FUTURES INDUSTRY BUSINESS CONTINUITY AND DISASTER RECOVERY 2007 INDUSTRY TEST RESULTSDR IV November 5, 2007 Compiled and Developed by Tellefsen and Company,

FUTURES INDUSTRY BUSINESS CONTINUITY

AND DISASTER RECOVERY

2007 INDUSTRY TEST RESULTS“DR IV”

November 5, 2007Compiled and Developed by

Tellefsen and Company, L.L.C.

Tellefsen Consulting Group, Inc.Tellefsen Consulting Group, Inc.CGConsultants to the Financial Services Industry

2007 FUTURES INDUSTRY DR TEST RESULTS

TABLE OF CONTENTS

I. Background 3

II.II. Executive SummaryExecutive Summary 88

III.III. Overall Test ResultsOverall Test Results 1212

IV.IV. Problems EncounteredProblems Encountered 2727

V.V. Lessons LearnedLessons Learned 2929

VI.VI. Suggested Next StepsSuggested Next Steps 3333

Page Number:



I. BACKGROUND

The FIA Information Technology Division conducted the first annual Disaster Recovery (DR) Test in October 2004.Starting in Q2, 2007, the FIA Business Continuity Committee began detailed preparations for this year’s third annual industry-wide test.A Working Group was convened to discuss and agree on a date, goals, objectives, etc.



BACKGROUND (Cont’d) …

Two futures Industry BC/DR symposiums were held in September in New York and Chicago. Panelists included representatives from the major exchanges and clearinghouses:

CBOE Futures ExchangeChicago Board of TradeChicago Mercantile Exchange/CME ClearingThe Clearing Corp.Eurex AGICE Futures EUICE Futures US/ICE Clear USLiffeKansas City Board of Trade/KCBT Clearing Corp.MEFFNew York Mercantile Exchange/NYMEX ClearingPhiladelphia Board of TradeWinnipeg Commodity Exchange



BACKGROUND (CONT’D) …

The scope of this year’s initiative was designed to test disaster recovery back-up connectivity and functionality between exchanges, clearinghouses and member firms:

– Test firm back-up to exchange back-up sites (DR-DR).

– Verify connectivity.

– Test round-trip communications capabilities.

The symposium sessions were well attended by numerous operations managers and BC/DR representatives from various clearing and non-clearing firms.

Regular Committee conference calls were held between May and October (bi-weekly and weekly).




The Committee including representatives from:– Clearinghouses– Exchanges– FCMs– Clearing firms– Non-clearing firms– Key service providers– Independent software vendors




To encourage participation, the FIA agreed that all firm names would be anonymous and test results would be without attribution to any firm.Post-test interviews with firms and survey forms were used to fine tune the results.



II. EXECUTIVE SUMMARYThe fourth annual industry-wide disaster recovery test in the U.S. financial services sector was highly successful, largely in part to the good working relationship between exchanges and the firms.

Major U.S. and international futures exchanges, clearinghouses, FCMs and clearing firms participated in this year’s test:

103 FCMs, clearing firms and non-clearing firms participated - an increase over last year98% of firms tested successfully

Participant firms represent a significant critical mass of futures order flow and liquidity:

~88% of overall futures exchanges’ volume.



EXECUTIVE SUMMARY (CONT’D) …

This year’s test initiative was expanded to include several domestic and international exchanges:– ICE Futures EU– MEFF– Philadelphia Board of Trade

Exchanges and clearinghouses demonstrated that their systems, processes and procedures simultaneously worked very well.



EXECUTIVE SUMMARY (CONT’D) …

Feedback from the firms, exchanges and clearing houses indicated that this was a valuable and worthwhile exercise and that the industry should continue to do more common testing in the future.

