Title: Presentation On AMS/3 (I) Overview (II) Functions
1Presentation On AMS/3(I) Overview (II)
Functions Capacity (III) Standards(IV)
Preparation for Rollout
2(I) Overview
3Overview
- AMS/3 provides a reliable trading system for
investors, Exchange Participants and market
participants. - AMS/3 provides a trading infrastructure which
connects investors, Exchange Participants and the
central markets through eCommerce facilities. - AMS/3 can bring benefits and business
opportunities to the Hong Kong securities market.
4AMS/3 consists of five major components Host,
Trading Terminal, Multi-Workstation System (MWS),
Open Gateway (OG) and Order Routing System (ORS).
5Benefits
- After its full implementation, AMS/3 will bring
the following benefits to investors, Exchange
Participants and the market. - To Investors
- Enable investors to have access to the central
market through additional channels via Exchange
Participants - Place trading requests anywhere and anytime via
Internet and mobile phone - Allow efficient access to trading request
processing status
6Benefits of AMS/3
- To Exchange Participants
- Increase Exchange Participants order throughput
per trading right - Allow improvement of operational efficiency
- reduce manual work to handle investors
trading requests, answering enquiries about
order status - better order management for traders
-
7Benefits of AMS/3
- To Exchange Participants
- Allow for more efficient risk management through
electronic investor authentication and built-in
credit control function -
8Benefits
- To Hong Kong
- Improve the Hong Kong securities markets
competitiveness - higher market accessibility and trading
efficiency will help attract more market
participation - provide market infrastructure of higher trading
capacity - allow multiple-market trading platform and
flexible trading hours - set the path for the future implementation of
straight- through processing
9Benefits
- To Hong Kong
- A market accessible by global investors
- contribute to the globalisation of Hong Kong
securities market - strengthen Hong Kongs position as a major
international financial centre
10(II) Functions Capacity
11Comparison of AMS/3 and AMS/2 Functionalities
AMS/2
AMS/3
Single Market
Multiple Market
Market Model
Automatching
- Automatching - Single price auction - Allow for
other new trading methods
Trading Method
- Limit order - Enhanced limit order - At
auction order - Others
12Comparison of AMS/3 and AMS/2 Functionalities
AMS/2
AMS/3
- Done by EPs - Investors can initiate through
Internet or phone
Order Modification and Order Status Enquiry
Done by EPs
- Done by EPs - Sent to investors
automatically by email, pager or mobile phone
Done by EPs
Order Confirmation
Straight-through Processing
Trading platform established to set the path for
the future implementation of straight-through
processing
N/A
13Comparison of AMS/3 and AMS/2 System Capacity
(1) Host
Handle 200 transactions per second (2.88 million
orders per day based on 4 hours of trading)
Handle 75 transactions per second
14Comparison of AMS/3 and AMS/2 System Capacity
AMS/3 Capacity
Component
(4) Open Gateway (OG)
Hardware capacity 12 transactions per second
(5) Multi-Workstation System (MWS)
Max. 12 transactions per second and 6
transactions per second if risk management
function is on
(6) Order Throughput in addition to first
terminal
1 second per order
(7) Order Routing System (ORS)
40 transactions per second
8 workstations can be connected to an MWS
server.
15Scalability Paths
- AMS/3 Host
- AMS/3 Host system is designed to be scalable,
meaning that the system capacity could be
expanded by adding hardware like CPU, memory,
disc, etc and the software reconfiguration of
AMS/3. - AMS/3 Network
- If market needs warrant, AMS/3 Network expansion
involves addition of network hardware and
reconfiguration of routers and Internet Protocol
addresses for the entire network.
16Scalability Paths
- ORS
- ORS is designed to be scalable to support future
transaction growth. Its capacity can be further
expanded by adding ORS server and security
hardwares. - OG MWS
- OG vertical scalability is currently limited by
the security hardware (for message encryption /
decryption) of 12 orders per second. Upgrade
direction will either be installing new
encryption devices or, if technically feasible,
to adopt software encryption mechanism.
17Throttle Rate
- Throttle rate is the number of orders that can be
submitted to the Host System from OG within a
specific period of time. - Rationales of adopting throttle control
- As a flood control mechanism which is common to
systems of this type, to ensure fair and orderly
operation of the market - To ensure OG-Host traffic flow will not exceed
the planned capacity of AMS/3 - As a reference of SEHK to plan, measure and
manage trading capacity and upgrade activities
18Throttle Rate
- The throttle rate under AMS/3 is defined as 1
second per transaction per trading right. The
order throughput of AMS/2 is 2.5 seconds per
terminal. Some Exchange Participants may have
installed two off-floor trading terminals (second
and third terminals) per trading right.
19(III) Standards
20Resources Involved In AMS/3 Implementation
- Substantial resources required for
- Project planning and system development
- Training, installation and roll-out activities
for about 500 broker firms, as well as
information service providers and software vendors
21Resources Involved In AMS/3 Development
- Project Steering Group formed by senior
executives of the Exchange from the business and
IT areas - Andersen Consulting, the project manager, has
acted as the System Architect and is responsible
for User Acceptance Testings - Compaq supplies and installs host computer system
and OG - PCCW-HKT responsible for MWS, ORS and network
development team - Involve over 1,000 man months, and 140 external
consultants at its peak. 50 staff from various
departments e.g. IT, Trading and Information
Services
22Standards
- The Exchange is committed to ensuring the highest
quality and service standards of AMS/3. - Critical problems identified in each test must be
solved before moving to the next step. - The Exchange has appointed two expert consultants
to conduct separate review on system security and
overall system readiness for launch in order to
ensure that proper and the highest testing
standards have been achieved.
