Technology trends for CSDs Andreas Lundell, Head of Product Management Nasdaq CSD Solution, Market Technology ACSDA General assembly, April 13, Nassau

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Technology trends shaping financial services Blockchain cannot stand alone CLOUD SERVICES SMARTPHONE ECOSYSTEM BLOCKCHAIN INTERNET OF THINGS INTELLIGENT/PERSONAL VIRTUAL ASSISTANT MACHINE INTELLIGENCE CRYPTOGRAPHY QUANTUM COMPUTING MICROSERVICES AUGMENTED REALITY / VIRTUAL REALITY DIGITAL MONEY BIG DATA FOG COMPUTING 3

Nasdaq’s blockchain journey Design Studies Design studies and Proof of Concepts (POC) together with customers. 2017 Nasdaq R&D – Blockchain tuned to handle the U.S. equities trading volume - 1st Nasdaq patent filed. Investment in chain.com Nasdaq recognizes the applicability of blockchain technology to Financial Markets. 2016 Blockchain products Commercialize blockchain. Issuance & Settlement product and eVoting product available. 2015 2013 Linq, proxy voting, R&D Nasdaq Linq enables first-ever Private Securities Issuance documented with blockchain technology. 4

Use Case Overview Nasdaq has a number of active blockchain initiatives both based on internal use cases and on cooperation with partners all with practical real-world applications. 5

“Blockchain for payments” with citi bank BUILDING COMMERCIAL OFFERINGS AND PUTTING SOLUTIONS INTO PRODUCTION Nasdaq / CITI Payment Solution A new integrated payment solution Enables straight through payment processing Automates reconciliation by using a distributed ledger to record and transmit payment instructions Integrates Nasdaq and Chain blockchain technology with Citi’s global financial network : In May 2017, Nasdaq announced a partnership with Citigroup and Chain to add straight through payment processing and automated reconciliation to the Nasdaq Linq platform via by use of a distributed ledger to record and transmit payment instructions. Nasdaq’s Linq leverages the blockchain to facilitate the issuance, cataloguing and recording of transfers of shares of privately-held companies on The NASDAQ Private Market. A number of live payment transactions have been concluded including Citi’s automated processing of cross-border payments via a link between the CitiConnect® for Blockchain connectivity platform and the Linq Platform powered by the Nasdaq Financial Framework.  This collaboration has created a pioneering institutional banking solution that tightly integrates blockchain technology with Citi’s global financial network leveraging API technology Key benefits that this integration offers: A seamless digital end-to-end transactional process for private company securities Direct access to global payments from Nasdaq’s Linq platform using CitiConnect® for Blockchain and WorldLink® Payment Services, Citi’s cross border, multicurrency payments service. Increased operational efficiency and ease of reconciliation with real-time visibility of payment transactional activity on the blockchain ledger.   6

Issuance and settlement on blockchain FOR PRODUCTION, DEPLOYED FULLY IN THE CLOUD NYIAX aims to transform ad inventory into standardized and durable securities A blockchain-enabled media trading platform running in the cloud and powered by Nasdaq The New York Interactive Advertising Exchange (NYIAX), which is set to launch in the fourth quarter of 2017, will provide an electronic marketplace for publishers, advertisers and media buyers to buy and sell future advertising inventory, global exchange operator Nasdaq and NYIAX said on Tuesday. Participants on the exchange will forward-like contracts, or agreements to buy and sell an asset at a specified price and a set future date.  The goal is to offer a more efficient and transparent way for players in the advertising market to sell and buy inventory, NYIAX executives said in an interview. NYIAX’s platform was built using Nasdaq’s exchange technology, which incorporates blockchain as its core ledger for transactions. 7

