ETHIX-Trade

INTRODUCTION AND HISTORY

Trading is one of the oldest professions in human kind in history and it developed along with the
Human civilization development until it reached its current global shape. Due to globalization, inter-
national trade became one of the most important professions not only for individuals but also for
countries. International trade is the exchange of goods against money between a buyer and a seller
residing in two different countries. Due to the physical separation between the buyer and the seller,
exchange of goods and money is not an easy matter; the buyer will not travel to the seller’s country
loaded with cash, survey and take delivery of the goods, arrange for loading them on a means of
conveyance, travel with the goods and clear them at the final destination. That is why both the Buyer
and seller rely on documentation proving all said acts. Such documentation are exchanged against
payment.

Banks realized the importance of this market, and how much benefits they could reap out of arrang-
ing activities between buyers and sellsrs. Accordingly, banks decided to get involved in the interna-
tional trading business by offering services, which will attract both buyers and sellers to do business
through them. For that to happen, banks started by offering services to Offset as much as possible
the client’s risks associated with trading abroad (non delivery versus nonpayment) and by offering a
wide range of specialized banking services, including business financing, F-X and the access to inter-
national trading and financial sources.

For banks to offer remarkable international services, they need an automated system coupled with
an effective communication system to compete in international trade operations, together with
establishing effective arrangements with a large network of correspondents and to offer foreign
exchange service.
ETHIX-TRADE IN DEPTH

ETHIX-Trade
The ETHIX-Trade Module manages trade-related instrument processing, connects your bank to the
SWIFT and networks, and provides a link between your bank and its clients.
ETHIX-Trade is a Windows-based trade finance software that automates all trade finance transac-
tions to enable easy, fast and secure data input and output generation.
Designed to endure the test of customer demands and bank operations over time, this solution
includes a full-featured back-office network, as well as an interface to corporate workstations,
putting the full range of Trade services at your customer’s fingertips. ETHIX-Trade Module estab-
lishes a competitive edge and protects your bank’s investment with prevailing LAN technology.

Features and Functions

The following section will explain the ETHIX-Trade module’s features and capabilities, to show how
much it will affect and help the bank to satisfy its objectives towards its customers.

Automation
ETHIX-Trade Module automates all trade finance instruments like import, export, and standby letters
of credit (L/Cs), as well as letters of guarantees, transfers, bills, acceptances, bills of lading, air waybill
releases, amendments, and other trade documentation. Bank back office spends less time re-keying
and correcting L/Cs because ETHIX-Trade Module validates the data captured against rules defined
by the bank for its business practice and messages construction, as well as standard ICC and UCP
rules.
The system saves additional time by automating liability management, client fee billing, accounting,
reports and advice generation functions.

Increased Profitability
Through the automation of all trade operations, ETHIX-Trade Module allows the bank to processes
more transactions with faster turnaround time and delivers better service to its customers, resulting
in improved profitability.

Rapid Implementation
ETHIX-Trade Module is a high-powered solution that enables the delivery of sophisticated services
to bank clients immediately. Parameterization of the business and market rules provides the flexibil-
ity to implement changes quickly and to be responsive to add new requirements.
Decentralized Processing, Centralized Control
Too often, the international department of a bank discovers too late that its technical direction limits
its flexibility and responsiveness in implementing new business strategies. With a centralized main-
frame or minicomputer system, upgrades to accommodate increasing transaction volumes are
costly and decentralizing to allow regional bank offices or branches to process some or all Trade
transactions involves the expense of online communication links.
ETHIX-Trade Module frees you from these constraints. Adding extra processing power is simply a
matter of connecting additional workstations to the network, allowing the bank to start small and to
scale up as much as needed. Should the bank decide to decentralize its business, it can use regional
or branch office ETHIX-Trade Module workstations, which only require a communications link to the
central database server.
With ETHIX-Trade approach, the possibilities are endless. The bank can be more responsive to the
needs of customers, providing more professional and quality service.

Short Learning Curve

Because the drop-down menus, online help capability, pop-up list boxes, push buttons and most of
all standard screens are so easy to understand, users learn to use The ETHIX-Trade Module quickly.
Familiar with its conventions, they can also readily master other software for the industry-standard
Windows operating system, including word processing and accounting applications. In this way,
they avoid time spent tackling conventions of less widely used software. The benefits are tremen-
dous, resulting in fewer errors, increased productivity, and lower costs.

