Offshoring in Sydney: A Case Study of FX Operations Management

1. Offshoring: Sydney A Live Example FX JSC Operations Managers Sub Group Operations Managers Conference April, 2005

2. c:\my documents\wordmark\a2powerproject\bbstart.pot Global Operations Managers Conference Table of Contents Section 1 2 Centre Model Section 2 Why Sydney Section 3 Support Model & Structure Section 4 The Reality The other side of Sydney Section 5

3. c:\my documents\wordmark\a2powerproject\bbstart.pot Global Operations Managers Conference 2 Centre Model • Why • Opportunity to create a dual processing centre model outside of the major financial centres • Reduced Operational headcount from four centres to two • Centralised functions • Reduces costs in supporting our core vanilla businesses • How • FX was specifically chosen as the test group for the two centre approach due to similar processing streams • A review was conducted to identify the functions which could be covered in Sydney during an extended working day. • Services provided in this location directly supports the entire Asia region and half of London working day. • Client Service Groups remained in the trading centres

4. c:\my documents\wordmark\a2powerproject\bbstart.pot Global Operations Managers Conference Why Sydney Ability to leverage experienced Morgan Stanley managers on site Sydney earliest time zone Higher cost differential Low geo-political risk Established financial centre Language skills (including Japanese) CLS best supported in the Pacific Rim region

5. c:\my documents\wordmark\a2powerproject\bbstart.pot Global Operations Managers Conference Support Model & Structure • Based on the functional review the following sub-groupings were developed. • Pre-settlement services • Account Maintenance • CLS • Trade Maintenance • Payment Processing • Phone confirms • Post-settlement support • Reconciliation • Investigations • Compensation • Sydney Support Structure • 2 x 10 Hour shift structure – 1 Day and 1Night • Day shift comprises staggered start times to facilitate all time zones • Night shift work a 4 day week Limited functions • Documentation & Payments • Payment processing • Incoming confirmations • Chasing Global coverage supported in Sydney Primarily supported in 2nd location Primary functions

6. c:\my documents\wordmark\a2powerproject\bbstart.pot Global Operations Managers Conference The Reality • People • Good pool of skilled people in relevant products / processes • Graduate population is keen to get into the financial industry • Higher than expected attrition rate • Market is buoyant in Sydney, similar organisations are competing for FX skill set • Supporting Shift structures • Processes • CLS support well established in Sydney, in-depth expertise / knowledge base now in place • Centralisation of reconciliations, creating economies of scale, improved ability to service our clients with earlier fail information • Centralisation of other functions (e.g. SSI maintenance) resulted in enhanced global standards in how we supported our businesses

7. c:\my documents\wordmark\a2powerproject\bbstart.pot Global Operations Managers Conference The Reality contd…… • Business Unit Relationships • Working remotely has made it difficult to establish strong relationships with the Business Unit for new staff, a new and different approach was required. • Global Operations Communication • Getting people to think differently in the way they communicate in a global operations with support offices now outside of traditional financial centres

8. c:\my documents\wordmark\a2powerproject\bbstart.pot Global Operations Managers Conference The other side of Sydney……