1. 1 NOVEMBER 2012 THE ROLE AND IMPORTANCE OF CUSTODIAN SERVICES IN THE GLOBAL FUND INDUSTRY FiduciaryFuture Cyprus 2012 NICOLAS GONZALEZ – HEAD OF BUSINESS DEVELOPMENT, PENSION FUNDS & SOVEREIGN ENTITIES

2. | 1 NOVEMBER 2012P.2| THE ROLE AND IMPORTANCE OF CUSTODIAN SERVICES IN THE GLOBAL FUND INDUSTRY CONTENTS CHAPTER 01_THE CUSTODIAN IN THE FUND ENVIRONMENT A. THE FUND ENVIRONMENT B. DEPOSITARY VS CUSTODIAN C. FUND MANAGER NEEDS CHAPTER 02_CUSTODIAN’S SERVICES A. THE CUSTODIAN IN THE ASSET MANAGEMENT CHAIN B. PRIMARY SERVICES C. ANCILLARY / VALUE-ADDED SERVICES D. CUSTODY MARKET CHAPTER 03_FROM OPERATIONAL RISK MANAGEMENT TO OPERATIONAL RISK INSURANCE A. ALMOST THERE: THE NEW FRAMEWORK FOR DUTIES AND LIABILITIES B. FUTURE OF CUSTODY

3. | 1 NOVEMBER 2012P.3| THE ROLE AND IMPORTANCE OF CUSTODIAN SERVICES IN THE GLOBAL FUND INDUSTRY CHAPTER 01 THE CUSTODIAN IN THE FUND ENVIRONMENT

4. | 1 NOVEMBER 2012P.4| THE ROLE AND IMPORTANCE OF CUSTODIAN SERVICES IN THE GLOBAL FUND INDUSTRY FUND ENVIRONMENT Asset Manager Asset Manager Insurer Pension Fund Sovereign Fund Retail DepositaryCustodian UCITS AIF Mandates Investors Asset management / Fund Custody Portfolios

5. | 1 NOVEMBER 2012P.5| THE ROLE AND IMPORTANCE OF CUSTODIAN SERVICES IN THE GLOBAL FUND INDUSTRY  Depositary = Custodian + Oversight Role  Custodian: Assets safekeeping Assets segregation Asset servicing  Regulated funds benefit from a higher protection than mandates DEPOSITARY VS CUSTODIAN

6. | 1 NOVEMBER 2012P.6| THE ROLE AND IMPORTANCE OF CUSTODIAN SERVICES IN THE GLOBAL FUND INDUSTRY FUND MANAGER NEEDS  Operational risk management Client guidelines breaches Transaction errors Valuation errors Fraud Settlement errors Corporate actions voting rights response failures etc  Core services Custody Fund administration & Transfer agency  Ancillary / Value-added services

7. | 1 NOVEMBER 2012P.7| THE ROLE AND IMPORTANCE OF CUSTODIAN SERVICES IN THE GLOBAL FUND INDUSTRY CHAPTER 02 CUSTODIAN’S SERVICES

8. | 1 NOVEMBER 2012P.8| THE ROLE AND IMPORTANCE OF CUSTODIAN SERVICES IN THE GLOBAL FUND INDUSTRY THE CUSTODIAN IN THE ASSET MANAGEMENT VALUE CHAIN Market Data Ratios Calculation Paying Agent Distribution Agreements F/O ASP Order Routing Securities Lending Repos M/O Clearing & Settlement Custody & Tax Financing FX Fund Administration Depositary Investment Controls Analytics Fund Trading Transfer Agency Paying Agent Trailer Fees PRE-TRADETRADEPOST-TRADE SECURITIES FUNDS

