DTCC - The Outlook for 2007 Rich Lanning BDUG October 2006 Rich Lanning BDUG October 2006

2 Technology / Communication Plans for 2007 PBS 2.0 SMART Messages Multi Protocol Label Switching Upgrade (MPLS) Common Data Transfer Services Web Service Simplified Sign-on PBS 2.0 SMART Messages Multi Protocol Label Switching Upgrade (MPLS) Common Data Transfer Services Web Service Simplified Sign-on

3 PBS Version 2 Update PBS 2.0 Launch Internal Pilot (8/7 – 9/30) External Beta 2 Firms (10/1 – 10/31) 10 Firms (11/1+) General Availability – Phased Rollout (2/15) Benefits Single sign-on between PBS and PBS 2.0 functions Applications re-platform Off the mainframe Enhanced security framework (seamless to users) PBS 2.0 Launch Internal Pilot (8/7 – 9/30) External Beta 2 Firms (10/1 – 10/31) 10 Firms (11/1+) General Availability – Phased Rollout (2/15) Benefits Single sign-on between PBS and PBS 2.0 functions Applications re-platform Off the mainframe Enhanced security framework (seamless to users)

4 Urban Legend ?! PBS Slowdown w/ Settlement between 1-3 PM Contact CSC ( Option 1 PBS related problem) as they occur State that user is experiencing a "disruptively slow response time on PBS", the PBS function they are using, and the approximate time they first experienced the issue. Will not be able to immediately remedy the situation but that we plan to use the collected information to analyze and determine the cause and solutions. PBS Slowdown w/ Settlement between 1-3 PM Contact CSC ( Option 1 PBS related problem) as they occur State that user is experiencing a "disruptively slow response time on PBS", the PBS function they are using, and the approximate time they first experienced the issue. Will not be able to immediately remedy the situation but that we plan to use the collected information to analyze and determine the cause and solutions.

5 PTS Screenscraping Uploads for DO, NDO, IPOS and PO to be handled as part of 2007 planning Investigating alternate delivery of PBS data CA Re-Engineering - Messages will be published and the on- line queries will be supported with the ability to export lists to Excel. CCF Files – Projection files (CSHPRJ), intra-day allocation files (CSHSTA - CSHSTJ), EOD allocation files (CSHSET) EOD unallocated files (CSHUNL) Please do not screenscrape PBS!! Uploads for DO, NDO, IPOS and PO to be handled as part of 2007 planning Investigating alternate delivery of PBS data CA Re-Engineering - Messages will be published and the on- line queries will be supported with the ability to export lists to Excel. CCF Files – Projection files (CSHPRJ), intra-day allocation files (CSHSTA - CSHSTJ), EOD allocation files (CSHSET) EOD unallocated files (CSHUNL) Please do not screenscrape PBS!!

6 SMART Messages Fact: 3270 printer support will be phased out over time SMART Messages is now generally available – Please try it! Deposit ticket options are still being reviewed and will be finalized shortly Fact: 3270 printer support will be phased out over time SMART Messages is now generally available – Please try it! Deposit ticket options are still being reviewed and will be finalized shortly

7 SMART/Messages Short Term deliverables Home Page Display more than 5 days worth of available tickets - Max is 7 days. Update Replay button in order to be more intuitive Enhanced sorting capabilities Short Term deliverables Home Page Display more than 5 days worth of available tickets - Max is 7 days. Update Replay button in order to be more intuitive Enhanced sorting capabilities

8 SMART/Messages Ticket Display Page When viewing group of actual tickets be able to: Provide better delineation between tickets Allow users to search for ticket specific information Allow users to print individual/specific tickets w/in all shown and not just the entire range Enhanced search capabilities: Account # $ amount Status Other ticket specific information Ticket Display Page When viewing group of actual tickets be able to: Provide better delineation between tickets Allow users to search for ticket specific information Allow users to print individual/specific tickets w/in all shown and not just the entire range Enhanced search capabilities: Account # $ amount Status Other ticket specific information

9 SMART/Messages Message List Page Display more than 30 tickets at a time (however, we need to keep a limit on the total number displayed as that could increase response times) Allow users to move between groups of 30 tickets instead of using the back and forth buttons (e.g , 31-60, 61-90, etc.) Message List Page Display more than 30 tickets at a time (however, we need to keep a limit on the total number displayed as that could increase response times) Allow users to move between groups of 30 tickets instead of using the back and forth buttons (e.g , 31-60, 61-90, etc.)

