Small local CSDs in a world of globalization and consolidation Peter Falk, Product Director, EXIGO CSDAMEDA meeting, Marrakech, 20 – 21 April 2006

2 OMX owns exchanges in the Nordic Baltic region and develops and provides technology and system services to financial companies around the globe.

3 Footprint of our business Exchanges (Marketplaces and services) Technology (Customer examples) Market Participants 4000 broker trading applications Partnerships: ORC Cameron Systems Information & Data Services 677 listed companies 149 members Exchanges Thailand Futures Exchange ISE ASX – Australian Stock Exchange SGX – Singapore Exchange HKEX – Hong Kong Exchanges Nord Pool ICAP + 4,000 broker trading applications EDX London Copenhagen Stock Exchange Stockholm Stock Exchange Helsinki Stock Exchange Riga Stock Exchange Tallinn Stock Exchange Vilnius Stock Exchange Clearing & CSD SFE – Sydney Futures Exchange HKEX – Hong Kong Exchanges and Clearing Nord Pool NCSD (20%) Stockholm Stock Exchange EDX London Estonian CSD Latvian Central Depository Lithuanian CSD

4 Market presence – More than 60 customers Asia Hong Kong Exchanges and Clearing Jakarta Stock Exchange Korea Exchange Philippine Dealing & Exchange Corp Port Moresby Stock Exchange Singapore Exchange Shanghai Stock Exchange Surabaya Stock Exchange Thailand Futures Exchange Australasia Australian Stock Exchange Bendigo Stock Exchange New Zealand Exchange Limited SFE Corporation Americas AMEX - American Stock Exchange Bahamas International Securities Exchange Barbados Stock Exchange Bermuda Stock Exchange Boston Stock Exchange Canadian Trading & Quotation System ICAP ISE - International Securities Exchange Jamaica Stock Exchange NASD - National Association of Securities Dealers Trinidad & Tobago Stock Exchange Middle East & Africa Abu Dhabi Securities Market Bahrain Stock Exchange Bourse Regionale des Valeurs Mobilieres Cairo & Alexandria Stock Exchange Doha Securities Market Dubai Financial Market Nigerian Stock Exchange Palestine Securities Exchange Tadawul (Saudi Arabia) Tehran Stock Exchange Europe Athens Exchange Borsa Italiana Bucharest Stock Exchange Budapest Stock Exchange Copenhagen Stock Exchange (OMX) Cyprus Stock Exchange EDX London Helsinki Stock Exchange (OMX) ICAP Iceland Stock Exchange Icelandic Securities Depository Istanbul Stock Exchange Malta Stock Exchange MICEX Nord Pool / Nord Pool Clearing NOS NYMEX Europe OMIP – Iberian Power Exchange OPCOM / Romanian Power Exchange Oslo Börs Polish Power Exchange Riga Stock Exchange (OMX) Stockholm Stock Exchange (OMX) SWX Swiss Exchange Tallinn Stock Exchange (OMX) TLX Turkish Derivatives Exchange Vilnius Stock Exchange (OMX) Wiener Börse AG

5 CSD Benchmarking Framework Example CSD Benchmark High Quality Efficient Operations Risk Elimination Broad Service Offering Adherence to International Standards Target scenario Current situation Level 4: best practice local CSD Level 5: multi-instrument, multi-currency, links

6 TradesClearingSettlementCustodyRegistrationAsset Servicing Manage standing data Manage Relationships Accounting Reporting 10.0 Communica- tions 11.0 Business Functional Analysis Capture key functional components of a CSD

Agenda The current situation Problems and challenges Driving forces Elements to a strategy

8 Some characteristics Local participants Local securities Small part of regional and global market Small volume but also a broad offering of securities Local market consolidation not yet feasible Dematerialized?

9 Baltic region 8 markets 8 currencies A small corner of Europe (only a few percent) A small corner of The Nordic Region (only a few percent)

million € in custody

11 A broad variety of instruments (national differences)

transactions per day

Agenda The current situation Problems and challenges Driving forces Elements to a strategy

14 Problems and challenges – local level Size –Small size = small revenues –Small size = lack of development resources Lack of standard interfaces Lack of functionality –Real time DvP –More than one batch settlement

15 Problems and challenges – regional level Different market practices –Account structure –Corporate actions processing –Settlement procedures –Reporting requirements Different rules and regulations –Account structure –Unlisted companies –Reporting requirements Different custody service solutions Not all differences are important!

