July aimed at market traders and back office personnel.

The main objective is to make users aware of the changes and to ensure that the entire market is prepared on the day the new version becomes operative. These sessions will continue in August and September.

On the same day that the new version becomes operative, the new Give-up system will also begin to work, with the existing Transitory Accounts being closed on this day and converting the current Global Give-up accounts into ordinary accounts. Therefore, instead of a progressive change there will be a Big Bang changeover to the new system.

After the session ends on the day before the Big Bang, MEFF will delete all the Transitory Accounts and, in their place, it will create Give-up References: a Reference for each Transitory Account deleted. Note that the procedures described below are only applicable to the Big Bang and once this is completed the Members will be able to change the Give-up references and the automatic filters that MEFF configured to make the Big Bang transitions easier.

The following example is for an Executing Broker with Member Code A835 that executes with the Transitory Account 017T2, which currently flows into the Global Give-up Account G22RR of Member A822:

In the Executing Broker MEFF will create:

§          A Give-up Reference for each Transitory Account deleted. The coding for the Reference will be “Executing Broker Member Code, Transitory Account Code, Clearing Broker Member Code, Global Give-up Account Code” (The Give-up Reference created will be “A835017T2A822G22RR”).

§          A Give-in Member, which will be the Clearing Broker that the Transitory Account flows into (The Give-in Member would be A822).

§          A Mnemonic for each Give-up Reference created. The coding for the Mnemonic will be the Transitory Account code (The Mnemonic created would be “017T2”).

In the Clearing Broker MEFF will create:

§          A Give-up Reference with the same coding as explained for the Executing Broker (It will have the same reference “A835017T2A822G22RR”).

§          A Give-out Member that will be the Executing Broker of the Transitory Account (In the example the Give-out Member would be A835).

§          A Mnemonic for each Give-in Reference created. The coding for the Mnemonic will be the Clearing Broker code and the Global Give-up Account code (Therefore, its Mnemonic would be “A822G22RR”).

§          An Assignment Account linked to this Reference and Give-out Member, which will be the current Global Give-up Account, reconverted to an Ordinary Account (It would be Account G22 RR).

§          An Automatic Acceptance Filter. Therefore, all the Give-up requests done by Member A835 with the Reference “A835017T2A822G22RR” will be accepted automatically, so long as the filter is not modified.

The purpose of this initial configuration is to make the adaptation of all members to the new Give-up easier, so that the Big Bang changeover goes as smoothly as possible.

Afterwards the Members will be able to adapt their Give-up configurations to the procedures that they choose to use.

Circular 18/04 that regulates the new Give-up:

(http://www.meff.com/ing/ficheros/give/Circular%2018-04%20-%20Give-up%20trades.pdf), cancels various clauses of the current Give-up contracts. For this reason, some Members have contacted MEFF to find out what needs to be done with the current Give-up Contracts.

Once the new Give-up system is implemented, MEFF will no longer ask Members to present signed copies of the Give-up contract, except for supervisory purposes. However, according to the current regulations, a contract between the Client and the Clearing Broker must exist for the account opened at the Clearing Broker (the former Global Give-up account).

With respect to the current contracts, MEFF recommends that the contracts be rescinded on the day Circular 18/04 of MEFF RV enters into effect, with new contracts being signed.

It is better to terminate the old contracts as the procedure described in said contracts does not correspond exactly with the new system and this may cause problems in the future.

Therefore it is recommended that new contracts be signed that correspond with the new process; a contract like the “International Give-up Agreement” covers the new process perfectly.

From 4 July a testing environment has been made available to all Members and the ISVs for the new version 6.0.

In this environment the users can familiarise themselves with how the new version works before it becomes operative in October.

It is also possible to ensure that those computer systems that interact with the MEFF system work correctly.

This environment is available daily with the following timetable:

§          Trading platform:

-          8:30. Start of order entry in auction mode.

-          8:45. End of opening auction and switch to live market.

-          11:00-11:30. Suspension of trading in Mini IBEX contracts.

-          18:30. End of trading.

-          19:15. Entry of closing prices and end of session.

§          Clearing platform:

-          8:30. Start-up of Clearing House.

-          13:30. Change of day for purpose of position adjustments.

-          19:30. Close of daily account, end of Give-up transactions, end of position adjustments, end of exercise requests and start of daily clearing calculations.

-          19:45. End of session.

Information on how to access the testing environment is available on the MEFF website:

(http://www.meff.com/ing/ficheros/give/Notice%2029-05%20-%20Simulation%20v6.0.pdf).

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