Algo Collateral Newsletter

Growth of Algorithmics over the past 2 years, and particularly since its acquisition by Fitch in 2005, has seen a rise in number of employees as the size and nature of our business continues to evolve and grow. Since the 1st Quarter of 2007, Algorithmics has revised its organizational structure. All field operations are now organized on a global basis, replacing our previous regional structure. This new structure now sees the Collateral business line expanded to form a new Algo Credit & Collateral team, focusing on not just collateral but also Credit solutions. The business line is responsible for leadership and management of all aspects of solutions and products including product roadmaps and functional specifications. Richard Barton will manage the Algo Collateral part of the business line following this reorganization.

The Professional Services and Support functions have moved out of the business line and into the dedicated Professional Services, Advisory Service & Customer Support area. They will continue to provide all support and consulting to clients. Barry Mole is responsible for all Global Support and Terry Baum for all Global Consulting Services. Benefits of the reorganization include knowledge sharing across the regions, shorter implementation times from benefit of additional shared resources and improved resolution times.

We are pleased to announce the release of Algo Collateral Reconciliation V1.0. This is the 2nd application built as part of our Next Generation of collateral management software (following the release of Algo Collateral Decision Support earlier this year).

This tool offers an automated answer for financial institutions looking to reconcile trade portfolios, resolving MtM/trade differences in a very short time period. Key benefits of the solution include:

• the ability to effortlessly import Excel files for each Principal & Counterparty's trades without the need to manipulate files
• easily identify trade booking discrepancies and/or MtM differences
• quickly create manual matches from a quality list of system suggested matches
• identify high priority discrepancies between you and your counterparty
• create useful reports which can assist in resolving identified discrepancies

For those clients wishing to learn more about Algo Collateral Reconciliation, please contact Neil Murphy for more details: Neil.Murphy@algorithmics.com

We are pleased to announce that the majority of our clients are now using the latest version of Algo Collateral, 4.8. Of those remaining on earlier versions many plan to upgrade during the 2nd half of 2007. The latest released version of Algo Collateral, 4.8.12, includes a fix to the 801 report.

Over the past year, Algorithmics has received an increase in requests from clients for consulting work in the following areas:

• Consolidation of margined products onto single platform
• Straight-Through-Processing
• Legal Interface into Algo Collateral
• Regulatory Reporting

Examples of consolidation of margined products include the adding of Repo or Securities Lending margining to Algo Collateral so as to leverage rehypothecation functionality for collateral optimization.

Straight-Through-Processing (STP) provides quite significant business benefits to Banks through a possible reduction in operational risk and reduced costs. The standard first phase of any such STP project is to automate the booking of collateral into settlement systems or middleware. A second phase can include confirmation of the settlement status of collateral movements back to Algo Collateral.

Adoption of a legal interface into Algo Collateral can reduce the need for manual entry of CSA/GMRA data into the application, removing possibility of human error and ensuring timely data entry.

Our standard approach for Consulting services is outlined below and allows for timely turn around of both estimates and delivery.

Please consult Terry Baum (Terrance.Baum@algorithmics.com) for any consulting requests.

During the 1st Quarter, Algo Collateral User Advisory Meetings were held in London, New York & Frankfurt. A large number of clients attended and heard updates on current and future development work on the Next Generation V5 of Algo Collateral. These meetings provide a great forum to learn about product direction, timelines and future developments within the collateral market. Topics included the following: V5 Roadmap, Reconciliation news and demonstrations, Concentration demonstrations and updates on 4.8 Upgrades/functionality. These meetings will continue to be held throughout the coming year. Any clients wishing to attend, please contact Neil Murphy: Neil.Murphy@algorithmics.com.

The 2007 ISDA annual conference was held in Boston, USA in March. Algorithmics participated as a sponsor with a number of employees in attendance. As the largest derivatives conference of its kind, it's great that so many clients from different corners of the globe can attend. It of course provided a good opportunity to hear latest developments in the derivatives world, and both Neil Murphy & Jeff Siemer were happy to meet up with so many Algo Collateral clients. For those who were there, we were able to provide demonstrations of our latest V5 software, including the newly released Algo Decision Support module (for management of Concentration risk and allowing users to accept wider forms of collateral), and a sneak preview of the new Algo Collateral Reconciliation module. For those of who you unable to attend and who would like a demonstration of our latest software releases, please contact Neil Murphy to arrange a demo: Neil.Murphy@algorithmics.com

The Algorithmics Annual Risk Conference will be held September 24-26th in Cannes, France. This industry leading event brings together risk professionals from around the world who aim to grow their business while at the same time, manage and mitigate their risk. The ARC is now in its 9th year and this year's agenda will provide unique insights for companies seeking to grow their business and manage risk. Please check our website for more up to date information as it becomes available: www.algortithmics.com

We are happy to welcome both Fortis Bank and Confederacion Espanola de Caias de Ahorros (CECA) to the Algo Collateral community. Continued growth in clients and content underpins our position as the #1 Collateral vendor, as ranked by the Risk Magazine Technology Rankings for the 3rd year running.

Contact Information

To add new colleagues to the distribution of this Newsletter, or to choose not to receive this going forward, please inform Neil Murphy: Neil.Murphy@algorithmics.com

Please forward your support issues to:

• All clients in Europe, Middle East, and Africa, please use: CollateralEMEA@algorithmics.com
• All clients in North America, please use: CollateralNA@algorithmics.com
• All clients in Asia and Oceania, please use: CollateralSEA@algorithmics.com

For more information on Algo Collateral, visit our website.

We welcome comments & suggestions to be forwarded to Neil Murphy, at Neil.Murphy@algorithmics.com or +44 (0)20 7392 5738.