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RE: Financial Services Use Case

From: Burdett, David <david.burdett@commerceone.com>
Date: Mon, 12 May 2003 08:28:54 -0700
Message-ID: <C1E0143CD365A445A4417083BF6F42CC053D1AAB@C1plenaexm07.commerceone.com>
To: "'Steve Ross-Talbot'" <steve@enigmatec.net>, public-ws-chor@w3.org
Steve
 
Apologies for not responding sooner, but I have been busy for the last week!
 
Anyway, your use case made me think that really what we have here is the
following (correct me if I have misunderstood).
1. The Sophisticated Trader (ST) conducts a "select venue" choreography
where he decides which venue to use to place the treasury bond
2. Once the "venue selection" choreography is complete, he carries out a
"conduct trade" choreography whose detail varies depending on the outcome of
the "select venue" choreography.
3. The "select venue" and "conduct trade" choreography are combined into one
"internal" business process by the ST.
 
My guess would be that the "conduct trade" part could be the result of
alternative different earlier choreographies as well. So isn't this more
about composing new "higher level" business processes and choreographies out
of lower level ones.
 
David

-----Original Message-----
From: Steve Ross-Talbot [mailto:steve@enigmatec.net]
Sent: Monday, May 05, 2003 10:00 AM
To: public-ws-chor@w3.org
Subject: Financial Services Use Case



Background 

Financial Service, at least wholesale banking (investment banking), differs
from most other web service domain in that it is much much more dynamic.
Dynamic in this sense means that the act of deciding who to trade with
depends on information that is dynamic. Prices tend to predominate in this
domain but they may be seen as serving to guide as to what one might do. So
for example if the price exceeds a certain threshold you might do one thing.
If the rate of change exceeds a threshold you might do something else. 


Of course any trading situation that is price driven (commodity, energy,
derivatives and so on) markets. So this problem will apply to Elf, BP,
Shell, Total, and of course any US based energy markets as well as the
futures markets attached to them and the commodity markets are the same. 


Description of how it is done today 

Today Joe Trader (JT) simply doesn't do it. Sophisticated Trader does. ST
looks at all sorts of market indicators and decides what strategy to employ.
That strategy might be to place trades with specific execution venues. An
execution venue is some place (represented by a company i.e. TradeWeb,
Instinet, MTS, EuroMTS etc etc) at which buyers and sellers meet up. because
there are several venues for different types of financial instrument ST
needs to keep in their head what the different contracts are for each venue.
So one venue might allow immediate price change, another might say only for
order above a certain value and another might simply restrict it to prices
changes every 5 minutes (from the point of view of whoever places that
price). 


Because only ST can have a hope of managing the situation the general case
put financial service inititutions at risk. They might offer a US treasury
bond at one price for 10 million units but over multiple venues. They want
to sell 10 million. But the venues increase their risk to the number of
venues times the units. Only ST, at best, can manage this. IT support is
needed. 


Description of what would be desirable tomorrow 

What they would like to do is on a per trade basis indicate how the trade
should be placed. So JT (let alone ST) might want to place a 10 million
units deal across several venues based on some business rule that minimizes
their exposure. On the other hand JT might want to indicate the price of a
deal right now, with the intention of changing the price pretty soon while a
bigger deal, that may change the price anyway is being pursued. Obviously JT
(as well as ST) want to ask each venue what their contract allows in order
to place the trade in the optimal way.   


What does this have to do with Choreography 

I thought I'd add this to make the relevance clear. The impact on
choreography is that the very contract that a choreogaphy (the external
observable behaviour ) represents may provide attributes that form part of a
query or constraint that is part of a strategy employed by a JT or an ST to
do their job. 


Without necessarily lifting a skirt on a venue, a venue could be a web
service, a JT or an ST could be interacting with another web service. What
they both want to do is examine the potential venues (web services) so as to
correctly place their trade with those venue based on some behavioural
attributes. 


This is late binding of web services based on choreography as well as
impacting other possible aspects of web services such as UDDI etc etc. 


Closing note 

I'd be happy to add more to this if required to do so. 
Received on Monday, 12 May 2003 11:28:35 GMT

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