Firms indicated that the test helped them:– Exercise their Business Continuity/Disaster Recovery

plans– Identify internal single points of failure– Tighten up and document their business continuity

procedures– Better understand the need for cross-training– Test connectivity with exchanges’ DR sites



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20

40

60

80

100

120

Firms as % of ExchangeVolumes

Source: Exchanges and Clearing Houses

TEST PARTICIPANTS REPRESENT A SIGNFICANT % OF EXCHANGES’ VOLUME



III. OVERALL TEST RESULTSThe major domestic and international futures exchanges and clearinghouses and 103 firms* participated in the test:

CBOE Futures 6CME Group 54Clearing Corp. 23Eurex 66ICE 87ICE Futures US/ICE Clear US 29Kansas City Board of Trade 17Liffe 19MEFF 2NYMEX/COMEX 40Winnipeg Commodity Exchange14

* Some firms are common members of multiple exchanges and clearing houses. PBOT testing did not involve members.



OVERALL TEST RESULTS (CONT’D)…

Test participants included both clearing firms and non-clearing firms.

Approximately 85% of all futures clearing firms participated.

98% of firms tested successfully.

92% tested from their Disaster Recovery sites and/or via back up communications facilities.

– The remainder tested from their primary sites.



CBOE FUTURES EXCHANGE

Tested via member firms’ back up connectivity to production CBOEdirect trading platform.

Scripted trade entry for VIX futures contracts.

Transmitted trades to the Clearing Corp’s. back- up systems.



CHICAGO BOARD OF TRADE

Members tested connectivity to eCBOT trading system.Participated in post-trade testing and generated a subset of October 26th trades to member firms from CME Clearing.Injected trades in trade handling system via back up site.Transmitted trade confirmations from CME Clearing.Accepted EFP, change records, PCS and large trader records.



CHICAGO MERCANTILE EXCHANGETested member firms back-up connectivity to production GLOBEX trading platform via CME remote back-up site.Entered a script of orders for various products.Received ex-pit, block trade information via CME remote site portal URL.Generated trade reporting and SPAN files from 10/26 trade date.Received PCS and large trader information from member firms.Transmitted trade registry data and SPAN files via FTP.



THE CLEARING CORP.

Tested member firms’ back-up connectivity to back-up clearing system.Confirmed system connectivity via successful system login message – no scripted trade entry.Transmitted previous business day clearing reports to member firms:

– Match off files– Report files– SPAN filesPCS, ex-pit and large trader information was not accepted.



EUREX AG

Tested member firms’ back up connectivity to production XCEED electronic trading platform.

Connectivity was confirmed via successful system log in message – no scripted order entry.



ICE FUTURES US / ICE CLEAR US Tested member firms’ back-up connectivity to the ICE Trader electronic trading system.Scripted order entry for Cotton and Sugar futures contracts.Trade entry via TIPS system for test trades, ex-pit, large trader and PCS information.ICE Clear produced end-of-day files:

– Match off files, report files and SPAN files.



ICE FUTURES EU Tested member firms’ back-up connectivity to the ICE Exchange electronic trading system DR site.Scripted order entry for Cotton and Sugar futures contracts.Tested ICE Block and other non trading functionality from DR site.ICE Web reporting via Internet portal for deal reporting, position reports, etc.Futures trades submitted to the ICE Clear DR site.



KANSAS CITY BOARD OF TRADE

Members tested connectivity to eCBOT trading system.Participated in post-trade testing.Generated a subset of October 26th trades to member firms.Transmitted trade confirmations from KCBT Clearing Corp.Accepted EFP, change records, PCS and large trader records.



LIFFE

Tested member firms’ back up connectivity to production CONNECT trading platform.

Connectivity was confirmed via successful system log in message to central gateways– no scripted order entry.



MEFFMEFF

Tested via the MEFF production ETS environment.

Simulated a failure of their London POP and successfully failed over to the backup system during the test.

Members entered trades and received reports.

Transfer files were delivered from clearing, but member firms’ back office systems did not receive any test data.



NEW YORK MERCANTILE EXCHANGE

Tested member firms’ back-up connectivity to GLOBEX trading platform, ClearPort TMS and ClearPort Clearing systems.

Order entry via scripted trade entry in crude oil, natural gas, heating oil, gasoline, silver and gold futures contracts.

