1. KSD – Past, Present & Future
October 5, 2005
Good morning,
Mr. Alexander Potemkin, General Director & CEO of the Moscow Interbank Currency Exchange,
Mr. Igor Moryakov, President of the Depository Clearing Company,
Members of the AECSD, distinguished guests, ladies and gentlemen,
I am Myeong-Hoon Lee, Managing Director of the Korea Securities Depository or KSD.
I feel honored to attend the 2nd AECSD conference and have an opportunity to introduce KSD to you.
Myeong-Hoon Lee
Managing Director
Korea Securities Depository

2. Outline KSD – Past KSD – Present KSD – Future History and Timeline
From Humble Beginnings To Prosperous Future
KSD – Present
Core and Value-added Services
From Serving the Domestic Market to Serving the International Market
KSD – Future
Hub of Securities Market in Korea
Ubiquitous & Convergent Securities Service Administrator
The topic of my presentation today is ‘KSD – Past, Present, and Future’ and my presentation is composed of three parts.
In ‘KSD – Past’ section, I will touch upon the history and timeline of KSD and what developmental phases KSD has gone through in order to position itself as the core infrastructure of the Korea capital market.
In the following ‘KSD – Present’ section, I will explain the core and value-added services KSD is providing and some international cooperative projects that KSD has been carrying out.
And lastly, in the ‘KSD – Future’ section, I will share with you KSD’s ambitious vision for the future.

3. KSD – History and Timeline
Mature Phase
( )
Growth Phase
( )
Initial Phase
( )
KSSC Established
Centralized Deposit
Beneficiary
shareholder
system introduced
FundNet launching
Intl. Consulting &
Infra Export
IT Back-up Center
KSD reborn on SEA
International Services
OTC Bond DVP
settlement
SLB, Repo, etc.
KSD was first established in 1974 as the Korea Securities Settlement Corporation. At that time, it was established under the Commercial Code, and was a wholly owned subsidiary of the Korea Stock Exchange.
With the rapid development of the front office, however, a stable and efficient back office infrastructure became vital.
So, in 1994, the KSSC was renamed into the Korea Securities Depository and KSD became the only central securities depository under the Securities and Exchange Act. In addition, the ownership structure of KSD became more user-friendly with about 100 shareholders.
Since its establishment, KSD has expanded its service areas not only by providing centralized deposit of securities for the domestic market but also by facilitating cross-border securities settlement, forming a cross-border clearing network covering 42 countries and launching the American Home Trading System. In addition, KSD opened the indirect investment asset deposit and settlement system called FundNet, positioning itself as the hub of the Korean Asset Management Industry.
In a nutshell, the history of KSD is the history of challenges and responses and at the time the history of tireless march into new service areas.

4. KSD –Roles & Functions Deposit Collateral International Management
Services
Other Services
Settlement
Primary Market
Now let’s turn our attention from the past to the present. This slide shows the what kind of roles and functions KSD is playing in the Korean capital market. As you can see, KSD services covers the financial market as well as the securities primary and secondary market. KSD provides value-added services like SLB, Repo, and collateral management, not to speak of the securities deposit and settlement services.
All these services are closely related and create synergic effect by using KSD infrastructure.

5. KSD – Core Services Deposit Settlement Blanket Deposit
Corporate Action Services based on Centralized Deposit
Indirect Investment Asset Deposit through FundNet
New Derivatives and Short-term Financial Instruments Deposit
Settlement
Securities Settlement Services for Market Transactions (KRX)
OTC Bond Settlement on a DVP basis by linking with BOK
Institutional Settlement Services for Institutional Investors
Settlement Services for Free Board
Indirect Investment Asset Settlement through FundNet
This slide shows the settlement service of the services KSD provides. KSD is responsible for the settlement of the Korea Exchange, the newly established exchange integrating the Korea Stock Exchange, KOSDAQ, and the Korea Futures Exchange. Trade comparison for the Korea Exchange is completed at the point of trade execution termed “Locked-in Trade.” The settlement cycle is T+2. The trade comparison under the Institutional Settlement is termed one sided confirmation because KSD sends trade confirmation to institutional investors who, in turn, affirm the trades. The trades are netted bilaterally and settled using the BOK wire on a DVP basis. In the OTC bond market, the buyer and the seller of bonds report their trade details to KSD and KSD matches the trade. Settlement is RTGS and the BOK wire is used.

6. KSD – Other Services Intl. Services Collateral Magt. Primary Market
Securities Lending and Borrowing Intermediary Service
Repo/ Covered Call/ OTC Derivatives
Transfer Agent Services (title transfer, stock issuance, notification)
Bond Registration Service (registration, transfer of bonds, pledging)
Cross-border Securities Deposit & Settlement Services
Custody of DR Underlying Shares/ Local Custody/ CB, BW, EB
Intl. Services
Primary Market
Collateral Magt.
Domestic and International Consulting Services
Information Provision Service
Other Services
This slide shows the settlement service of the services KSD provides. KSD is responsible for the settlement of the Korea Exchange, the newly established exchange integrating the Korea Stock Exchange, KOSDAQ, and the Korea Futures Exchange. Trade comparison for the Korea Exchange is completed at the point of trade execution termed “Locked-in Trade.” The settlement cycle is T+2. The trade comparison under the Institutional Settlement is termed one sided confirmation because KSD sends trade confirmation to institutional investors who, in turn, affirm the trades. The trades are netted bilaterally and settled using the BOK wire on a DVP basis. In the OTC bond market, the buyer and the seller of bonds report their trade details to KSD and KSD matches the trade. Settlement is RTGS and the BOK wire is used.

