Steven Palstermans 5th Annual AECSD Meeting - Almaty 1 – 4 October 2008

AECSD_ Agenda AECSD objectives Corporate actions Initiatives in other CSD associations Proxy voting How can SWIFT support you

AECSD_ AECSD Objectives Harmonization of the regulatory framework Establishment of depository links among the members to support cross-border securities transactions Standardization of the technologies for the depository operation, procedures for depository transaction processing, and rules and regulations governing the depositories' activities Adoption of international messaging standards for depository transactions and their use in the national practice Development of Electronic Document Interchange Supporting a coordinated process to enable the Association members to integrate into the global depository system

AECSD_ Common Standards? Central Depository of Armenia The National Depository Center (Azerbaijan) Republican Central Securities Depository (Republic of Belarus) Georgian Central Securities Depository National Securities Depository of Moldova Central Securities Depository (Kazakhstan) Central Depository (Kyrgyzstan) State CSD of the Republic of Uzbekistan Interregional Stock Union (Ukraine) The National Depository of Ukraine Depository Clearing Company (Russian Federation) The National Depository Center (Russian Federation)

AECSD_ Agenda AECSD objectives Corporate actions Initiatives in other CSD associations Proxy voting How can SWIFT support you

Beyond the standard: improving Corporate Actions data quality 5th Annual AECSD Meeting - Almaty 1 – 4 October 2008

AECSD_ A real prospectus: Exchange offer 531 pages 7 classes of stock 3 month timetable Extraordinary meeting Your challenge: find the right 40 pages with the the right data for a notification message – or - verify which of your three sources is correct! Complex and difficult

AECSD_ Market Need – Manual data entry problem CSD Issuer Registrar Investor Custodian On-Line (very few markets) ISO 15022

AECSD_ INVESTOR ISSUER Co / Lead-Manager/ Exchange Agent/ Conversion Agent FUND MANAGER Appointed by investor CUSTODIAN Appointed by investor REGISTRAR / AGENT Appointed by issuer to maintain register BROKER / DEALER Execution of trades where necessary CSD Where shares are Ultimately held CUSTODIAN’S NOMINEE Name on register Do corporate actions affect you? ISITC Corporate Actions Diamond - the lifecycle of corporate actions “…notes in red where non-usage of industry standard messaging occurs.”

AECSD_ Market need – Corporate Actions Challenges  Significant shortfall in message quality and market practice compliance  Limitations of software vendor solutions  Difficult business case – management buy-in for improvement projects Drivers  Losses / risk mitigation  Operational efficiency  Reducing costs  Regulatory compliance  Customer Service  Maximise portfolio performance  Achieve scalability The Drive for STP  Standards  Market practice and tools  Best practices

AECSD_ Agenda AECSD objectives Corporate actions Initiatives in other CSD associations Proxy voting How can SWIFT support you

Corporate Actions and Standards Provide input to the next generation of ISO messages - ISO20022 Create a 'Corporate Actions Best Practice Guide' for ACSDA members Create National Market Practice Groups in markets where this kind of a group does not exist Continue participation at SMPG Share ACSDA Corporate Actions survey results, now covering 17 countries, with interested members of ACG Expand Agenda to Include Issuer Services, extending ECSDA work

AECSD_ Elimination of the Giovannini barriers Barrier 1 : Diversity of IT platforms / interfaces (SWIFT) Final Protocol recommendation Gap analysis Full implementation of the Protocol (March 2011) Barrier 3 : Corporate actions (in cooperation with other European industry associations : Corp. Action Joint Working group) Distributions Reorganisations Transaction management General meetings Barrier 4 and 7 : intraday settlement finality / op. hours and settlement deadlines Ten standards for issuer CSDs Under way : cross-border issue (investor CSDs / banks) ►Monitoring : European Commission (CESAME Group)

AECSD_ Existing standards working groups for CSDs Giovannini working groups Global CSD working group Consolidate CSD views on standards

AECSD_ National Market Practice Groups NMPG countries NMPG countries specified on EIG

AECSD_ …regarding Corporate Actions “There are two kinds of securities messaging: high maintenance and low maintenance....” “Which one am I?” “You're the worst kind. You're high maintenance, but you think you're low maintenance.” With apologies to the writers of “When Harry Met Sally”

AECSD_ Folks! We’ve got a situation here! Risk of significant claims Manual processing dependency Difficult business case for improvement

AECSD_ Simulation Testing and Qualification Service (STaQS) Test MT 564 Notification and MT 566 Confirmation messages for compliance to market practice … a health check for Corporate Actions messages What can you do with this service? –Measure conformance –Identify improvement areas –Benchmark progress –Improve counterparty automation STaQS for Corporate Actions

AECSD_ Agenda AECSD objectives Corporate actions Initiatives in other CSD associations Proxy voting How can SWIFT support you

AECSD_ Shareholders ’ Meetings and Proxy Voting The problems: –corporate actions standards are inadequate –process transparency –confirmation of vote lodged –communication of results –seasonal concentration of meetings –compressed deadlines The result... Shareholders are being disenfranchised by the process!