Immediate Access
Users can retrieve and modify information through the convenience of push buttons, “cut and paste”,
and mouse selections. ETHIX-Trade Module provides immediate access to online trade activities and
saves further processing time by cross-referencing text and previewing documents.

Seamless Efficiency
When the bank uses ETHIX- Trade Module to deliver trade related services, then the bank can
depend on efficient communications, even between other systems and platforms. With the appropri-
ate network access and security clearance, you can make queries, move data, and run multiple appli-
cations simultaneously - including communications, spreadsheet, and word processing - without
leaving ETHIX-Trade Module. For efficient reporting, you can reach into or beyond the ETHIX-Trade
Module database using SQL queries from the mainframe or through minicomputer terminals.
Customer-specific Templates
ETHIX-Trade has customer templates functionality, the template functionality is designed to allow
standard information for particular customers to be defaulted and automatically entered into the
database upon registration of a selected instrument. The template is effectively a copy of standard
data, specific to a customer application that is set up in advance and provided to users to expedite
the registration and data entry of new instruments.

Libraries
ETHIX-Trade has a very sophisticated library feature, this feature is used while entering data to
prevent user error; the users choose from the library list to use it in the corresponding field in the
instrument.
ETHIX-Trade Module maintains a customer library to provide online access to all current customers’
names and addresses and other relevant information, such as risk level, custom fees, and credit lines
available for individuals for whom your bank regularly processes instruments. The library also
contains information for beneficiaries and other parties related to Trade Finance instruments
processed by the bank.
ETHIX-Trade library is extended to maintain a repository of Nostro and Correspondent Banks, includ-
ing branches of the bank, especially branches in other countries that use different currencies, and
branches with different processing requirements from the main branch. Complete information for
advising, reimbursing, confirming, and other functions easily accessed.
ETHIX-Trade library is a smart function, it is automatically maintained by the system; adding new
entries to the library is done while the user is entering the data, so it is a library maintained real-time
by the processed information.

Standard Phrases
ETHIX-Trade module has an editor that allows the bank to enter and maintain a library of standard
phrases used frequently in Trade Finance transactions SWIFT messages. These phrases implemented
bank-wide, or they are specific to individual customers.
Copy Functionality
ETHIX-Trade System allows the user to copy all the details of any previously created instrument to
create a new instrument for the same client using the old saved data, saving much of the user
processing time for data key in.
For example: after saving a new ILC to a registered status, the system gives the ability to copy details
of any ILC of same customer or any other customer into the registered ILC by making those detailed
a standard setting that can be chosen. The System then copies the data from the source transaction
into the destination transaction as per the setup.

RIM Synchronization with Core banking

The system can be set to update Client’s profile information - non financial information such as
name, address, etc- automatically and online after being updated on the core banking system. In
this case, the customer data will be synchronized according to a new mapping scheme between
ETHIX- Core and ETHIX- Trade that is parametrized and controlled.
Supported DBMS
The system can operate on any of the following DBMSs:
Sybase Server
SQL server
Oracle server

Maker – Checker Concept

ETHIX-Trade maximizes the use of Maker - Checker concept in order to provide better security and
control to the user on all the transactions that will be generated from the system. Therefore, each
transaction will be reviewed by a user other than the user who made it.

Audit Trail
A very comprehensive audit trail function giving high monitoring capability for the administration
setup of the system, as ETHIX-Trade log all the changes done for the administration parameters keep-
ing the old and new data and the time stamp along with the username responsible for changing this
information for future audit use.
ETHIX-Trade keeps log files for all of the below:
Any transaction that has run by the system on the database (select – insert - update - delete) in
SQLLOG.LOG file.
Any financial/commitment transaction sent to ETHIX-Core through the interface, system keeps in
DEBUGATM.sql file.
The system keeps in TPI Any loan/Islamic deal system sent to ETHIX-Core through the interface,
and the reply from ETHIX-Core in TPE file

Interface with Documentum – SigCap.

ETHIX-Trade provides the ability to integrate with Documentum (Document management solution)
and Sig Cap Signature verification system.

