APPENDIX D

TELEPROCESSING "FRONT-END" COSTS

This Appendix contains summaries of three proposals, including approximate costs, for implementing an electronic switching and control facility for CSDS. This information was obtained by requesting three vendors to submit statements of proposed capability, costs and time to implement a "front-end" message switching system.

The proposed front end is envisioned as having the capability of eventually interconnecting to the Bank Wire, BAS Network, Federal Reserve Network, the Telex Network, private lines and bankand brokerage-firm-owned networks. By connecting to these many wire networks, the system would provide a wide range of capabilities to the banking and securities communities; for example, a small-volume bank might find the use of the Bank Wire most economical, while a larger bank would utilize a direct private-line connection to the Depository. A small brokerage firm could use a Teletype connection, while a larger one might communicate through an interconnection between its own message-switching network and the Depository network. The Committee believes that by providing a range of alternatives to the users, each will be able to choose a method of communications that meets his individual volume requirements in the manner he determines to be most cost effective.

• Install turnkey system consisting of a modular group of interactive mini computers

• Initial installation of 3 interactive computers

to handle 120 lines of any speed and code

to interface any central depository processor

to have sustained message thruput of 80,000 - 90,000 messages/hour

⚫ to accept all formats

• System expandable by the addition of one or more computers to handle growth in

• Cost of initial 3 computer system - $10,000 - $12,000/month; basic software included

• Five computer system to cover major expansion - $20,000 – $25,000/month;

basic software included - doubles throughput capability

• Initial system provided in 6 - 9 months

• One processor in each configuration used for monitor and backup

DISK

PACK

UNITS

• Install turnkey system consisting of two existing systems - each duplexed

· Initial installation of an existing process control system to interface up to 176 lines of any speed and code

• Second system to perform all logging, format conversions and local processing

• Second system interfaces to any central depository processor

• Sustained message thruput of 100,000 125,000 messages/hour

• Not modularly expandable; growth would be accomplished by trading up to larger system

• Cost of initial system both ends duplexed - $20,000 - $22,000/month software cost not yet available

• Initial installation of 50 line system comprised of 32 low speed, 18 medium speed

• Expansion to 128 lines on same system

• Modular expansion through up to 6 additional 128 line modules

• Sustained message thruput of over 200,000 messages/hour

• Presently supports 84 different speed and code disciplines

· Cost of initial system - each processor carrying half load capable of carrying full load without degradation — $15,000 - $20,000 per month

• Software and turnkey costs not yet available

• Initial system provided in 9 months

78-429 072-38

As previously announced, the Clearing Corporation wi'l require the CUSIP number on all stock and bond trades reported for clearance beginning April 3, 1972.

The Clearing Corporation has been processing the CUSIP number in its stock clearance system since October 1970. Since that time, the CUSIP system has been modified to provide for three processing codes. The three additional codes are intended to aid in handling special situations such as "When-Issued" trading; trading subject to the Interest Equalization Tax, and identification of coupon and registered bonds. In order to accommodate these conditions, the Clearing Corporation is in the process of modifying its stock and bond clearance systems to accept these additional codes with the CUSIP number. These changes will be completed prior to April 3, 1972.

The attached exhibits provide examples of the new input forms and card layouts for the stock and bond clearance systems. These exhibits should be carefully reviewed by the operations personnel concerned with CUSIP implementation in each member firm. For your convenience, the following summary describes how the processing codes will be used in the CUSIP system:

"When-Issued" items are identified by the regular CUSIP number plus the SIP indicator or processing code. The letter "W" or digit "1" must be used on card input for a "When-Issued" item. On paper input a "When-Issued" box must be checked. "When-Issued" data will continue to be submitted as separately batched input. (See Exhibits)

"Domestic" items require the letter "D", digit "0" or a blank column in card input. Paper input has a box to check. (See Exhibits)