CSDs over SWIFT Current status, challenges and strategy Market Infrastructures May 2016- ACSDA

Market Infrastructures Market infrastructures are one of the 3 top priorities of SWIFT 2020 strategy Supporting more than 220 around the world, MIs are strategically important to SWIFT, and form a major part of SWIFT2020 SWIFT2020 Priorities | Core, Compliance and MIs One-to-Many MIs Many-to-Many FIs MI FI Many-to-Many Market Infrastructures Messaging Software & Connectivity Shared Services MIs Core Compliance 2

Which market infrastructures use SWIFT today and why ? 4 High Value Payment Systems - RTGSs Low Value Payment Systems - ACHs (I)CSDs and Securities Settlement Systems CCPs Market Segments 7 Payment and cash management Forex and liquidity management Securities pre-trade/trade Securities clearing and settlement Custody and asset servicing Funds Trade and supply chain Business Areas

Let’s focus on CSDs: which CSDs are connected to SWIFT today ? SWIFT has deep, global penetration, especially in mature markets CSDs: 85 / 167 CA US MX PAA PE BR AR CH 4

800 million 85 12 to 16% 33 ISO 20022 9% growth > 60 % 90% CSDs in figures Global Sales Convention 12 to 16% Market share in volume MIs represent over a quarter of all SWIFT’s volumes 2015 figures 33 ISO 20022 85 Projects to materialise in the next 24 months Live CSDs, ICSDs and SSSs connected to SWIFT 800 million FIN messages to and from (I)CSDs in 2015 9% growth > 60 % 90% FIN messages in 2015 Of SWIFTNet IA , Mainly for T2S, CREST, Jasdec, DTCC and Euroclear’s Euclid Of the CSDs / Central Banks that selected a T2S service provider chose SWIFT, using ISO 20022 5

CSDs have become instrumental to any major securities market evolution Evolving market model Driving market changes Risk Mgt. CSDs are key to any regional project: EU, ASEAN, MILA, SADC, EAC Evolving business: collateral, investment funds, links with CCPs CSDs become change engines for their markets Driving market standardization A clear move towards ISO 15022 and 20022 Impact of regulation: CPMI-IOSCO, .. Focus on operational excellence Unquestionable resilience

Driving market changes What is SWIFT doing to support CSDs in their evolution ? CSDs are not treated as ‘simple customers’…. Evolving market model Driving market changes Risk Mgt. Develop complete messaging solutions with and for CSDs: - CSDs can develop at their pace without need to re-invest when they decide to develop new services - more than10.000 counterparties Develop communities around CSDs : - migration to new standards - commercial model attractive to big and small players - connectivity solutions adapted to size and usage Interoperable solutions using international standards (ISO 15022 and 20022) 99.999% quality of services 24/7 support Operational excellence services Compliance with CPMI-IOSCO requirements

85 CSDs, ICSDs connected to SWIFT How do CSDs use SWIFT ? CSDs’ participants Cash leg CSD to (I)CSD links 85 CSDs, ICSDs connected to SWIFT Clearing and settlement Asset servicing, corporate actions and custody Collateral, FX and liquidity management Regulatory reporting In : foreign link into domestic market Out : value added securities services in another market for CSDs’ participants Agents, custodians Cross-boarder clearing and settlement Asset servicing Link to collateral platforms Funds hubs Link to new SSS such as T2S Link with clearing or settlement banks Member of payment and RTGS systems 8

Some 15 CSDs communities are using ISO 20022 today Communities, standardization and excellence of services are SWIFT key values CSDs’ participants Cash leg CSD to (I)CSD links ISO 20022 and ISO 15022 Some 15 CSDs communities are using ISO 20022 today More than 30 CSDs will launch new ISO 20022 projects in the next 24 months Agents, custodians 9

Our value proposition for CSDs Compelling messaging proposal CSDs’ entire eco system Complete securities and cash processing chain Domestic and international Links with other MIs : Euroclear, Clearstream Value added services : compliance, analytics, ref data.. Harmonized usage of standards Protects TCO Ensures interoperability with all major systems Facilitates CSDs developing new types of business (funds, collateral, asset servicing..) Scalable solution Scalable infrastructure Scalable solution transparent to the market Competitive and predictable pricing Reverse billing : no need to re-charge customers and build a new invoicing mechanism Competitive price for both small and big CSD customers Infrastructure costs not impacted by volume evolution Peace of mind : messaging solution operated at highest industry standards Operational excellence Resilience and risk management 10

Nordics case study: Leverage 20022 migrations to attract traffic from 6 banks and 4 CSDs over SWIFT Participants

Case Study – Nordic CSDs Preparing convergence to 20022 at domestic level in European markets Nordic markets are made of Finland, Norway, Denmark and Sweden of which to 2 markets are moving on the T2S platform implementing the T2S guideline over 20022 All markets are progressively moving out of their proprietary formats in order to deploy new services and get prepared for future integration with the T2S markets To lower down the cost of change for their participants, the CSDs are willing to offer co-existence of 15022 and 20022 while adapting their own internal systems SWIFT is working on a domestic proposal enabling co-existence of standards at a competitive cost for the participants by leveraging their existing SWIFT infrastructures IMs and Banks IMs and Banks 15022 20022 Proprietary 15022 SWIFT domestic proposal Co-existence MIs –CSD MIs –CSD

LinkUp Market and T2S (the Pan-European Securities Settlement System) Case Study – LinkUp markets LinkUp Market and T2S (the Pan-European Securities Settlement System) LinkUp market was a hub connecting together about 10 European CSDs The CSDs that had invested in this interoperability hub were facing 2 challenges with the arrival of the T2S platform: (1) make their interoperability hub scalable to the volume changes triggered by T2S, (2) interconnect T2S to their hub. The latest implied setting-up 20022 standards and a connectivity layer SWIFT offered a scalable solution for cross-border links between CSDs over 15022 standards and a direct access to T2S with expertise on setting-up a 20022 based Settlement links MIs –CSD MIs –CSD 15022 15022 SWIFT inter-CSD link 20022 MIs –CSD MIs –CSD

SWIFT’s VAN Solution for T2S Market participant CSD T2S SWIFT Direct connectivity Indirect connectivity ISO20022 today: proprietary or ISO15022, with T2S: as today or ISO20022 Technical Infrastructure to exchange data with T2S Messaging Applications to handle the T2S flows Consultancy Services to prepare and implement T2S

Technical requirements T2S user activities in the T2S project SWIFT Services helping you along the way Familiarise with T2S Business study Technical requirements Integration project Care Impact assessment for T2S Functional analyses for T2S Support Standards gap analyses for T2S Integration design for T2S - testing and implementation Care contract Technical infrastructure review for T2S End to End project Management Training and knowledge transfer

Market Infrastructures – Global ISO 20022 adoption 200 initiatives Under discussion > planned > rollout > live 90 countries Europe Asia Pacific Americas FX CLS ISO20022 Adoption Trends_ACSDA 2016

Market Infrastructures – Global ISO 20022 adoption ISO20022 Adoption Trends_ACSDA 2016