Algo Collateral Newsletter

Driven by the market, the International Securities and Derivatives Association (ISDA) has been focusing on ways of improving reconciliation processes. For instance, one of the objectives for the ISDA Operations Committee is to develop consensus around an agreed framework, which will serve as a guide for best practice and minimum standards in the derivatives market. At Algorithmics, we are closely following their work on revising the reconciliation template by attending conferences and workshops. In addition to being involved in the ISDA events, we have responded to this increased interest in reconciliation standards by initiating reconciliation workshops for our clients to ensure they are maximizing their usage of the reconciliation tool.

In June 2005, the Algo Collateral team held the first initial reconciliation initiative workshop in London and three current high volume (portfolios exceeding 6,000 trades) users of the reconciliation tool participated. As it is in all our interests to improve best practice in reconciling collateralized trades, we felt it would be beneficial to arrange an initiative whereby clients could work together reconciling their portfolios. This also allowed Algo Collateral to promote the ISDA template developed three years ago together with the ISDA working group (for more information on the 310 ISDA template please see the Algo Collateral Industry Initiative page). To help the clients start this project, the Algo Collateral team assisted in providing logistics and product knowledge. The aims of the initiative were to:

• Identify common challenges in performing portfolio reconciliations
• Review the Algo Collateral 4.8 reconciliation tool enhancements and usability
• Provide feedback/comments to the product team on the new available functionality
• Aim for the users to have reconciled a troublesome portfolio
• Increase the usage of the reconciliation tool amongst Algo Collateral users. Come to an agreement that going forward users should continue to do reconciliations on a regular basis
• Promote the usage of the ISDA reconciliation template

The first day focused on learning the new features of the reconciliation module in version 4.8. During the second day the users started reconciling the portfolios they had with one another using the 4.8 reconciliation tool.

Participants were then asked to write up how they thought the exercise benefited them:

• Face-to-face reconciliations with counterparties proved to be very beneficial:
• Allowed users to understand counterparty data
• Easier to set up initial reconciliation configuration and matching rules
• Heightened confidence between counterparties on matching accuracy
• High degree of matching achieved for vanilla products
• Quicker to identify specific portfolio issues/exception
• Working in partnership with Algorithmics allowed:
• Better understanding of system functionality based on real examples
• Valuable feedback for required enhancements to the reconciliation tool
• Immediate support on understanding system/data issues encountered during reconciliation

During the Algorithmics Risk Conference 20th to 22nd June 2005, a two-hour user discussion 'Driving Reconciliation' presented by Geoff Robinson from CSFB, allowed other clients to hear the outcome of the reconciliation initiative. The user discussion also included topics related to data standards. Clients are currently experiencing difficulties with the underlying trade information received from counterparties whereby a large amount of time is spent on modifying the actual quality of the underlying data. Participants of the reconciliation initiative workshop held in our London office felt that working together with the counterparty face-to-face was useful in solving these issues.

Algorithmics has recently held a follow-up workshop for the attendees as these clients are excited about bringing the reconciliation initiative to closure and want to keep the momentum going.

Algorithmics will also host a reconciliation workshop coming up for our Scandinavian clients in September 2005 and one in New York for our US clients in October 2005.

If you are interested in teaming up with some of your counterparties in your country to organise a reconciliation workshop, please contact Elisa Nordstrom on enordstrom@algorithmics.com or tel: +44 (0) 20 7553 2639.

CSFB will lead the next London user group meeting shortly. Details on this event will be available in the next Collateral Management Newsletter. It will also feature more details on the panel discussion "Achieving Best Practice in Collateral Management" held for the attendees of the Algorithmics Risk Conference.

Following the user group meeting in Vienna, the German client base decided it would be more beneficial for them to form their own group and link up with other user groups as required. This allows them to focus on topics that are important to them such as 4-eyes module (staging). Since January the group had already met a few times before inviting Algorithmics to attend in July. A London user group attendee kicked off the meeting to present items that had been discussed at the London user group meeting. As the meeting progressed it became apparent that the German user base wants to focus more on the product rather than processes around collateral management. They presented at a high level their ideas for enhancements and are now in process of writing business requirements for changing existing functionality. The Algo Collateral team appreciates the involvement and efforts the German users are investing in our product.

If you are interested in setting up a user group in your country/region please contact Armando Hernandez (NA) on ahernandez@algorithmics.com or tel: +1 856 642 6101, Elisa Nordstrom (EMEA) on enordstrom@algorithmics.com or +44 (0) 20 7553 2639, Greg Ballesty (SEA) on gballest@algorithmics.com or tel: +61 2 9004 7400.

In February 2005 the first version of our online help was made available to all our clients. Although the content is not 100% complete, we feel that enough topics have been covered for it to be useful for Algo Collateral users. In particular, each new release of Algo Collateral is accompanied by a 'What's New' topic that enables clients to stay abreast of new developments and functionality at the click of a button.

