Orc Software

POWERED

BYORC

Find the opportunities Trade on them Secure your profit

MISSION STATEMENT < 1

THE

ORCMISSION

Orc Software provides business-critical, dynamic and turnkeytechnology that enables participants who trade on electronicmarketplaces to fully realize their market and revenue poten-tial on a global scale.

Orc Software’s objective is to be the leading global supplierof technology for electronic trading and to constitute the coretechnology of the client’s business operations. Orc Softwareshall be the first choice of third-party developers, consultantsand business partners, and provide service and support of thehighest quality.

DONTTAKE

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TAKE THEIRS.

INVESTMENT BANKSInvestment banks use the most advanced compo-nents of the Orc System to trade on several marketssimultaneously and in multiple currencies. For aninternational investment bank, it is important to beable to price and trade complex derivative productsand to monitor their global risk in real-time.

TRADING AND MARKET MAKING FIRMSTraders and market makers place very highdemands on functionality, speed, reliability anduser-friendliness. The Orc System’s real-time pri-cing and automated quoting functions make it easyfor market makers to fulfil their obligations. Theyalso value the integrated position keeping and riskmanagement in real-time, as well as the ability totrade on a large number of marketplaces globally.

BROKERAGE HOUSESTraditional brokerage houses use the Orc System toimprove the efficiency of order management andorder execution. From a single workstation, a brokercan trade on several marketplaces and in severalinstruments simultaneously. The Orc System alsoenables integration with the client’s administrativesystems, as well as an automatic control of theorder flow – which together considerably reducecosts and risks for the client.

INTERNET BROKERSInternet brokers place very high demands on effec-tive system support that can ensure that the end-client’s order is directly forwarded to the marketpla-ce, and that the end-client can always see the order

status. Through the built-in order validation of theOrc System, an assessment of the end-client’s credit-worthiness can be carried out in real-time, whichreduces the risk for the brokerage house. Otheradvantages are the ability to trade on many market-places, that the Orc System can easily be integratedin existing infrastructures, and that the system canhandle large transaction volumes.

INSTITUTIONAL INVESTORS Institutional investors primarily require portfolio andrisk management as well as order execution. OrcSoftware offers these institutions risk managementin real-time and efficient execution via brokers in alarge number of marketplaces, which in turn enablesa reduction in the number of trading terminals.

HEDGE FUNDSLike institutional investors, hedge funds use the OrcSystem for advanced portfolio and risk manage-ment and for order execution. Hedge funds alsoappreciate the ability to price and trade complexderivative products.

ELECTRONIC EXCHANGESAn electronic marketplace consists of the market’scentral system as well as the systems that the mem-bers use when trading. An increasing number ofexchanges choose to offer or recommend the OrcSystem to their members, in line with the increase indemand for electronic trading systems. An exampleis the International Securities Exchange (ISE), anAmerican derivatives exchange, where Orc Soft-ware via ISE has approximately 25 clients.

THEWORLDS LEADING FINANCIAL

INSTITUTIONS AS CLIENTS

Orc Software’s clients are market participants who trade on electronic marketplaces. The

majority work with complex financial transactions and therefore place very high demands

on the effectiveness, functionality and reliability of their trading systems. Clients include

investment banks, trading and market making firms, brokerage houses, Internet brokers,

institutional investors, hedge funds and electronic exchanges. They use the Orc System

for analysis, electronic and automated execution, as well as risk management.

Orc Software’s clients include a large portion of the leading institutions in the

international financial markets, such as Citibank, Dresdner Kleinwort Wasserstein,

JP Morgan, Merrill Lynch, UBS Warburg, Crédit Lyonnais, Soros Fund Management

and E*TRADE. At the end of 2001, the Orc System was used by 145 client sites in

18 countries in Europe, North America, Asia and Australia.

CUTTING EDGETRADINGANDRISK

MANAGEMENTSOFTWARE

THE ORC SYSTEM < 5

The Orc System is a standardized software system for trading in real-time. From a single

workstation, a client can trade on several different electronic marketplaces simultaneously.

The Orc System contains advanced calculation models for analysis and pricing of finan-

cial instruments. A further important component of the Orc System is integrated portfolio

and risk management. The system is flexible and user-friendly as well as being easy to

install and maintain.

