Algo Collateral Newsletter

Over the past year Algorithmics has spent a considerable investment in development of the latest version of our software, Algo Collateral V5. This is being developed in order to respond to market demands for a more flexible cross-product margining solution. Not only will this provide an enhanced risk mitigation platform (including new Repo & Securities Lending capability) but it will allow for enhanced integration with client infrastructure. This is being developed in two streams; creating new product functionality, and replacing existing functionality.

During 2007 we saw the launch of the first 2 new products on the V5 platform; Algo Reconciliation, Algo Decision Support. Both products have received an excellent response from clients and have allowed for business improvements in production sites. Given the flexibility for the new V5 version to integrate to existing V4 technology, some benefits have also been realized to current processes. These include improved data loading (significant time reductions) and enhanced data control information (ability to understand margin results in the GUI).

Throughout 2008 we will continue to add new functionality. We hope to be able to share this with as many clients as possible during the development process via User Groups, client meetings etc. For enquiries, please contact Neil Murphy.

ISDA has just published their 2008 Margin Survey to member institutions. As in previous years Algorithmics is providing clients with the ability to auto-generate the data required to respond to the survey via an external module which can be run via a User Program. System output is created to a file stored on your system API path directory. The required External Module and installation document can be found on Algo Assist under Documentation: www.algoassist.com. For any issues please use the standard Support mechanism.

Note, the survey includes a new question this year on Portfolio Reconciliation.

For the 3rd year running Algo Collateral has been voted #1 collateral vendor by Risk Magazine in its annual Technology Rankings. Many thanks to all our clients for your support and backing!

The magazine's annual rankings are based on a poll of end users of risk management software products, who vote for the technology vendors they believe provide the best offering. These users have voted Algorithmics into the top slot in five of the ten risk categories assessed:

• Regulatory capital management
• Economic capital management
• Assessment and key risk indicators for operational risk
• Capital calculation for operational risk
• Collateral management

For the other five risk categories assessed; market risk, internal loss databases for operational risk, trading and banking for credit risk, limit checking for credit risk and Basel II, Algorithmics was voted in either 2nd or 3rd place.

Clive Davidson, contributing editor at Risk, said, 'In the risk management systems sector, Algorithmics held its dominant position across market, credit and operational risk, as well as collateral management and Basel II.'

Michael Zerbs, President and COO of Algorithmics, said, 'I am very pleased that our clients have once again confirmed their satisfaction with our solutions by voting us top vendor in 50 percent of the risk categories assessed, and within the top three in all ten categories covered.

'Recent market events confirm the importance of an integrated approach across all relevant risk categories - which is exactly what Algorithmics has pioneered and which has again been proven to be market leading. The ability to take a holistic enterprise view of market, credit, liquidity and operational risk and to understand the linkages and dependencies between those risk categories, has become an essential underpinning of effective risk management. Our risk aware market and credit risk applications for portfolio and asset liability management, regulatory and economic capital management and collateral management, help our clients develop their business activities and build shareholder value in a sustainable way.

'As innovative institutions are increasingly pricing and trading credit risk thereby transforming it into market risk, solutions that take a consistent and integrated view of market and credit risk are becoming important building blocks for forward looking capital market operations.

'We will continue to work closely with our clients to develop the enhancements required to meet evolving financial markets, and to provide a level of service and satisfaction that will ensure we stay at the top of the vendor league table in the months and years ahead.'

During 2007, Algo Collateral User Advisory meetings were held in London, New York & Frankfurt. These provided an opportunity to update clients with our latest functionality and development roadmap as well as providing a forum for clients to exchange views on market requirements/events etc. In the past these meetings have provided an excellent opportunity to share with clients updates on product direction as well as to gain market insight.

Since 2007 saw the launch of 2 new products (Algo Reconciliation, Algo Decision Support) developed on the latest V5 platform, clients were able to learn how these products can help their businesses reduce credit risk and how they can be integrated into their current production setup. We plan to continue these events through 2008 and will strive to share new functionality as well as request client input on market requirements.

These meetings will continue to be held throughout the coming year. Any clients wishing to attend or find out more, please contact Neil Murphy.

We are very pleased to announce that Steffen Lehman has transferred to our Tokyo office from London. Steffen will provide support to the Asian region, as well as providing expertise in EMEA/NA where required. This now extends our support function allowing client coverage in London, Philadelphia, New York, Sydney, Singapore, as well as Tokyo. This provides for full 24 hour coverage, with an operating model that allows for client issues to be transferred across locations and improved resolution times.

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

Joe Balkovec, an original founder of the Algorithmics collateral solutions (as co-founder of Sentry Financial Systems which was purchased by Algorithmics in 2001), has re-joined the firm. Joe will help provide additional value to collateral clients through the next stage of growth as the market expands and develops.

John Macdonald, Executive Vice President of Marketing in London said, 'I am delighted that Joe has decided to return to Algorithmics to enhance our service to clients using our collateral solutions. He has extensive experience in the collateral software market and was previously instrumental in developing Algorithmics' Collateral Operations solution into the world leader that it has become today.

Joe Balkovec added, 'I am very pleased to be coming back to Algorithmics at a time when it is well into the re-development of its Collateral Operations solution. I look forward to building on the success already seen in the uptake by clients of the first deliverables and to ensuring these solutions help clients to identify where the increased use of collateral can reduce the economic or regulatory capital they require and provide a competitive advantage through enabling greater volumes of business.

David Wechter (along with Joe, a founding partner of Sentry) will also be returning to Algo in January as Senior Director of the Business Line.

Michele Zazzara, familiar to many of you in the NA region, gave birth to a baby daughter, Anneliese, in November. Mother and baby (3kg/6.75 lb) are healthy and happy. Michele hopes to return from maternity leave to the Professional Services team later in the spring.

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

For more information on Algo Collateral, visit our website: www.algorithmics.com