From 4.6.8 onwards, clients can launch the help file from the help menu in Algo Collateral. In order to do this, they just need to save the compiled help file (Algo_Collateral.chm) into the folder where they have the Algo Collateral executable saved. Context sensitive help is also available in some screens and we are continuing to add to this functionality. This means that from within the screen they can hit the F1 key and call up the help relating to that part of the system.

Clients using versions of Algo Collateral prior to 4.6.8 can still make use of the help file. However, they cannot launch the help from within the system and will have to use the search functionality to find topics of interest. The user double-clicks the .chm file to open it and they should be aware that the help is written for 4.6 so it may include functionality that does not exist or is different in earlier versions of Algo Collateral.

If clients want to document their own external modules and extension fields they can do so in any help-authoring tool. The help will be available under the External Modules and Extension Fields items in the table of contents provided users compile Microsoft HTML Help files called Algo_Collateral_Module.chm and Algo_Collateral_Extension.chm and save these in the folder with the Algo Collateral executable. The only requirement to make this work is that the external module and extension field help files must also contain their own table of contents. From versions 4.8 onwards, context sensitive help will also be available for the external module and extension fields help. For instance, if a client clicks on an agreement extension field and hits F1 they will get the help specific to those extension fields and not just extension fields in general.

The help file is included on the CD with each new release. In addition, Algo Collateral has posted the file to General Documentation on the support site.

If you experience any problems using the help or would like to request additional documentation, you can log issues on the support site with an Issue Type of "Document". Alternatively, contact Ellen Swabey or Alison Duke with any questions or suggestions for improvements.

During the past year we have been working on adding new system features and functionality for the newly released Algo Collateral Version 4.8. We would like to thank our clients for the enhancement requests/ideas submitted that inspired and allowed us to develop our latest version of Algo Collateral. On an ongoing basis we strongly encourage all our clients to provide feedback on the enhanced functionality and to submit new suggestions for enhancements, which can be scheduled for a future release. Submit your requests on the Algo Collateral Support Site or contact your Algo Collateral professional services representative.

We would like to congratulate Nordea as our first client to be live with version 4.8. We are also in the process of another 4.8 implementation and several upgrades have already been requested.

Version 4.8 introduces new functionality in several areas of the system such as workflow and most significantly the re-vamped reconciliation tool. Under general documentation on the Algo Collateral Support Site users can find a 4.6 - 4.8 executive summary of all enhancements made in version 4.8. Clients still on version 4.4 or earlier may also find the 4.4 - 4.6 executive summary of interest.

Clients can also download our new online help documentation files (see section Online Help Project) for more detailed information on all enhancements. Users can also find a document (4.8 Reconciliation Tool.doc) that summarizes all reconciliation enhancements in Version 4.8. Please feel free to download and read sections of interest.

If you do not have a User ID and password to the Algo Collateral Support Site, please email a request for these to your Algo Collateral regional client support mailbox.

In the past year and a half we have seen many additions to the Algo Collateral team. In addition to some old faces who have returned to Algorithmics, we have hired new people across our Professional Services (PS), Product and Development teams. The new team members have valuable experience from the banking and collateral industry that we feel will add value to our clients.

We are pleased to announce that Farina Hering is now the Algo Collateral NA PS Manager and has assumed responsibility for the Algo Collateral PS Operations in North America since March 2005. Farina joined Algorithmics three years ago and has grown to be a key resource in the PS team and has been involved in significant consulting implementations. Farina has taken over the role vacated by Richard Barton who is now responsible for the Product team.

The Product team provides the link between the PS and the Development teams. Its main responsibilities are to write enhancement specifications, testing and documentation (see section on Online Help), and training materials, provide product demonstrations, and be involved in other market initiatives. Recent hires to the Product Team include Armando Hernandez and Andrew Simmons who bring many years of managing collateral, collateral teams and credit application expertise. The product team is currently envisioning the next generation of the Algo Collateral product with a focus on:

• Usability reviews (when usability reviews have been completed they will be posted on the Algorithmics website) 
• Performance
• Functionality

The development team in New Jersey has also seen a lot of additions lately. We welcome the most recent additions; Anthony Palumbi, Brian Pickard, Jonathan Graves, Nicholas Goede, Steven Eichert, Christopher Chau and Alex Shoumeikin.

New hires in the EMEA PS team beginning September 2005 are; Gerard Denham who has ten years repo and securities lending experience and Mark Sherwood with four years IT and Algo Collateral experience. Omar Taleb joined the EMEA PS team in July 2005. Omar was previously working as a consultant and brings many years of project management expertise and banking book collateral knowledge. Linda Bosch has joined the NA PS team and has several years of collateral management experience. After two years working in the development team Arun Sundaram has transitioned to the NA PS and is our first resource to be based in New York. The PS team is currently re-structuring support processes to be able to provide a more efficient service for our clients.

In an effort to provide a greater focus to support we are dedicating more resources to this function. This has resulted in an increased lead-time for consulting that will soon decrease thanks to our new team additions. Despite all our new hires we are still looking to recruit more staff across our teams in order to further increase customer satisfaction.