AECSD_ What can we do about these Proxy Voting problems? Automation and standardisation –A new solution and standard –Tailor-made for Proxy Voting –Industry agreement –Supports EU Shareholders’ Rights Directive –Auditable process –Confirmation of votes lodged –Results reporting

AECSD_ The asset servicing solutions Automation and harmonisation Market practice conformance Streamlining your data providers Improve proxy voting services Corporate Actions solution STaQS for Corporate Actions Data Distribution solution Proxy Voting solution

AECSD_ Agenda AECSD objectives Corporate actions Initiatives in other CSD associations Proxy voting How can SWIFT support you

AECSD_ Get buy-in from regulators, professional associations. Use ISO standards for domestic and international operations. Offer the use of the SWIFT network to MIs for the domestic business. Gain the critical mass of Broker/Dealers and Investment Management Institutions (Top 15). Set up and open the Moscow office. Strategic goals for Eastern Europe

AECSD_ Securities Market Infrastructures on SWIFT >80 institutions from 50 countries Hong Kong Exchanges and Clearing Hong Kong Monetary Authority (CMU) Hong Kong Estonian Securities Depository OMX Estonia MCSD MISR for Clearing, Settlement and Depository Egypt Central Securities Depository Bank of Greece Greece Eurex Clearing Clearstream Banking AG MTS Germany Caja de ValoresArgentina France Finland Czech Republic Croatia Canada Brazil Belgium Austria Australia Euroclear France Euronext Paris – MATIF MTS NCSD Finland – APK OMX UNIVYC Sredisnja Depositarrna Agencija CDS CBLC Euroclear Belgium Euroclear Bank MTS National Bank of Belgium OeKB Australian Securities Exchange Austraclear Keler KSEI Euroclear UK & Ireland Hungary Indonesia Ireland Euroclear Nederland MTS Netherlands RBNZ Austraclear NZX Ltd New Zealand Depository Clearing Company The National Depository Center Russian Federation National Depository for Securities – KDPW Poland Banco de Portugal – SITEME MTS Portugal VPSNorway S.D. IndevalMexico Clearstream Banking SALuxemburg OMXLithuania Midclear Central Depository Lebanon Bank of Latvia Central Depository OMX Latvia Korea Securities DepositoryKorea Central Securities Depository Kazakhstan Stock Exchange Kazakhstan Bank of Japan Jasdec Japan CCG Monte Titoli Italy Tel Aviv Stock ExchangeIsrael Central Bank of Sri Lanka (LankaSecure) Sri Lanka DIFXUAE - Dubai Reserve Bank of ZimbabweZimbabwe ISE Settlement and Custody Bank INCTurkey The Central Depository (Pte) Ltd Monetary Authority of Singapore Bank of Slovakia CDCP Singapore Slovakia Chicago Mercantile Exchange Clearing Corporation DTCC Federal Reserve Banks Omgeo Options Clearing Corporation USA Euroclear UK & Ireland LCH.Clearnet London Stock Exchange United Kingdom Thailand Securities Depository Co. Ltd. Thailand Taiwan Depository & Clearing Corporation Taiwan SIS SIS x-clear Switzerland NCSD Sweden – VPC OMX Sweden Iberclear MEFF MTS Spain STRATE JSE Ltd South Africa Central Securities Clearing Corporation – KDD Slovenia Denmark OMX VP

AECSD_ Common Standards? Central Depository of Armenia The National Depository Center (Azerbaijan) Republican Central Securities Depository (Republic of Belarus) Georgian Central Securities Depository National Securities Depository of Moldova Central Securities Depository (Kazakhstan) Central Depository (Kyrgyzstan) State CSD of the Republic of Uzbekistan Interregional Stock Union (Ukraine) The National Depository of Ukraine Depository Clearing Company (Russian Federation) The National Depository Center (Russian Federation)

AECSD_ Questions?

AECSD_ Thank you