With the Orc System, clients can quickly identify and price business opportunities,

effectively and safely carry out transactions via fast and reliable market connections, as

well as monitor their total risk via the system’s risk management functionality in a single

system. All in real-time. Examples of financial instruments traded are equities, options,

futures, bonds, commodities and energy contracts, as well as currencies.

THEORCSYSTEM

6 < THE ORC SYSTEM

GLOBAL MARKET ACCESSAn Orc System user can currently be connected tomore than 35 different electronic marketplaces inreal-time. This implies that a client can act simulta-neously on marketplaces in several countries and indifferent instruments without having local represen-tation. The client can trade via the direct marketconnections wherever they hold exchange mem-bership. Using the Orc System, a client can alsoplace orders via a broker in marketplaces where theclient is not a member. In addition to different mar-ketplaces, the Orc System can be connected to

several information services. The number of market-places and information services is increasing conti-nuously in line with the establishment of furtherelectronic marketplaces.

LEADING TRADING APPLICATIONSThe Orc System offers several trading applicationsthat have been specially designed for differentkinds of users and areas of use.

Orc Software’s most advanced trading applica-tion is designed for professional traders and marketmakers whose business activity is characterized by

THE ORC SYSTEM

GLOBAL ACCESSMARKETPLACES

INTEGRATIONPOSSIBILITIES (API)

THIRD-PARTY DEVELOPEDAPPLICATIONS

LEADING TRADING APPLICATIONS

The picture illustrates the structure of the Orc System and its key components. The different exchanges are experienced as onesingle virtual market by the user. Through an analysis of market information, business opportunities are identified and order or quo-tes are sent, manually or automatically, to the electronic exchanges for execution. The portfolios in the Orc System are updated inreal-time after each executed transaction and further analysis can be made through the risk management function, which in turnforms the basis for decisions regarding new transactions.

THE ORC SYSTEM < 7

very transaction-intensive trading and complex riskmanagement. The product enables rapid pricing ofa large number of financial instruments, as well asadvanced automatic execution and automatic hedgingfunctionality. Portfolios are updated immediately andkey figures for risk are calculated in real-time.

The Orc System also offers trading applicationsthat are specially designed for brokers who needrapid price information and the ability to place largetransaction volumes. With the help of the system,order validation takes place via direct credit controlof the end-client’s account. In addition, the user can

quickly and easily produce reports of transactionscarried out.

For clients with simpler needs, there are tradingapplications for use over the Internet. The client canreceive price information in real-time, place ordersdirectly to the market, as well as monitor orders andpositions. These applications in turn enable OrcSoftware’s clients to provide their institutional andretail clients access to a tool created for professio-nal traders.

The administration and monitoring tools of theOrc System enable the client to add users and mar-

EquitiesAustralian Stock Exchange

seats market ASX Australia

Copenhagen Stock Exchange CSE Denmark

Euronext France

/Belgium

/Holland

HEX equities HSE Finland

Jiway JIWAY Global

London Stock Exchange SETS United Kingdom

Mercato Telematico Azionario MTA Italy

Nordic Growth Market NGM Sweden

Oslo Stock Exchange OSE Norway

Russian Trading System RTS Russia

Stockholmsbörsen Sweden

Swiss Exchange SWX Switzerland

TLX TLX Italy

virt-x United Kingdom

/Switzerland

Xetra XETRA Germany

Xetra Vienna WBAG Austria

DerivativesAustralian Stock Exchange

options market ASX Opt Australia

Austria Stock and

Options Exchange ÖTOB Austria

Bourse de Montréal ME Canada

Chicago Board of Trade CBOT USA

Eurex EUREX Switzerland

/Germany

Euronext MONEP/MATIF France

/Belgium

/Holland

HEX derivatives SOM Finland

Hong Kong Futures Exchange HKFE China

International Securities Exchange ISE USA

Italian Derivatives Market IDEM Italy

London International Financial

Futures and Options Exchange LIFFE United Kingdom

Mercato Covered Warrants MCW Italy

Oslo Stock Exchange OSE Norway

Stockholmsbörsen Sweden

BondsCopenhagen Stock Exchange CSE Denmark

Stockholmsbörsen Sweden

EnergyNordic Power Exchange Nord Pool Denmark

/Finland

/Norway

/Sweden

PulpPulpex United Kingdom

/Sweden

Order Routing NetworksBridge Trading Global

Lexit USA

NeoNet Europe

Information VendorsBridgeFeed Global

Open Trade United Kingdom

RendezVous Global

Reuters SSL Global

MARKETPLACES, DECEMBER 31, 2001

8 < THE ORC SYSTEM

ket connections to the system, and to regulate aut-hority. The client can also set security barriers thatregulate the maximum risk a trader or end-clientmay take.