9. | 1 NOVEMBER 2012P.9| THE ROLE AND IMPORTANCE OF CUSTODIAN SERVICES IN THE GLOBAL FUND INDUSTRY PRIMARY SERVICES  Global custody  Sub-custody  Depositary  Fund administration  Transfer agency Market Data Ratios Calculation Paying Agent Distribution Agreements F/O ASP Order Routing Securities Lending Repos M/O Clearing & Settlement Custody & Tax Financing FX Fund Administration Depositary Investment Controls Analytics (Perf., Risk) Fund Trading Transfer Agency Paying Agent Trailer Fees PRE-TRADE POST-TRADE SECURITIES FUNDS Market Data Ratios Calculation Paying Agent Distribution Agreements F/O ASP Order Routing Securities Lending Repos M/O Clearing & Settlement Custody & Tax Financing FX Fund Administration Depositary Investment Controls Analytics Fund Trading Transfer Agency Paying Agent Trailer Fees PRE-TRADE POST-TRADE SECURITIES FUNDS

10. | 1 NOVEMBER 2012P.10| THE ROLE AND IMPORTANCE OF CUSTODIAN SERVICES IN THE GLOBAL FUND INDUSTRY ANCILLARY AND VALUE-ADDED SERVICES  Liquidity management  F/O and M/O solutions  Analytics: Performance & Risk  Distribution support  OTC derivatives and collateral management (EMIR)  Solvency II reporting (look-through, SCR calculation) Market Data Ratios Calculation Paying Agent Distribution Agreements F/O ASP Order Routing Securities Lending Repos M/O Clearing & Settlement Custody & Tax Financing FX Fund Administration Depositary Investment Controls Analytics (Perf., Risk) Fund Trading Transfer Agency Paying Agent Trailer Fees PRE-TRADE POST-TRADE SECURITIES FUNDS Market Data Ratios Calculation Paying Agent Distribution Agreements F/O ASP Order Routing Securities Lending Repos M/O Clearing & Settlement Custody & Tax Financing FX Fund Administration Depositary Investment Controls Analytics Fund Trading Transfer Agency Paying Agent Trailer Fees PRE-TRADE POST-TRADE SECURITIES FUNDS

11. | 1 NOVEMBER 2012P.11| THE ROLE AND IMPORTANCE OF CUSTODIAN SERVICES IN THE GLOBAL FUND INDUSTRY CUSTODY MARKET  Increased need in having cross-border custodians meeting the regulatory challenges  Only a dozen of custodians have a regional/global presence  This has not changed for the last 10 years: Some players have been bought and replaced by others (e.g., SG, Caceis and RBC) Assets increase Domestic players  The European custodians are now French

12. | 1 NOVEMBER 2012P.12| THE ROLE AND IMPORTANCE OF CUSTODIAN SERVICES IN THE GLOBAL FUND INDUSTRY CHAPTER 03 FROM OPERATIONAL RISK MANAGEMENT TO OPERATIONAL RISK INSURANCE

13. | 1 NOVEMBER 2012P.13| THE ROLE AND IMPORTANCE OF CUSTODIAN SERVICES IN THE GLOBAL FUND INDUSTRY ALMOST THERE: A NEW FRAMEWORK OF DUTIES AND LIABILITIES  High level description in UCITS IV (almost unchanged since UCITS I)  Local regulation prevails  AIFMD, UCITS V Eligibility: Credit institutions or MiFID compliant entities Loss of assets under custody ▫Restitution without undue delay ▫Reverse burden of proof ▫Except in “external event beyond reasonable control” (acts of God, State, etc) Cash monitoring

14. | 1 NOVEMBER 2012P.14| THE ROLE AND IMPORTANCE OF CUSTODIAN SERVICES IN THE GLOBAL FUND INDUSTRY FUTURE OF CUSTODY  Capital requirements? Trusts vs universal banks?  Increased costs?  Insurers?  Shadow banking, regulations, low interest rates: New revenue models?  Systemic risk?  A lot of uncertainties due to a fragmented and still unknown regulations AIFMD Level 2, UCITS V MiFID II SLL UCITS VI  National transpositions and discrepancies  Harmonization and assessments of the implemented laws are the pre- requirements