ACSDA VIII GENERAL ASSEMBLY MARCH 31, 2006 Larry Thompson Managing Director and General Counsel of The Depository Trust & Clearing Corporation

DTCC’S EXPERIENCE WITH REFCO SECURITIES LLC

DTCC—BACKGROUND DTCC—Holding Company DTCC’s depository—The Depository Trust Company (DTC) DTCC’s other subsidiaries Fixed Income Clearing Corporation (FICC) National Securities Clearing Corporation (NSCC) Other subsidiaries (e.g., DerivServ LLC)

DTCC’S RELATIONSHIP WITH REFCO Refco Securities LLC (Refco) Regulated by the SEC and NASD Registered broker-dealer Member of DTC, FICC (both Divisions) and NSCC Must maintain minimum financial standards Open positions at all 3 Collateral deposited at all 3 to support activity

THE REFCO EXPERIENCE October 10, 2005 news story Related to Refco Inc, an affiliate of the DTCC member NOT the member itself

THE REFCO EXPERIENCE—cont’d Significance of regulated entity Loss of market confidence in all Refco entities Firm determines to wind down in an orderly fashion

THE REFCO EXPERIENCE—cont’d Significant role of the DTCC clearing agencies Information providers and market facilitators Wind-down of significant activity Preparation for ceasing to act, if necessary

THE REFCO EXPERIENCE—cont’d Communications to clearing agencies’ memberships Communications with Regulators, the firm’s settling bank and other clearing corporations

THE REFCO EXPERIENCE—cont’d Voluntary termination of DTCC memberships No loss to DTCC members

THE REFCO EXPERIENCE—cont’d Lessons learned Rule changes Special collateral premium example