FLEXIBLE INTEGRATION POSSIBILITIESOpen interfaces are provided by Orc Software inorder to facilitate the development of solutions thatcomplement the Orc System. Through the flexibilityof these open interfaces, it is easy for the client to

integrate the Orc System with their businesssystems, for example back-office systems, and todevelop additions and adaptations such as pricingmodels. With the Orc System as a base, clients canalso build their own products that can then be offe-red to end-clients. The Orc System thereby acts as atechnological platform around which the variousbusiness systems of the client are designed.

THE ORC TECHNOLOGYThe various trading applications use a central ser-ver, where for example information about positions,orders and transactions is stored. It is also the ser-ver that is connected to the different electronic mar-ketplaces. The server has a flexible design, is com-pletely scalable and uses one of the most robustoperating systems in the industry, Sun Solaris.

The trading applications are available for theMac OS X and Windows NT/2000/XP operatingsystems, and the Internet-based applications areavailable for all Java-compatible platforms.

ONGOING PRODUCT DEVELOPMENTThe financial markets change continuously, andsoftware must be adapted on an ongoing basis inorder to maintain its competitive edge. To be at theforefront of technological development is a centralpart of Orc Software’s strategy, and the Companyinvests considerable resources in product develop-ment. Orc Software develops standardized solu-tions and focuses its development resources on the

further development of the standard products.Through the developers of Orc Software having aclose dialogue with clients, the Company is able topick up new ideas at an early stage and to imple-ment them in the system – thus enabling all clients tobenefit from improvements and new features.

Most development takes place centrally at theGroup’s head office in Stockholm, although OrcSoftware also has a development office in Moscowthat primarily works with new market connections,

as well as development activities in St Petersburg,Frankfurt, London and Hong Kong.

LICENSE MODELOrc Software licenses the Orc System to clients,who pay a quarterly license fee per user and serversoftware. The license fee includes service, ongoingsupport and new versions. This means that the cli-ent is aware of and can control total costs, and canavoid resource-demanding and expensive updatingof internally developed systems. In addition, no largeinitial investments are required.

PARTNERSHIP CREATES NEW PRODUCTSOrc Software’s objective is that the Orc Systemshall be the platform on which clients base theirsecurities trading. It is therefore in the interest ofOrc Software to stimulate and to help other compa-nies to integrate their products with the Orc System.

An increasing number of companies that deliverproducts and services to Orc Software’s clientswould like to make their products compatible withthe Orc System. There is also considerable interestbeing shown by many clients, particularly by broke-rage houses, for specific adaptations of the system.In order to satisfy these demands, Orc Software hasstarted several strategic partnerships with theobjective of providing brokers and other companiesincreased opportunities to offer end-clients custo-mized solutions with the Orc technology as a base.For example, suppliers of information systems such

Throughthe flexibilityoftheopen

interfaces,itiseasyfortheclientto

integrate the OrcSystem withtheirbusiness

THE ORC SYSTEM < 9

as Ecovision and Infront have included an order-entry feature, and can thereby offer a trading appli-cation based on Orc technology.

Through a partnership with Nordnet, Orc Softwareand Nordnet can sell joint technology to banks andbrokerage houses who want to offer their retail clientselectronic trading over the Internet.

Other types of third-party products and servicesthat build on Orc technology are under develop-ment, which will enable Orc Software’s clients to

quickly and easily have access to integrated tradingsolutions and a large range of cost-effective con-sultancy services.

ORC EXNETOrc ExNet Transaction Services was formed in theautumn of 2001. Orc ExNet’s business concept isto offer Orc Software’s clients access to marketpla-ces where the client is not a member. Many of OrcSoftware’s clients currently use different order-entry systems for different marketplaces. This impli-es that a broker desk or a trading department oftenhas one system to trade directly on its primary mar-ket and a number of other terminals in order to reachsecondary markets.

Orc ExNet offers a service where the order-entrysystems are integrated with the Orc System. The cli-ent therefore requires only one terminal and onesystem. This provides several advantages for clients:

• Increased and better functionality

• Reduced risk of incorrect registrations

• Risk management in real-time for all trading

• Fewer terminals

Orc Software has previously signed agreementswith NeoNet and Bridge Trading Technologies.These agreements are now managed by Orc ExNet.Through the agreement with NeoNet, Orc ExNetcan provide Orc Software’s clients access to a num-

ber of European marketplaces without the clientsrequiring membership status.