10 SMART/Messages Long Term Enhancements Home Page Enhanced sorting capabilities Ticket type Use of filters/ticket specific information Alerts Notify users when something new has come. Allow users to define alert parameters. Parameters to include: Time, Ticket Type, Other Ticket Specific Information. Long Term Enhancements Home Page Enhanced sorting capabilities Ticket type Use of filters/ticket specific information Alerts Notify users when something new has come. Allow users to define alert parameters. Parameters to include: Time, Ticket Type, Other Ticket Specific Information.

11 SMART/Messages Home Page (cont.) Allow users to create a profile (i.e. define which ticket types should go to which destination – 00, 01, 02, xx) Indicate which tickets in a range of tickets have already been printed Message List Page Display ticket specific information in the message text field. Home Page (cont.) Allow users to create a profile (i.e. define which ticket types should go to which destination – 00, 01, 02, xx) Indicate which tickets in a range of tickets have already been printed Message List Page Display ticket specific information in the message text field.

12 SMART/Messages Ticket Display Page Identify when a ticket has already been printed, especially when a range of tickets has been printed. Allow tickets to be downloaded either individually or in groups so users can archive Ticket Display Page Identify when a ticket has already been printed, especially when a range of tickets has been printed. Allow tickets to be downloaded either individually or in groups so users can archive

13 MPLS Network Upgrade A technology refresh which requires swapping out the old frame relay circuits & routers The new MPLS routers & circuits will offer optional features such as encryption It is not a small effort & we hope to have it significantly completed in 2007 We ask for your assistance with the coordination with this task A technology refresh which requires swapping out the old frame relay circuits & routers The new MPLS routers & circuits will offer optional features such as encryption It is not a small effort & we hope to have it significantly completed in 2007 We ask for your assistance with the coordination with this task

14 Common Data Transfer Service An effort to re-engineer our message & file systems onto a single enterprise-wide architecture Meeting with participants between now & the end of 2006 to examine message & file interfaces Results will be published in Q An effort to re-engineer our message & file systems onto a single enterprise-wide architecture Meeting with participants between now & the end of 2006 to examine message & file interfaces Results will be published in Q2 2007

15 Web Service Simplified Sign On Will be swapping out existing PC Web Direct digital certificates with new DTCC Web Direct certs Piloted in October with 10 firms. November general migration of ACATS & MF services Will work with each firms Access Coordinator to review & authenticate each users existing access Will be swapping out existing PC Web Direct digital certificates with new DTCC Web Direct certs Piloted in October with 10 firms. November general migration of ACATS & MF services Will work with each firms Access Coordinator to review & authenticate each users existing access

DEMATERIALIZATION

17 Direct Registration System (DRS) July 2006: SEC rule approved - all exchange listed issues must be DRS eligible 1/1/2007: new issues coming to market must be DRS eligible 1/1/2008: all listed issues must migrate to DRS SIA approaches regional exchanges July 2006: SEC rule approved - all exchange listed issues must be DRS eligible 1/1/2007: new issues coming to market must be DRS eligible 1/1/2008: all listed issues must migrate to DRS SIA approaches regional exchanges

18 DRS – Jan 2007 – New Issues Underwriter awareness Information flow to Syndicate Operations Division Letters to all DTCC article US Facilities shut down Eliminate Hold and Bust function Minimal transaction volumes 2 Bust per day. Certificate transactions continue to decline Underwriter awareness Information flow to Syndicate Operations Division Letters to all DTCC article US Facilities shut down Eliminate Hold and Bust function Minimal transaction volumes 2 Bust per day. Certificate transactions continue to decline

19 DRS Mid 2007: Begin analysis of eliminating cert. for DRS eligible issues Info exchange with DTCC Board, SIA, and industry 3Q 07: Implement DRS processing enhancements Move all shares Move all, sell fractions Move all, terminate account, sell fractions Mid 2007: Begin analysis of eliminating cert. for DRS eligible issues Info exchange with DTCC Board, SIA, and industry 3Q 07: Implement DRS processing enhancements Move all shares Move all, sell fractions Move all, terminate account, sell fractions

20 DRS Jan 2008: All NYSE, NYSE Arca, Nasdaq, and Amex issues must be DRS eligible Expand DRS to other exchanges 2Q 08: Default to statement only for DRS eligible issues Currently: 80% of WTs are for DRS eligible issues Jan 2008: All NYSE, NYSE Arca, Nasdaq, and Amex issues must be DRS eligible Expand DRS to other exchanges 2Q 08: Default to statement only for DRS eligible issues Currently: 80% of WTs are for DRS eligible issues

21 WTs 2007: Avg. daily WT cert. volumes decline by 22% WT DRS statement volumes increase by 50% 2Q 07: Explore limited processing days each week for WTs 2007: Avg. daily WT cert. volumes decline by 22% WT DRS statement volumes increase by 50% 2Q 07: Explore limited processing days each week for WTs

