1. May 7th, 2003 ISSUE BRIEFING European Parliament Warrants and Bonds Prospectuses

2. Warrants May 7th, 2003 2 Société Générale Equities & Derivatives « Trading and sale of equity derivatives products » More precisely, derivatives products such as :  Simple calls & puts example : a plain vanilla call gives the right to buy a specific underyling at a fixed price - at or up to a determined date (maturity date)  a wide range of « innovative » options example : corridor option gives the right to receive 1 euro per day, where the underlying asset closes inside specific range (up and down limits) during a period of time.

3. Warrants May 7th, 2003 3 Société Générale Equities & Derivatives « Trading and sale of equity derivatives products »  Structured products with simple or innovative indexations example : at maturity the holder will receive 100% of the initial amount invested plus x% of the performance of the CAC 40 index over the period.

4. Warrants May 7th, 2003 4 Adapting the offer to client needs... Different « wrappers » ….  Warrants  Certificats  EMTN  Funds …. answering specific needs for different types of customers

5. Warrants May 7th, 2003 5 What are Covered Warrants? Generally simple call & put options “Covered” means that when the issuer launches a warrant on the market, he buys/sells the underlying share to cover its position (i.e. no equity creation in case of exercise) Issued by a financial institution Mid to long-term (6 to 24 month) options High liquidity provided on the exchanges Leverage effect Possibility to hedge : portfolio protection

6. Warrants May 7th, 2003 6 Sydney Hong-Kong Stockholm Paris Madrid Zurich Milan Frankfurt Stuttgart Frankfurt Stuttgart Brussel Amsterdam Lisboa Helsinki Warrant markets in the world

7. Warrants May 7th, 2003 7 2002 Turnover on Warrant markets

8. Warrants May 7th, 2003 8 Issue process today SG acts as issuer targeting retail investors in 13 countries Today, plain vanilla call and put warrants are considered as « standard » by market authorities throughout Europe SG Manages a global range of 5,000 warrants updated on a daily basis (strikes, maturities) with a lot of product replication due to a lack of common European regulations and definitions When it comes to innovative products discrepancies throughout Europe limit the offering possibilities

9. Warrants May 7th, 2003 9 Germany ’s legal framework The oldest warrants market (with Switzerland) : 1st issue in 86 German market authorities have set the listing guidelines with the input of issuers Great reactivity : listing within two days Same issue procedures for simple and innovative warrants :  Deposit of a Master Document for each category ; once a year with the new financial statements of the issuer  For all following issues only a complete prospectus is required to be deposited at the exchange ; listing the next day  No legal restrictions on the characteristics (strikes, redemption at maturity, expiry…)

10. Warrants May 7th, 2003 10 France’s legal framework The warrants are issued and listed on the Stock Exchange since the issue is approved by the COB Less reactivity : listing within a week (minimum) Different procedures for simple warrants and innovative products  Warrants program registered by the COB ; updated once a year with the new financial statements of the issuer  Innovative structures should be issued as bonds (legal and fiscal consequences)

11. Warrants May 7th, 2003 11 Italy’s legal framework The warrants are issued and listed on the Stock Exchange since the issue is approved by first CONSOB then Borsa Italiana Different procedures for simple warrants and innovative products  Warrants program registered with the CONSOB ; updated once a year. Delay of approval : 1 month and 1 week for every supplement  Innovative structures should be issued on a “stand alone” format. Delay for approval : 1 month minimum Registration costs extremely high

12. Warrants May 7th, 2003 12 Issue process today Issuers still have to cope with 13 different issue procedures (requirements and delays) All market authorities have different views on the product :  a digital option should be issued as a warrant? As a certificat? As an EMTN?  Up and in options? What Does the Directive Prospectus propose ?

13. Warrants May 7th, 2003 13 The Directive proposals First proposal  European Passport  No choice of competent market authority : headquarter of the issuer  Language of the prospectus (French exception) The current proposal  Choice of the competent market authority : country of the headquarter of the issuer or country where the public offer will take place Since market authorities accept different products under the name of “warrants”, competition discrepancies between issuers will subsist (ex : German issuers)  Different rules for warrants when issued by SG on SG share different requirements are not justified on a financial basis

14. Warrants May 7th, 2003 14 The « ideal world » All market authorities should agree on the same definition and language  local rules should converge, in particular in the context of Stock Exchange mergers  adapted language: one common and usual languages should be accepted by all market authorities Accuracy and reactivity of the product range to market fluctuations :  Delays reduced to the minimum : 1 week maximum Investor protection  information on the underlying asset should not undermine an understandable description of the rights attached to the product  adapted language : summary in the language of the country where the product is offered