Reported trade fill information to member firms.

Transmitted end-of-day clearing reports via NYMEX Clearing:

– Ex-pit, PCS, large trader information– 591 Member Trade Register report



PHILADELPHIA BOARD OF TRADE

PBOT conducted an ‘internal’ testPBOT conducted an ‘internal’ test

Used the PBOT/XL trading systemUsed the PBOT/XL trading system

Trade Orders received at PBOT/XL Help Desk.Trade Orders received at PBOT/XL Help Desk.

Fill reports were generated.Fill reports were generated.

PBOT trade file processed for clearing and PBOT trade file processed for clearing and settlement.settlement.



WINNIPEG COMMODITY EXCHANGE

Members tested connectivity to eCBOT trading system.Participated in post-trade testing.Generated a subset of October 26th trades to member firms from Clearing and transmitted trade confirmations.Accepted EFP, change records, PCS and large trader records.



THE MAJORITY OF PARTICIPANTS WERE CLEARING FIRMS

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Non-Clearing Members

Clearing Members

Source: Exchanges and Clearing Houses

Number of Firms



IV. PROBLEMS ENCOUNTEREDA number of problems were encountered, including:

– Incorrect FIX tags impacted routing logic– Configuration parameter not set properly on back up

servers– Configuration file issues with ISV systems– MQ connectivity/could not generate MQ messages– Incorrect IP addresses/incorrect network configuration– Firewall configuration parameters– Member firm hotline was not working initially– Exchange trading system not accepting logins– Exchange web portal connectivity problems– Remote login to clearing system did not work

Most were resolved quickly, although some caused an unexpected delay to test progress.



PROBLEMS ENCOUNTERED (CONT’D)…

Some firms experienced procedural problems with invalid or expired passwords, looking at the wrong system screens, etc.One exchange had problems with firm’s access to their backup systems, issues with SFTP encryption certification.Some firms did not verify that their back up servers and equipment was properly functioning prior to the test.



V. LESSONS LEARNEDThe futures industry proved that it is capable of successfully orchestrating an industry-wide disaster recovery test.

Most problems that were encountered were rectified quickly, although some caused an unexpected delay to the restoration of full processing capabilities:

Under real life situations, most problems could probably be resolved within hours or by the next business day.

The exchanges and clearinghouses’ internal support processes and procedures worked well.



LESSONS LEARNED (CONT’D)…

Firms indicated that the test helped them:– Identify some internal single points of failure– Tighten up and document their business continuity and

system fail over procedures– Better understand the need for cross-training– Test connectivity with exchanges’ DR sites

Pre-test connectivity testing was valuable and should be a pre-requisite for future tests.




Firms must be aware of any environmental impact on their network fire walls caused by test requirements:– Have proper network staffing support actively engaged during

the test.– Be aware of any firewall impact and make changes accordingly

to accommodate testing.

There is a need to better coordinate testing activities:– More time should be allocated for this during future tests.– Need to identify and corroborate all test contacts prior to the

tests.– Try to standardize scripts across exchanges.




Need clear support desk procedures and sufficient staffing at exchanges to properly support the test.

A number of firms apparently did not pre-register and “showed up” for the test at several exchanges:– They were set up and most tested successfully, however, this

placed an additional demand on exchange and clearing house support staffs.

– Additionally, several firms that registered at 1-2 exchanges were “no shows”



VI. SUGGESTED NEXT STEPS

Survey firms and exchanges for input to future testing.Announce the details of the 2008 DR test:

– Define the scope of next year’s scenario test exercise

– Establish the goals and objectives of test initiatives

– Announce dates early in advanceBroadly “market” future test initiatives to firms’ IT, operations, trading and senior management, to ensure a wider dissemination of test information within all firms.

Documents

FUTURES INDUSTRY BUSINESS CONTINUITY AND DISASTER RECOVERY 2007 INDUSTRY TEST RESULTSDR IV November 5, 2007 Compiled and Developed by Tellefsen and Company,