Extra Fields
ETHIX-Trade has the offers that feature of user defined extra fields. Extra fields has various data types
and can be used by the user on the level of the instrument like:
Selective type that can be used to select any predefined name or role in the system library
List boxes with predefined values
Text boxes
Currencies and amounts

Maintain Logins and Database Users on Sybase Server

ETHIX-Trade provides for the ability to create Sybase logins and database users with permissions
that correspond to the security privileges given to them by its own defined system operators.
Integration with Windows Server Active Directory
ETHIX- Trade has the ability to integrate with Windows Server Active Directory and allow the user to
log on to the system by without the need to enter a user name and a password again. The user in this
case has to be logged already into the domain using domain user name and password.

Holidays and Currencies

ETHIX-Trade maintains a library of processing days, holidays, and other non-banking days, as well as
the standard currency associated with countries, states, and cities where the bank has branches, and
where the bank frequently sends instruments.

Other Libraries
ETHIX-Trade also maintains additional libraries for industry codes, interest sources, merchandise
codes, and responsibility center designations.

Real-time Liability Management

ETHIX-Trade Module provides full client liability management, including “shadow” posting of transac-
tions in progress for real-time liability views.
ETHIX-Trade allows the bank to create and monitor multi-credit line for the customers, these credit
lines created for specific instruments or a general credit line for all customers’ instruments.
The bank can define its own custom credit utilization rules for monitoring risk, and specify under
what circumstances they are activated. Shadow drawings against credit lines provide you with a
pre-utilization monitoring capability (i.e., at the point of instrument registration, shadow utilization
is established). These facilities enable the monitoring of all customer financial activities, including
limit exception reporting and control.

Presentation
ETHIX-Trade Module provides comprehensive processing of import and export bills, including sight
bills and bills under letters of credit, as well as import and export collections. You can specify multi-
ple fees, commission rates, and interest rates.

Multi-Currency Payments
ETHIX-Trade Module supports multi-currency payments and fees (based on prevailing conversion
rates or foreign exchange contracts arranged by the customer). You can specify the currency of the
Bank payment and the currency of the customer payment.
Approved payments automatically update liabilities on the system, and updating the bank’s Finance
system online.
General Ledger Accounting
ETHIX-Trade Module is configured to generate and post journal entries associated with automati-
cally processed instruments , according to the product profiles and accounting rules defined by your
bank, ETHIX-Trade posts the generated accounting entries online to ETHIX-GL. In addition, ETHIX-
Trade Module supports dual Base Currency Accounting (e.g. Local currency and Euro).
The ETHIX-Trade Module includes fees accounting formulas, so that fees would go in accordance
with bank procedures and standard accounting practices.
Journal entries reflect fees, charges, current account, Nostro account, and applicable liability entries
associated with the processing of a Trade Finance instrument. Entries may be in actual currency and
either of two specified Base Currencies (e.g. Local currency and Euro).
Moreover, depending on security restrictions, a user can also manually enter additional journal
entries.
The user can review and add journal entries to be posted to the General Ledger for accounting
purposes on the Journal Entry screen.
The bank’s accounting rules and mapping of journal entries using the bank’s Chart of Accounts
provides the means for extracting accounting entries for upload to the bank’s main general ledger.
Accounting entries generated by the system cannot be modified or deleted by any user.

Tailored Fee Structures

ETHIX-Trade Module has a very comprehensive fees profile; it gives the bank the ability to tailor the
fees charged for the Trade Finance services, either on a generic basis across the system for all prod-
ucts, or individually for each customer. Fee types supported include but are not limited to:
Flat amount
Percentage
Minimum and maximum fees
Minimum Period
Tiered fees based on transaction value
ETHIX-Trade gives the bank the flexibility to control the setup and ongoing management of these
fees, the bank can generate fee extracts for performing customer profitability analysis and billing to
the customer’s current account. In addition, the bank can also generate Debit Advices or invoices for
any fee activity.
The bank can offer each customer his own schedule of customized fees and commissions with
defaults, the user can override the system-calculated charges according to the situation.
Deposit Margin
The ETHIX-Trade Module calculates and processes Deposit margining requirements in association
with the Trade Finance transactions.
The User can maintain the System calculated margin by increasing, decreasing or even waive it at
any stage in the life cycle of the instrument or even while creation according to the instruments
circumstances.

Reminders
Reminders/ticklers are automatically generated according to predefined bank rules or by individual
users during instrument processing. Reminders can be sent by email, printed or faxed.