23Before AMS/3 market rehearsals, various testing
activities have been performed to ensure
readiness at individual component, system and
operational levels. These items were covered as
follows
- Functional Test
- Volume Stress Test
- Fail-over and Recovery Test
- Security and Operation Control Test
Production Readiness Test
User Acceptance Test
AMS/3 Day-0 Rehearsal Programme
- Production Environment Shakedown
- Production Fallback (e.g. Fallback to Backup Site
) - Connectivity Test
- Network Operations Setup
- Market Contingency Plan Rehearsal (e.g. Fallback
to AMS/2)
24Production Readiness Test
- Production readiness tests had been conducted in
the past 10 consecutive weeks. - 10 pilot MWS brokers, 41 pilot BSS brokers,
selected terminal brokers and all information
vendors participated. - Themes of the tests include production
environment shakedown, production fallback,
connectivity, network operations setup,
fallback to AMS/2, and volume stress, etc. - Technical issues encountered during the fallback
test from primary site to backup site. The
issues had been resolved.
25(IV) Preparation for Rollout
26Preparation for Rollout A series of broker
activities were held to familiarise brokers with
AMS/3
27Preparation for Rollout
- The Exchanges various initiatives to get the
market prepared for AMS/3 rollout - Raising public/market awareness
- market consultation before system development
- AMS/3 web corner
- press release and presentation to news media
- AMS/3 newsletter
- other investor education initiatives
28Preparation for Rollout
- Support for Exchange Participants
- seminars
- product brochures
- site visits
- terminal training /computer based training
29Preparation for Rollout
- Support for Information Vendors to facilitate
their connectivity to AMS/3 - Support for BSS Suppliers
- release technical specifications to support their
in-house system development - briefing sessions, including technical briefings
after production readiness tests to share
experience for ensuring that their systems are
capable for handling high throughput - Help desk to handle telephone and email enquiries
30Preparation for Rollout
- Next Step Market Rehearsals
- Four consecutive weeks from 2 September - 23
September - Aim to familiarise all Exchange Participants
(including 10 pilot MWS and 41 pilot BSS) with
new trading environment - New functionalities
- Operation of Trading Terminals, MWS and OG
- Volume stress (3 times of historical peak)
- AMS/3-to-AMS/2 fallback
31Details of the Market Rehearsal (MR) Scenarios
and Calendar are as follows
32Day 0 Rehearsal Programme
- General
- AMS/3 terminal operation rehearsal following
completion of terminal training for 1,800
traders - Compulsory participation and reporting of
rehearsal status by Exchange Participants - Real-life trading procedure
33Day 0 Rehearsal Programme
- General
- Briefings will be provided to all Exchange
Participants on Market Rehearsal arrangements - Rehearsal programme will be closely monitored and
reviewed by the Exchange and the SFC, and
Exchange Participants are requested to
participate in compliance with stated
requirements and guidelines - Rehearsal programme consists of Normal Trading,
Volume Stress, Fallback to AMS/3 backup site,
and Fallback to AMS/2
34Day 0 Rehearsal Programme
- Normal Trading Rehearsal
- Repeated rehearsals for each session for all
on-floor and off-floor terminal users - Script-free, but with guidelines to ensure
realistic real-life practice (For example
order quantity NOT greater than 10 board lots,
and order price should be within /- 32 spreads
against opening price), and - Exchange Participants are requested to follow
the guidelines or else will be suspended from the
rehearsal - Include normal administrative activities (For
example new listings, suspension of trading for
individual stocks, and trading and issuers news
announcements)
35Day 0 Rehearsal Programme
- Volume Stress Rehearsal
- Two runs of two 45 minutes sessions of volume
stress test at 3 times historical peak for
350,000 orders and 250,000 trades per each 45
minutes session - Exchange Participants are required to key in 3
orders per minute using off-floor terminals, and
on-floor terminals will be reserved for
computer-assisted generation of traffic to meet
the target stress
36Day 0 Rehearsal Programme
- Fallback Rehearsal
- AMS/3 to AMS/3 backup site (normal contingency
fallback) - AMS/3 to AMS/2 ("3 to 2" fall back, special
contingency fallback for the first two weeks)
37 AMS/3 Rollout Schedule
3rd Batch Rollout
Pilot Rollout 10 sets of MWS terminals
Pilot BSS Rollout
1st Batch Rollout 50 MWS, 30 BSS
2nd Batch Rollout 50 MWS, 40 BSS
10 MWS
50 MWS
xx MWS
50 MWS
Terminals
3040 BSS
30 BSS
xx BSS
40 BSS
Month 3
Day 0 3 weeks
Month 2
Day 0
Month 1
DAY 0
DAY 0 3 weeks
DAY 0 2 month
DAY 0 3 month
- Terminal Delivery
- MWS Multi- Terminal Mode Delivery plus OG
Delivery
- Activate 30-40 BSS plus OG Delivery
- Rollout depending on market needs
- Auction Trading
- New Order Types - Enhanced Limit Order
- Rollout depending on market needs
- ORS Internet Delivery
- ORS Mobile Delivery
38AMS/3 Rollout Schedule
Day 0
Day 0
Day 0 3 months
Day 0 3 weeks
39Preparation for Rollout
- Rollout strategy - implementation by phases to
manage implementation risks and preparation for
progressive market readiness. - The Exchange aims to identify any possible market
and system issues related to the system rollout
in market rehearsals. - The Exchange will determine if other readiness
activities will be required after four weeks of
market rehearsals.
40On Day 0 (To be decided after satisfactory Market
Rehearsals results)
- AMS/3 will operate in terminal mode.
- Other functions and open accessibility will be
activated in phases.