7. KSD –International Cooperation
International Business Cooperation
Business Agreement with JSSC (Japan)
- Dual listing between Korean and Japanese Market
SLB & Repo Project with SET/TSD (Thailand)
- Dispatched 7 SLB, Repo, and IT experts to Thailand
* First Infrastructure Export to a Foreign Market
International Consulting Services
Expert dispatch, Invitational training, etc.
Beneficiary States
- Uzbekistan, Vietnam, Indonesia, the Philippines, etc.
While serving the domestic market, KSD has been preparing itself for a meaningful role in the international financial market.
We have a firm belief that it is none other than exchanges and cooperation that enables us to enjoy a steady growth and development in this era of globalization. In that belief, KSD has put much value on forging friendly and cooperative relations with various organizations around the world. So KSD has signed a memorandum of understanding on information sharing and cooperation with 8 organizations around the world and has been maintaining mutually beneficial ties.
At the same time, KSD has been providing consulting services to the countries where our ample experience and know-how in the securities market could be inspiring and instrumental. We have provided consulting services to Uzbekistan, Vietnam, Indonesia and the Philippines by dispatching our experts or providing invitational training courses. In the case of Thailand, we have dispatched 7 SBL, Repo, and IT experts to help them develop the SBL and Repo system on a contractual basis. The project is especially significant for KSD in that it is the first infrastructure export case for us.

8. KSD – Future Plan Domestic Front International Front
Introduction of Electronic Securities System
Establishment of Electronic Voting System
International Front
Full support to the Asia Bond Market Initiative (ABMI)
CSD Linkage to facilitate global listing
Now let me share KSD future vision with you. I believe that no man without vision can survive this era of changes and challenges. And this is also true for any organization in the securities industry where the wind of change blows first and foremost among various industries. Realizing the importance of vision, KSD has been and is making efforts to set the right vision and future directions.
Domestically, KSD is striving to position itself as the hub of the securities market acting as the electronic highway for securities transactions.
At the same time, KSD would like to be the hub of securities information as all the securities-related information converges on KSD. We will package and compile the information and produce meaningful knowledge out of it. Lastly, in line with the rapid IT evolution, KSD will make endeavors to provide ubiquitous and convergent securities services to the investing public.
Internationally, KSD has a dream to be the hub of the Northeast Asia securities market and a major contributor to the global securities market. I believe Northeast Asia will emerge as one of the major securities market in the world in the near future. Biding the time, KSD is making necessary preparations. At the same time, KSD envisages itself as a major contributor to the international securities market. As part of the effort, KSD has provided consulting services to various foreign countries and offered to host international conferences like ISSA Regional Meeting, which is held in Seoul right now, and the 9th International CSD Conference, which will be held in Seoul in 2007.

9. KSD – Future Vision Vision for Domestic Market
Hub of Securities Market in Korea
Hub of Securities Information
Ubiquitous & Convergent Securities Service Provider
Vision for International Market
Hub of Northeast Asia Securities Market
Major Contributor to Global Market
- CSD9(2007)
Now let me share KSD future vision with you. I believe that no man without vision can survive this era of changes and challenges. And this is also true for any organization in the securities industry where the wind of change blows first and foremost among various industries. Realizing the importance of vision, KSD has been and is making efforts to set the right vision and future directions.
Domestically, KSD is striving to position itself as the hub of the securities market acting as the electronic highway for securities transactions.
At the same time, KSD would like to be the hub of securities information as all the securities-related information converges on KSD. We will package and compile the information and produce meaningful knowledge out of it. Lastly, in line with the rapid IT evolution, KSD will make endeavors to provide ubiquitous and convergent securities services to the investing public.
Internationally, KSD has a dream to be the hub of the Northeast Asia securities market and a major contributor to the global securities market. I believe Northeast Asia will emerge as one of the major securities market in the world in the near future. Biding the time, KSD is making necessary preparations. At the same time, KSD envisages itself as a major contributor to the international securities market. As part of the effort, KSD has provided consulting services to various foreign countries and offered to host international conferences like ISSA Regional Meeting, which is held in Seoul right now, and the 9th International CSD Conference, which will be held in Seoul in 2007.

10. Thank You
Today I have tried to introduce KSD to you from the perspective of our history and future vision. I hope my presentation today helps you enhance your understanding on KSD.
I have a firm belief that nothing is impossible when we have a clear vision and strong willpower to march toward that vision. That fact that KSD is a member of the AECSD itself shows that KSD has partly realized its vision and has succeeded in cultivating friendly and cooperative relations with you, I believe.
Thank you for taking KSD as your friend. I hope we, the members of the AECSD, will improve our mutually beneficial and cooperative ties onward.
Lastly, I would like to thank all the people who have made this wonderful conference possible for their time and efforts.
Thank you for listening. Thank you.