Development Benefits of Equity Markets  Countries with more liquid stock markets enjoy faster growth rates of real per capita GDP over subsequent decades  Stimulate employment: 92% of a typical U.S. company’s employment growth comes post-IPO  Critical to the development of venture equity financing  Innovations that lower equity trading costs lower the cost of capital to listed companies  Dramatically increase the scope for foreign financing  Equity investments in developing countries have historically offered a more attractive risk- return profile than debt

Global Trading is Fueling Domestic Exchanges  Europe Foreign investors are increasingly trading in local markets, reducing need for companies to list abroad

European ADR vs. Domestic Volumes Nokia ADR volume as % of total underlying value traded Source: ERDesk, Efficient Frontiers, Bloomberg 0% 10% 20% 30% 40% 50% 60% 70% Jan-99 Mar-99 May-99 Jul-99 Sep-99 Nov-99 Jan-00 Mar-00 May-00 Jul-00 Sep-00 Nov-00 Jan-01 Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Mar-02 May-02 Jul-02 Sep-02 Nov-02 Jan-03 Mar-03 May-03 Jul-03 Sep-03 Nov-03 Jan-04 Mar-04 May-04 Jul-04 Sep-04 Nov-04 Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07

Global Trading is Fueling Domestic Exchanges  Europe  Latin America Foreign investors are increasingly trading in local markets, reducing need for companies to list abroad

BrazilBrazilian ADRs $550m $3,200m Source: ERDesk, Efficient Frontiers, Comissão de Valores Mobiliários Funds Raised in Brazilian Equity Offerings

Brazilian ADR vs. Domestic Volumes Source: ERDesk, Efficient Frontiers, Bloomberg, BVMF3

Latam ADR vs. Brazilian IPOs Bovespa IPOs Latam ADR IPOs Source: ERDesk, Efficient Frontiers, NYSE, Bovespa, WFE, BNY Mellon

Brazilian Public Offerings Source: ERDesk, Efficient Frontiers, Bovespa

Algorithmic Trading in Brazil Participation of algorithmic trading by exchange In terms of number of trades 60% 55% 50% 40% 35% 30% 35% BATSNASDAQNYSE ArcaDirectEdgeXetraLSETokyo SETMX 18% Bovespa Source: ERDesk, Efficient Frontiers, Finextra, Traders Magazine, FT, Reuters, BM&FBovespa

High Frequency Trading in Brazil 0.31% 0.57% 0.97% 1.45% 1.99% 1.63% 1.79% 2.10% 2.64% 4.69% 5.44% 5.56% 4.16% 3.47% 4.69% 5.18% 3.87% 4.26% 6.89% 5.50% 5.93% 6.66% 4.97%4.73% 4.47% 4.04% 5.66% 6.63% 5.86% 5.89% 8.69% 7.59% 8.57% 11.35% 10.41% 10.29% Nov-10Dec-10Jan-11Feb-11Mar-11Apr-11May-11Jun-11Jul-11Aug-11Sep-11Oct-11 In terms of value traded Volume from Co-located Other HFT Source: ERDesk, Efficient Frontiers, BM&FBovespa

Global Trading is Fueling Domestic Exchanges  Europe  Latin America  China Foreign investors are increasingly trading in local markets, reducing need for companies to list abroad

Financial Statecraft  United States: Financial sanctions Exchange rate policies Capital flow policies  Europe: Tobin tax

Tobin Tax Derivatives exchange fees Rate per million of value traded CME Eq mini ICE US Fin CME Eq std NYMEX Core COMEXICE UE Futures CME Eurodollar CME T-Bonds Proposed Tobin tax x 39x 18x11x52x21x13x17x Source: ERDesk, Efficient Frontiers, CME

Financial Statecraft  United States: Financial sanctions Exchange rate policies Capital flow policies  Europe: Tobin tax  India?

Internationalization Strategies  Intra-SAARC potential limited  Key is U.S. & European flows

U.S. Portfolio Holdings of Indian Securities Source: U.S. Department of the Treasury Holdings in $ millions % of total U.S. foreign holdings

Internationalization Strategies  Intra-SAARC potential limited  Key is U.S. & European flows  India seen as a BRIC, not South Asian