Issuance and settlement on blockchain FOR PRODUCTION, DEPLOYED FULLY IN THE CLOUD Issuance and Settlement of OTC Structured Products Issuance and settlement of OTC structured products through a DLT solution, including management of payments. The solution, deployed in a cloud environment, is built on the blockchain technology provided by Nasdaq and Chain. Initial MVP phase with member testing, MVP project to be finalized January 2018, On August 09, 2017 SIX Swiss Exchange and Nasdaq, Inc. announced that Nasdaq, in collaboration with its technology partner Chain, will provide distributed ledger technology (DLT) for a Minimum Viable Product (MVP) for SIX’s OTC structured products business. The solution will integrate with several systems currently managed by SIX and utilize the DLT capabilities at the core of the Nasdaq Financial Framework, Nasdaq’s next-generation enterprise architecture stack. With the MVP, SIX gains first-hand experience regarding the implementation of a DLT solution and investigating how to leverage blockchain technology for SIX and its members in the post- 8

Evoting solution on blockchain BUILT FOR PRODUCTION, CAN BE DEPLOYED FULLY IN THE CLOUD IF NEEDED eVoting solution Streamlined service for evoting, including proxy voting Votes will be tracked, stored in the immutable ledger Digital authentication to onboard users Issue and record votes on the blockchain Targeting production August 2018 The e-Voting system uses the blockchain in the traditional way to record the ownership of securities as reported by the CSD. Based on those holdings, the system also issues voting right assets and voting token assets for each shareholder. A user may spend voting tokens to cast their votes on each meeting agenda item if they also own the voting right asset. This model successfully demonstrated how a blockchain could be used for something other than transaction settlement. By leveraging blockchain technology we see enormous potential for greater efficiency and integrity in Annual Meeting and shareholder voting process and this is a very positive step for our industry and for the kind of potential that blockchain continues to represent for the capital markets. As a result of the project, Nasdaq Market Technology is working with other CSDs to develop other proof of concepts and Nasdaq believes this to be a commercially attractive offering moving forward. 9

Solving Our Nordic Mutual Fund Client Needs with Blockchain Issuance & Settlement of mutual fund shares Will revolutionize the fund market with one common framework for issuing, trading and settling of fund units including payments on the blockchain Current market very fragmented, many intermediaries, long lead times and sometimes fax machines are still being used Initial start in the Nordic countries, further global expansion with the market technology customer base PoC project finished 10

A new medium for transferring assets In a decentralized eco system Promises of blockchain Can save billions $$$ in settling financial transactions Improves efficiency, reduce errors and opens possibilities for immediate settlement Brings robustness, transparency and innovation together Greatest potential is the possibility to remove the need for a central trusted party e.g. remove the need for CCPs and CSDs in our industry What problems are we trying to solve where blockchain may apply? Reconciliation can be a pain point in markets, especially where more than two intermediaries need to be involved in a transaction chain Reduce the settlement time Move from semi-manual to fully automated STP value chain Create improved trust through a distributed network rather than a single node Transparency and traceability 11

A new medium for transferring assets In a decentralized eco system Industry reactions on blockchain A move from public blockchain to private blockchain concepts Use case’s primarily within smaller segments of a market, well isolated from the main market The discussions in the CSD community has moved from “will we be replaced” to “where could we use blockchain to improve our business” Slower progress in the financial industry than many expected Our experience International capital markets are not yet ready for such massive disruption in the systemically important equity and bond markets Legacy infrastructure and processes will take time to be replaced Blockchain is only marginal better than current technologies Important to be agnostic to specific blockchain technology A decentralized infrastructure is much more complex to facilitate compared to a centralized An observation There are no major concerns with centralized operators, rather the opposite, they provide means for trust and possibilities for being a regulated and supervised entity 12

Considerations entering into new tech projects Customers: Defining the customers, potential new segments (e.g. retail investors, issuers) Customers’ readiness to adopt to new technologies/new services Market context: New business or internal cost efficiency Scope, where do we start? Service or product areas suitable for innovation and transformation Regulatory environment Organization: Is the organization’s profile the required for a digital transformation? Invest in resources and new competencies?