22 WTs Mid 2008: WT processing truncates to 2X a week Prepare to eliminate DMD processing 4Q 08: Sunset DMD functionality Mid 2008: WT processing truncates to 2X a week Prepare to eliminate DMD processing 4Q 08: Sunset DMD functionality

23 Deposits 2Q 06: Efforts continue to expand Paperless Legal program Letters and flyers to articles One-on-one contact with agents and participants Jan 2007: No paper processed for legals Six month break-in period / paper stripped & returned for PLAs Presentments outside of DTC for non-participating agents in July Q 06: Efforts continue to expand Paperless Legal program Letters and flyers to articles One-on-one contact with agents and participants Jan 2007: No paper processed for legals Six month break-in period / paper stripped & returned for PLAs Presentments outside of DTC for non-participating agents in July 2007

24 Deposits July 2007: No paper legal transactions accepted by DTC Sept 2007: DTC begins to charge for paper legal transaction rejects 4Q 2007: Explore limited processing days each week for deposits July 2007: No paper legal transactions accepted by DTC Sept 2007: DTC begins to charge for paper legal transaction rejects 4Q 2007: Explore limited processing days each week for deposits

25 Deposits 2Q 08: Truncate deposit processing to 2X each week Consider sun-setting BDS Exceptions: Reorg deposits Custody deposits Restricted deposits 2Q 08: Truncate deposit processing to 2X each week Consider sun-setting BDS Exceptions: Reorg deposits Custody deposits Restricted deposits

26 Non-Transferables 2007: Over 1 million cert. in vault PREM and Destruction process continues As cert. decline, economies of scale diminish Jan 2007: Fees increase 3Q 2007: Explore eliminating new deposits Fee increases considered 2007: Over 1 million cert. in vault PREM and Destruction process continues As cert. decline, economies of scale diminish Jan 2007: Fees increase 3Q 2007: Explore eliminating new deposits Fee increases considered

27 Custody 2007: Growth continues as less fungible cert. in circulation Vault houses over half million cert. and growing All manual processes, with no economies of scale 1Q 08: Recommend right sizing fees 3Q 08: Plan for sun-setting of ESS service 2007: Growth continues as less fungible cert. in circulation Vault houses over half million cert. and growing All manual processes, with no economies of scale 1Q 08: Recommend right sizing fees 3Q 08: Plan for sun-setting of ESS service

28 Custody 1Q 09: Evaluate options for processing efficiencies and cost cutting 1Q 09: Evaluate options for processing efficiencies and cost cutting

OTHER 2006 / 2007 NEWS

30 Other News You Can Use! Settlement Hotline Established – Fee Impact Analysis will be available in late November Real time link between Omgeos Tradesuite & DTC in November – Late Affirm Processing DTCC Learning – Review certification opportunities & new e-learning offerings 2007 BCP Testing & Out of Region Recovery Planning Settlement Hotline Established – Fee Impact Analysis will be available in late November Real time link between Omgeos Tradesuite & DTC in November – Late Affirm Processing DTCC Learning – Review certification opportunities & new e-learning offerings 2007 BCP Testing & Out of Region Recovery Planning

Annual Meeting Recap

32 ATP Re-Design Feedback on handout describing the holiday processing proposal ISO Message Formats Feasibility Real-time 24x6 Feedback on handout describing the holiday processing proposal ISO Message Formats Feasibility Real-time 24x6

33 DTC Operational Metrics Like you, we have hundreds of internal operational performance metrics. We always tell you how we are doing... after we do it. This year we selected 17 metrics from our catalog that we thought clients would be most interested in. We vetted those with the OAC and ASAB in We set targets and are monitoring performance with the OAC and ASAB. We are planning to distribute more broadly in We hope this adds additional transparency and accountability. Are there other metrics you would be interested in for next year? Like you, we have hundreds of internal operational performance metrics. We always tell you how we are doing... after we do it. This year we selected 17 metrics from our catalog that we thought clients would be most interested in. We vetted those with the OAC and ASAB in We set targets and are monitoring performance with the OAC and ASAB. We are planning to distribute more broadly in We hope this adds additional transparency and accountability. Are there other metrics you would be interested in for next year?

34 Structured Securities Be mad as hell and pledge not to take it anymore. White papers are nice but it's time for action. Paying agents are not the problem - the structure of many deals is. The community is together trying to separate the bad from the good deals and make recommendations for each. We do not want to harm to the investor with our actions. BDUG is welcome to the table! Be mad as hell and pledge not to take it anymore. White papers are nice but it's time for action. Paying agents are not the problem - the structure of many deals is. The community is together trying to separate the bad from the good deals and make recommendations for each. We do not want to harm to the investor with our actions. BDUG is welcome to the table!

QUESTIONS?