Reporting & Advices

ETHIX-Trade Module reporting capabilities are an asset, providing lasting strategic management
benefits - not only for the bank, but for the clients as well.
ETHIX-Trade Module comes with preformatted system reports that may be custom-defined by your
organization. These reports contain information about multiple instruments or customers, or any
other collection of information about data used or processed by the system.
Sample of the available reports include:
Status & Open Transaction Reports
Daily General Ledger Summaries
Transaction Audit Reports
Expiring/Maturing Business Reports
Customer Outstanding Reports
Marketing Reports
Volume Reports
ETHIX-Trade Module’s open architecture gives the bank the capability to create additional custom
reports and advices using industry-standard SQL query tools or report writers. This flexibility enables
you to create virtually any customized report or advice as necessary to meet your organization’s infor-
mation and reporting needs.
In addition, ETHIX-Trade is fully integrated with crystal reports tool, through which the user can
create any report or advice, then attach it to the trade finance report repository, or even adding
advices or printouts to any instrument.

Preformatted Messages
ETHIX-Trade module supports automatic formatting for SWIFT, Airmail, and Fax transmissions.
ETHIX-Trade Module generates SWIFT MT1XX, MT2XX, MT4XX, MT7XX, and MT999 messages, either
automatically or on user request.
Communications
ETHIX-Trade Communications Manager handles all messaging functions and output generated from
the processing of instruments in the ETHIX-Trade Module. The program acts as an engine resident on
a stand-alone PC, polling the output queues for items to be processed.
Communications formats handled include:
SWIFT Outgoing - supports MT7XX, MT4XX, MT999, N category message types as well as MT202
bank transfer message types
SWIFT Incoming - accepts incoming message types for auto-loading into the system.
Fax and Print - provides output to either printer or fax devices.

Online Validation
ETHIX-Trade provides comprehensive checks on data input through a number of integrity and
reasonableness checks. The validation rules are user-defined and validation levels are set at either
Warning or Mandatory like:
Customer balances for fees\margin cover.
Insurance policies\ Commercial license expiry.

Checks also can include any of the input data like:

Dates
Holidays
Business Practice
Data Variables and Dependencies
Data Comparisons
SWIFT Rules

Security & Auditing

ETHIX-Trade Module provides extensive security features, including user passwords, supervisory
approval, user levels, authorization keys, secured access, audit trails, data integrity functions, transac-
tion record, archiving and event logging.
The design of ETHIX-Trade security prevents any user from being able to perform all the steps in
creating an instrument or processing a financial transaction under an instrument.
ETHIX-Trade Module’s auditing features ensure that any access and usage of the system is through
authorized channels.

Interfaces
ETHIX-Trade Module provides several interface capabilities to enable the bank to integrate ETHIX-
Trade easily with other financial systems in use at your bank.
Exchange Rates
The ETHIX-Trade Module provides electronic upload of exchange rates used in the conversion and
translation of currency equivalents to facilitate the loading of foreign exchange rates.

Islamic Banking Practices

ETHIX-Trade module manages the processing requirements of Murabaha Transactions. ETHIX-Trade
Module initiates the automatic generation of the details required for the creation of the Murabaha
and the generation of the required accounting entries (Financing is based on ETHIX-Core Module
setup).

Documents Register
ETHIX-Trade module registers the receipt of documents, processing and onward transmission main-
tained for trade related transactions, ETHIX-Trade gives the user the capability to attach scanned
image with the document record.
Through the scanning capability, ETHIX-Trade maintains a complete logical file similar to the actual
physical file.

Instruments
ETHIX-Trade Module manages the following instruments:
Documentary Credits
Import Letter of Credit
Import Letter of Credit Amendment
Export Letter of Credit
Export Letter of Credit Amendment
Transfer Letter of Credit
Transfer Letter of Credit Amendment

Negotiations
Import LC Negotiation
Import LC Negotiation Amendment

Standby's
Standby Letter of Credit
Standby Letter of Credit Amendment
Standby Letter of Credit Claim
 Collections
Import Bill For Collection
Import Bill For Collection Amendment
Export Bill For Collection
Export Bill For Collection Under Letter of Credit
Export Bill For Collection Amendment

Guarantees
Shipping Guarantee
Delivery Order
Letter of Guarantee
Letter of Guarantee Amendment
Letter of Guarantee Claim
Letter of Guarantee Release

Payments & Settlements

Export Bill for Collection Settlement
Export Bill for Collection under Letter of Credit Settlement
Export Bill Purchased Settlement
Export Bill Purchased under Letter of Credit Settlement
Letter of Guarantee Payment
Import Bill for Collection Payment
Import LC Negotiation Payment
Standby Letter of Credit Payment
Transfer Letter of Credit Settlement
Clean Outward Payments

Sub-Instruments

The ability to define sub-instrument types, e.g., Import Letter of Credit Term and Import Letter of
Credit Sight, provides the bank with additional flexibility and manageability.