In the beginning of 2002, an agreement wasalso signed with Lexit Capital, LLC, an Americanbrokerage house with access to all the major USstock exchanges, and mainly orientated towardsEuropean institutions and banks. The purpose ofthe agreement is to provide Orc Software’s clientswith the opportunity to trade on American market-places without requiring exchange memberships.

Orc ExNet’s service creates the opportunity for OrcSoftware to broaden its product range and,amongst other things, offer institutional clients andother non market-members new trading opportuni-ties in the Orc System.

ORC TRADELAB Orc Tradelab Robotic Trading develops the Orc Trade-Bot software, which constitutes a valuable comple-ment to the Orc System. Orc TradeBot can automati-cally match orders that clients have electronicallyplaced with the broker. The order is analysed in accor-dance with decision criteria established by the user,and completion then takes place if these criteria arefulfilled. A broker can handle a considerably largerorder-flow by using the system as opposed to manualhandling. The technology is already being used withvery good results.

Orc Tradelab is the result of a cooperation betweenOrc Software and Tradelab.

ORC EDUCATIONOrc Education offers a number of different trainingcourses for users of the Orc System, from introduc-tory courses to advanced courses in basket trading,volatility management, automatic quotation and riskmanagement. The objective is for users to learn tofully benefit from all of the advantages of the OrcSystem.

ORC EXNET’S SERVICE

10 < SALES AND SUPPORT

Sales and support of Orc Software’s products is car-ried out from Stockholm and offices in Copenhagen,Frankfurt, Hong Kong, London, Milan, New York, Syd-ney and Zurich, as well as Montreal and Toronto fromthe first quarter 2002. Sales and support is carried outfrom these offices to the local and surrounding mar-kets. Orc Software’s international presence enablesthe Company to provide support in all time zones.

Orc Software offers high quality support that isguaranteed by employees who possess a solidknowledge of equities and derivatives trading, finan-cial mathematics and technology. In order to prevent

potential problems, the support personnel offer adviceand training so that clients can utilize Orc Software’sproducts in the best possible way. A close cooperationglobally between the support, sales and developmentfunctions ensures that knowledge is spread and thatnew functionality and new market connections canquickly be implemented for the client.

Orc Software’s strategy is to establish sales andsupport offices in all major markets. It ensures thatOrc Software can handle sales and delivery at a fastpace whilst maintaining high quality.

ORC SOFTWAREAROUND THEWORLD

BERIT PETTERS,Manager of Orc Software Hong Kong“The positive reception of the Orc System in Hong Kong shows that we have a unique opportunity to provide the finan-cial institutions in Asia with the best possible tool for execution and risk management in real-time.”

ORC OFFICE< COPENHAGEN

ANDERS HENRIKSSON, Manager of Orc Software Germany “Orc Software has positioned itself as a standard within deri-vatives trading in the German market with several of the German market’s key operatorsas clients.”

LARS PEHRSSON, Manager of Orc Software Denmark “Electronic trading with bonds is increasing inDenmark and has led to an increased interestin Orc Software’s solution for bond trading.”

ANNELIE EK KREPP, Manager of Orc Software United Kingdom“By creating a close client relationship with the international investment banks, Orc Software has quickly established a leading position in the British market.”

ORC OFFICE< HONG KONG

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ORC OFFICE< MILAN

MIKAEL KLINGMAN, Manager of Orc Software Italy“Orc Software has a very strong name as a supplier ofsystems for derivatives tra-ding in Italy. Traders are nowstarting to understand that the system offers much morethan this, which is also reflec-ted in our growth figures.”

ORC OFFICE< LONDON

ORC OFFICE< STOCKHOLM

JESPER ALFREDSSON, Support Manager,Nordic Region“A business-critical systemdemands a robust solution incombination with high qualitysupport and follow-up.”

FREDRIK HJORTH, Sales Manager, Nordic Region“By understanding the client’s business,we can deliver products that createrevenue instead of costs.”

MIKE GILBERT, Manager of Orc SoftwareAustralia ”Having the ability to trade onboth local and Asian marketsfrom Australia on one platformwith state-of-the-art real-timemarket access and portfoliomanagement, is what all financialinstitutions in our market want.”

