JBuilder Case Study: Daiwa Securities

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Case Study

DAIWA SECURITIES
New York City, New York, USA

OVERVIEW
• Daiwa's Correspondent Services wanted to streamline the securities clearing process and improve service to customers with an automated Trade Processing System.

• IT planners wanted to build the system with Java to take advantage of its "develop once, deploy anywhere" capability, but using inadequate tools caused the schedule to fall seriously behind.

• Developers moved the system to JBuilder in one day, including a complete Java version upgrade.

• JBuilder enabled developers to add many new features to the system and still restore their schedule.

RETURN ON INVESTMENT
• Automated trade processing improves accuracy and eliminates intermediate-stage handling, allowing increased volume without increasing headcount.

• Real-time trade reporting gives customers instant access to trading information, so they can more profitably respond to market conditions as they occur.

• A multi-tier system gives clients the business advantage of complete access to information on their own accounts yet does not compromise the security of the corporate mainframe back-office system.

• Daiwa will gain a competitive advantage by being first to market with a Java-built trading system.

COMPANY BACKGROUND
Daiwa Securities Co. Ltd. is the second largest securities brokerage firm in Japan, and the seventh largest in the world, ranked by capital. Daiwa Securities America (DSA) is the largest clearing house on Wall Street for two types of securities: Brady bonds (Latin and South American government debt guaranteed by the US Government under terms of the Brady bill) and sovereign debt.

SITUATION
Daiwa Correspondent Services (DCS) handles the back office work of settling and clearing security trades. DCS clears trades and delivers documentation for a number of large clients, chiefly inter-dealer brokers specializing in institutional accounts. These brokers contract with Daiwa for clearing services because of DCS's reputation for accuracy and efficiency.

DCS's legacy back office system was on a Tandem mainframe, handling batch-processing overnight. Trading results were only available as of the close of the previous business day. The system was not robust; it was inflexible, and it was hard to extend. DCS wanted to institute a state-of-the-art system that would deliver results in near real time and provide customers with direct access to the status of their trades. Ultimately, the company wanted to allow customers to input trade details once, have them flow through to the back office for settlement and clearing, and return a final confirmation with no further input along the way. This straight-through processing capability has been a "Holy Grail" goal of brokers on Wall Street for years.

DSA's information technology department decided to build the new system using Java. They felt that Java's widely discussed capability to "develop once, deploy anywhere" would be a natural for the Wall Street environment, where incompatible computer platforms, ranging from desktop PCs to UNIX workstations to very large mainframes, coexist. DSA was one of the first securities trading companies to commit to Java for business-critical applications. Because first-generation Java tools were far from industrial strength, work was started with command-line coding in a native Sun environment.

After several months' work, the project was significantly behind schedule, with many requirements not yet addressed. INPRISE's second-generation JBuilder tool became available in a late beta release, and DSA developers were so impressed with the visual RAD environment that they decided to set aside just two days to see how difficult it would be to move their system to JBuilder. JBuilder produces 100% Pure Java code, so there was no problem porting their application, with close to 250 classes, to JBuilder in less than a dayùwith a full version upgrade of Java at the same time. On the second day, after experiencing first hand the lightning-fast compiler and RAD environment, the team adopted JBuilder.

SOLUTION
Initial Java development work had been contracted to a third party. When the schedule fell seriously behind, an internal task force took on the project. Much was left to be done, but business needs were driving the schedule, and only about six weeks remained. The one-day, trouble-free conversion to JBuilder gave the project a morale and productivity boost, and the team realized that, using JBuilder, they could actually deliver to the schedule that management had originally set.

The team decided to implement a middleware layer between the Java client and the back-end Sybase database. (The Sybase server delivers real-time online transaction processing during the day, then updates the Tandem mainframe every night.) Using JBuilder, the team implemented major changes in architecture and at the same time added significant features and functionality to the system. They used the extensive JBuilder JavaBeans Component Library to implement new interface components and will shortly upgrade the entire visual user interface. And they still made the original release deadline In fact, they accomplished all this in less than a third of the time that had elapsed during the earlier effort.

Reusable JavaBeans are a key element in reducing development cycles for Daiwa. Since JBuilder produces 100% Java code, the JavaBeans are fully portable for reuse in future applications on any Java platform. In addition, INPRISE's DataExpress architecture, using industry-standard JDBC connectivity, will enable DCS to create thin clients for DSA and its customers to access timely data from the corporate Information Network for reporting and supporting business decisions.

Using JBuilder has enabled DSA to develop a Trade Processing System that can be accessed by customers to input trading information on an automated, straight-through basis, improving trade-reporting accuracy and enabling an increase in the volume of trades handled without a corresponding increase in DCS's operational headcount. The ultimate benefit will come from reducing unnecessary interaction between firms through exception handling—the only time a person will need to intervene is when something goes wrong.

DSA believes that JBuilder will yield enormous flexibility in modifying and extending the trading system and customizing its clients. The real-time system allows Daiwa's customers to view their account status trade by trade, including interest, profit/loss, and all settlement particulars. Because the Trade Processing System is built with Java, it will run under any major operating system; and when proper security is installed, clearing and settling trades will eventually be handled over the Internet or an extranet, with no private network dial-ups.

TECHNOLOGY

Legacy system		Tandem mainframe, batch processing overnight
Database server		Sybase
Platform		Multi-platform
Other technology		Active Software's ActiveWeb middleware, Marimba's Castinet

DEVELOPMENT

Tool used		Inprise JBuilder
Other tools evaluated		Symantec's Visual Cafe, Sun's JDK and Java Workshop, Microsoft's Visual J++
Team size		Four developers
Development time		Three months
Deployment date		Internal release, September 15, 1997

CUSTOMER COMMENTS
"We committed to JBuilder for production coding our Trade Processing System while JBuilder was still a beta product. It was an unusual step to take, but JBuilder was so much better than anything else available that it was the correct business decision."

—Jeffry Borror, Director of Information Technology,
Daiwa Securities America Inc.