Offshoring: Sydney A Live ExampleApril, 2005

FX JSC Operations Managers Sub Group

Operations Managers Conference

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Global Operations Managers Conference

Table of Contents

2 Centre ModelSection 1

Section 2

Section 3

Why Sydney

Section 4

Section 5 The other side of Sydney

The Reality

Support Model & Structure

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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

Global Operations Managers Conference

2 Centre Model

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Global Operations Managers Conference

Why Sydney

Ability to leverage experienced Morgan Stanley managers on site

Low geo-political risk

Language skills (including Japanese)

Higher cost

differential

Sydney earliest time zone

Established financial centre

CLS best supported in the Pacific Rim region

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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

Documentation & PaymentsPayment processingIncoming confirmationsChasing

Primarily supported in 2nd location

Global coverage supported in Sydney

Primary functions

Limited functions

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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

Global Operations Managers Conference

The Reality

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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

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Global Operations Managers Conference

The other side of Sydney……