YVO HOLLENSTEIN, Manager of Orc Software Switzerland “Orc Software is very well positioned for futu-re expansion in Europe with market connec-tions to all of the large European stock mar-kets.”

ORC OFFICE< NEW YORK001

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PER ANDERSSON, Manager of Orc SoftwareNorth America “We are ready with one of themarket’s widest product rangeswhen screen-based tradingbecomes a reality in the US.Already today, Orc Softwarehas a large number of clients in North America.”

ORC OFFICE< ZURICH

ORC OFFICE< SYDNEY

ORC OFFICE< STOCKHOLM

STOCKHOLM

FRANKFURT

MILANNEW YORKZURICH

HONG KONG

MONTREAL

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LONDON

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MONTREAL

NEW YORK

ST PETERSBURG

SYDNEY

TORONTO

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About OrcOrc Software develops and markets standardized software for trading in real-time. The Orc System inclu-des trading with equities, derivatives, bonds, commodities and energy contracts, as well as currencies, andenables the client to trade simultaneously on more than 35 marketplaces around the world.

Orc Software is a leading international supplier with clients in 18 countries and offices in 11 countries.The Company’s most important clients include investment banks, trading and market making firms, brokera-ge houses, Internet brokers and institutional investors. In 2001, the Company’s total revenue amounted toSEK 210 million with an operating income of SEK 86 million.

History

1987 Orc Software is founded by CEO Nils Nilsson and EVP Ulrika Hagdahl.

1992 Operations are focused on the develop-ment and sales of the Orc System. Own trading operations cease.

1993 Carnegie acquires 25 percent of the shares in Orc Software.

1995 First client outside the Nordic Region.

1997 OM acquires just over 50 percent of the shares in Orc Software.

1998 First sales and support office outside Sweden is opened in Denmark.

1999 Orc Software takes over OM’s internationaldistribution operations of the Orc System at OM’s offices in Australia, Italy and the United Kingdom.

2000 Offices are established in Germany, Russiaand the US. Orc Software’s shares are listed on the O-list of Stockholmsbörsen.

2001 Orc ExNet and Orc Tradelab are started. Agreements are established with NeoNet, Nordnet, Ecovision and Infront. Offices are opened in Hong Kong, St Petersburg and Switzerland. Orc Software receives award for best IPO prospectus.

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Orc Software

HEAD OFFICEOrc Software StockholmKungsgatan 33Box 7742SE-103 95 Stockholm, SwedenTelephone +46 8 545122 50Fax +46 8 24 5411

OTHER OFFICESOrc Software CopenhagenKøbmagergade 5, 3DK-1150 Copenhagen K, DenmarkTelephone +45 3915 8110Fax +45 33 32 85 02

Orc Software FrankfurtGuiollettstrasse 3060325 Frankfurt am Main, GermanyTelephone +49 69 7167 390Fax +49 69 7167 3920

Orc Software Hong Kong18/F One International Finance Centre1 Harbour View StreetCentral, Hong Kong, ChinaTelephone +852 2166 8286Fax +852 2166 8999

Orc Software London135 Cannon Street, 4th floorLondon EC4N 5BP, United KingdomTelephone +44 20 7942 0950Fax +44 20 7942 0940

Orc Software MilanVia Silvio Pellico 1220121 Milan, ItalyTelephone +390 2 86915446Fax +390 2 86915439

Orc Software Montreal240 rue St-Jacques, Suite 610Montreal, QCH2Y 1L9, CanadaTelephone +1 514 844 8282Fax +1 514 844 3809

Orc Software MoscowOffice 22028/1, Sredne-Tishinskiy pereulok123557 Moscow, RussiaTelephone +7 095 745 2803Fax +7 095 745 2804

Orc Software New York140 Broadway, 26th floorNew York, NY 10005, USATelephone +1646 428 3080Fax +1212 480 7965

Orc Software St PetersburgMalaya Morskaya 23190000 St Petersburg, RussiaTelephone +7812 38059 79Fax +7812 38059 59

Orc Software SydneyLevel 2456 PittstreetSydney 2000 NSW, AustraliaTelephone +612 9240 2405Fax +612 9240 2499

Orc Software TorontoOpens Q1 2002, see website for details

Orc Software ZurichBolleystrasse 29CH-8006 Zurich, SwitzerlandTelephone +4143 244 9245Fax +4143 244 9246www.orcsoftware.com

info@orcsoftware.com