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Shadow Financial Services Announces New Securities Finance System that Supports Outsourced Self-Clearing

LoanStar from Shadow Financial Services Allows Trading Groups to Self-Clear
Without the Cost and Infrastructure of an Internal Securities Finance Operation

EDISON, N.J. (September 13, 2004) - - Shadow Financial Services, developers of the ShadoSuite global securities processing system, today announced the launch of LoanStar, a new securities finance system that enables trading groups using ShadoSuite as their clearing system to outsource the securities finance operations, reducing the capital and operating expenses of their clearing operation.

LoanStar, a component of Shadow's ShadoSuite, calculates securities finance requirements. Based on these calculations, LoanStar instructs the associated stock loan group to "borrow to cover short," "finance a long" or close out the most cost effective open financing position. All outstanding trading activity and positions for multiple trading groups can be aggregated and "netted down," ensuring that only one instruction per security is sent to the securities finance group. Deals done are brought into the trading groups' ShadoSuite system and automatically compared to what was previously instructed. Deals within pre-determined tolerances are passed into ShadoSuite's AutoCage for auto-instructing and reconciliation and those outside the pre-set tolerances are sidelined for manual intervention.

Donald Marino, CEO of Shadow Financial Services, said, "LoanStar was developed to enable a trading group to go self-clearing without the enormous costs associated with creating and maintaining an internal securities finance operation. If a trading group contracts with one or more securities finance groups, they can seamlessly outsource this function with LoanStar."

"Shadow has provided a seamless front and back-end system with its LoanStar platform by electronically automating processes that, in the past, would have been manually intensive. This ultimately allows trading desks to concentrate on what they do best - trading. In addition to these benefits, it has also helped Maple Securities to become a provider of prime broker-like services to firms that electronically submit their requirements to us through this platform," said Keith Kirsch, senior vice president, Maple Securities USA, Inc.
Self-clearing with ShadoSuite will reduce a firms cost per trade and provide real-time efficient access to transactions and positions. LoanStar enables trading groups to derive the benefits of self-clearing, without the expense and need for dedicated staff to manage the clearing process.