Agenda The current situation Problems and challenges Driving forces Elements to a strategy

17 Driving forces Globalization, regionalization, single market Localization Regional and international players Moving towards standards Efficiency, costs, competitive pressure

18 CSDs – a historical view Improvement market by market Local models, local systems Role models Frankfurter Kassenverein and DTC Euroclear VP and Sicovam Decades of convergence ISSA, FIBV, G-30, BIS, IOSCO … CSDs are mature businesses undergoing great change

19 Local investors Foreign investors Local securities Foreign securities Local investorsForeign investors Local securities Foreign securities Yesterday The traditional CSD turf is getting smaller Tomorrow

20 Global initiatives with implications for CSDs G-30 –1989: 9 recommendations (*) –2003: 20 recommendations CPSS (BIS/IOSCO) –2001: Core principles – payment systems –2001: Recommendations for securities settlement systems (*) –2002: Assessment methodology –2004: Risk management for CCPs IMF and World Bank: FSAP assessments Hague Convention: removal of conflict-of-law The Giovannini Group –Action plan for removing the 15 barriers ECB –9 minimum operational standards for SSS ECB / CESR –Moving 19 CPSS recommendations  binding standards The European Commission –Directives on collateral, finality, investment services –Principles for functional regulation. (*) = local scope

21 Conflict: International vs. local Regional and international market participants request easy, secure and low cost access to several markets. Large issuers require large liquidity pool Small and medium-sized issuers, local investors, local participants and domestic considerations request extremely efficient STP transaction flows for domestic trades

22 Nordic and Baltic region OMX regional ambition: To make the Nordic and Baltic region be perceived as one securities market, so efficient and attractive that it will climb the ladder of the leading European markets

23 STOCKHOLMSBÖRSEN HEX HELSINKI Exchange members: growth in remote, local stable

24 # of trades per year Cost 0 Exchange Settlement Cost of market participation – coarse view

25 NOREX is the first stock exchange alliance to implement a joint system for equity, fixed income and derivatives trading as well as harmonised rules One membership and one connection for members! Shared technology reducing cost Cross membership Local clearing & settlement A FULLY INTEGRATED MARKET! Wide Distribution Network: -SB Members -OB Members -CSE Members -HEX members - ICEX members - RSE members -TSE members -VSE members - (EDX London Members) Wide range of products and services Common regulatory framework: Harmonized membership and trading rules Single point of liquidity - One single order book Joint Infrastructure OMX Trading & Clearing systems EDX* London Link-Up opportunities with other exchanges worldwide *Derivatives CSE SB OB HEX ICEX RSE TSE VSE

26 DKICE DKICENOSEFIESTLATLIT TRADING CSD CCP SETTLMNT Nordic vision One access point

Agenda The current situation Problems and challenges Driving forces Elements to a strategy

28 Elements to a strategy Local CSDs with local registers, local service and support SWIFT standard messages Realignment of rules and market practices (not all!) Shared settlement A single standard systems platform Possibility to handle a broad list of instruments Step by step implementation

29 SETTLMT (DVp) INVESTOR CSD INVESTOR CSD Trading systems CCP CSD links Central Bank A Central Bank B Add-ons (example): Collateral Mgmt Sec. Borrow/Lending Shared settlement platform ISSUER CSD CLEARING ISSUER CSD CSD BCSD A Shared settlement engine for two CSDs Enables co-operation and retains local independence  CSD A operate under the rules of country A  CSD B operate under the rules of country B  The settlement engine follows joint settlement rules

30 3-step roadmap Move towards international standards Establish target Move to “best practice” CSD where needed Prepare for regional and/or internationa l standards

31 Benchmark Functional Service Offering Sample assessment FUNCTIONALITY 0,00 10,00 20,00 30,00 40,00 50,00 60,00 CSD1CSD2CSD3… CSD

End of presentation Peter Falk, Product Director, EXIGO CSDAMEDA meeting, Marrakech, 20 – 21 April 2006