Case Study

May 21, 2003

Today, with interest rates being kept so low, corporations and individuals alike face the task of making the best use of their assets. Securities transactions through online trading over the Internet are now gaining in popularity as a means of asset utilization accessible to everybody. As well as seeing high value in putting transactions online, securities companies are also adopting a systematic approach to business. Both measures have a direct impact on improved quality of service.

Nomura Securities Co., Ltd., the largest securities company in Japan, has a better than average record of early development and deployment of such systems. Within their group, the Nomura Research Institute, Ltd. (NRI), plays an active role in their ability as an early adopter. In particular their pioneering and progressive approach to the introduction of advanced security transaction systems and related business is highly regarded in this industry sector.

Nomura Securities has also taken another step in securing the reliability of its system. That of effectively processing the ever-growing volume of securities transactions. To do so, the company took the traditional and standard approach of enhancing its computer hardware performance to both increase its processing power and secure higher reliability in its UNIX environment. The server that met and was chosen for Nomur's requirements was a PRIMEPOWER server from Fujitsu Ltd.

Faster Information Transfers Cause Dynamic Price Movements; The Challenge is How to Deal with Growing Workloads

Naohiro Sako, Manager,
Equity Planning Office,Nomura Securities
(in charge of stock transaction information systems)

Securities trading is a market active with eager players including many personal investors. A good example is Nomura's online trading service aimed directly at such private investors. It saw its millionth account opened on June 26, 2002 and the number of accounts is still growing.

Trade is becoming all the more active in the market, as securities dealing is more accessible thanks to substantial advancements in online trading services, in addition to home trading.

Naohiro Sako, Manager, of the Equity Planning Office at Nomura Securities and in-charge of such equity products, commented on the trend: "Systems now hold a key position in all the aspects of securities trading whether they are online or not. As stability and processing performance of a system directly influences transactions, it is not too much to say that it is the system that is carrying out the business."

In the past, computers installed at a securities company simply worked as terminals connected to a system at a stock exchange. Orders were input one by one each time they were accepted. For a time this practice competently met the needs of business. But now, stock transactions are widely pursued by an ever-increasing number of investors. Plus related information is being transferred at higher rates in proportion to the growth of Internet use. The resultis larger fluctuations in prices. This in turn means that trade in the market becomes even brisker. Such a climate, is compelling securities companies to handle an ever increasing volume of transactions with ever more complicated content.

Mr. Sako also said that Nomura traders are handling more cases of "split orders." What were previously large orders are now being split into smaller volumes for separate buying during the trading day. The result has been an indispensable need for higher performance servers.

System Performance is Vital

Mr. Sako explained the day-to-day operation: "Leveraging computer systems is essential not only in dealing but also in the day-to-day operations of a trader. For example, there may be a client who requests to be informed of the status of his contracts that day immediately after closing. With manual operation, the large volume of contracts and the complexity of transaction content make it virtually impossible to provide an on-time client report. The only way to address this issue is by reports prepared automatically by the system for each client."

Almost every service offered to clients by today's securities companies depends on systems. These transaction status report summaries as well as a range of information services in addition to handling buy and sell orders. Mr. Sako also said, "Securities companies are requested to fulfill value-added services, such as information provision, while coping with ever more complex transactions. In each case, 'immediate action' is a must; and processing power is a key factor for stable operation of the system."

If a transaction management server is unable to handling traffic, there will be a lengthy time lag from data input by the trader to the moment the deal is actually done. In the meantime, that stock might undergo a price change. In practice, an instruction on trade is issued from a system in a brokerage house to the system at the stock exchange through a network. If too many orders are generated, there will be a delay due to unprocessed data waiting in the pipeline. A reliable server in the brokerage house is necessary to avoid such potentially detrimental delays.

Mr. Sako further commented: "Currently, clients can directly give sell or buy orders online. Therefore, the performance and reliability of their system is what makes securities companies reliable."