Workflow Engine
ETHIX-Trade provides extensive workflow management capabilities, it has a built-in workflow
engine, through this engine, the bank can define the available statuses of each instrument and the
valid transitions between these statuses. These status transitions define the specific workflow
processes that a department adheres to, and enable the bank to manage the path an instrument
follows in its lifecycle.
Through the security capability, the bank can define the user responsible for a status and a transi-
tion.
Instrument Processing
ETHIX-Trade Module instrument processing is based on registration and data entry functions. User
access to these functions and tasks is security-controlled. For each instrument, the bank define the
business rules attached to the processing by determining the valid queue statuses and transitions
for an instrument, data validation checking, credit validation, accounting rules, and output genera-
tion.
Depending on how ETHIX-Trade is configured, the workflow process for each specific product may
vary slightly.

ETHIX-Trade Technical Architecture

ETHIX-Trade Module gives the bank a technological advantage through its use of an industry-
standard open architecture.
ETHIX-Trade Module is a client/server application, written in Centura SQL Windows. It runs under the
Microsoft Windows operating system, and uses an SQL database as its relational database manage-
ment system (RDBMS) running on Windows NT Server or UNIX.
Centura SQL Windows is an object-oriented development language that provides significant
benefits in rapid application development.
The database is SQL-compliant, and the environment supports Dynamic Data Exchange (DDE) and
Object Linking and Embedding (OLE) with other Windows-based applications.
SQL commands are embedded within the database using Stored Procedures, enabling processing
and business rules to be coded within the database and interpreted at runtime by the front-end
application. This configuration allows many changes to be implemented at the database level as
opposed to the program level.
ABOUT ITS
International Turnkey Systems (ITS) is a recognized market leader in providing cutting edge
technological solutions to a wide spectrum of industries across the Middle East, Africa, and Asia. The
company offers unprecedented experience in providing Financial Software Solutions and IT
infrastructures to banks and financial institutions. With a proven record of accomplishment for
successfully implementing financial software products within both Islamic and conventional
organizations, ITS is regarded as a key solutions provider. Established in 1981, ITS now has a portfolio
of more than 150 clients across the globe and is the preferred choice for a growing number of
businesses, banks and financial institutions. With a team of dedicated professionals, ITS can offer a
range of customized IT services and solutions including fast track implementation, total business
solutions as well as providing continuous customer support. Over the years, the company has
gained many awards and certifications for its products, the latest of which is AAOIFI certification in
December 2009 for ITS Islamic Solution. Moreover, the first official Gartner Islamic Banking
Landscape report issued in July 2010 has positioned ITS ETHIX Islamic Banking Solution as a Tier 1
provider. ITS has been ranked as 1 of 3 companies worldwide considered as T1 providers with ETHIX
financial solutions, with a unique positioning in being the ONLY company globally to convert
conventional banks to Islamic, based on our unique technical and business know how.

The ITS headquarters are based in Kuwait and the company currently has 26 offices in the ME, Africa
and Asia.

ITS Development Centre (ITS GBS) is located in Cairo, Egypt. It has 1000+ IT Consultants specialized
in Design, development, testing and training of the ITS software products. ITS GBS was one of the
first development houses in the Middle East certified as a CMMI 5. ITS GBS also houses the research
and development division that creates the ITS's products roadmap.

ITS’s major after-sale support centre is ITS GDC that is located in Egypt, Smart Village. ITS GDC is ITIL
Compliant, BS15000, BS7799 Certified and houses experienced and certified team who provides
support services 24x7. The center provides Managed Services across Network, Servers, Databases,
Custom Applications, ERP, Data-centre, Helpdesk, Desktop, Hosting and Infrastructure Consulting,
and provides back up to regional support centers when needed.

© 2012 ITS – all rights reserved. Warning: This document is protected by

copyright law and international treaties. Unauthorized reproduction of
this document, or any portion of it, may result in severe and criminal
penalties, and will be prosecuted to the maximum extent possible
under law.

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