1. Tehran Stock Exchange Service Company (TSESC): Introduction and Post-Trade Responsibilities September 19, 2005

2. TSESC CONTENTS Brief History Ownership and Governance Services Provided Type and Form of Securities Holding or Ownership structure Order to Final Settlement Process Risk Control & Management Developments

3. September 19, 2005TSESC BRIEF HISTORY Started its operation as a subsidiary of National Informatics Corporation (NIC) in 1984 Originally maintained TSE’s HW & SW Incorporated in 1994 Additional services

4. September 19, 2005TSESC OWNERSHIP AND GOVERNANCE Owned by TSE and its members Five member Board of Directors Representatives of TSE Representatives of brokerage companies Managing Director

5. September 19, 2005TSESC SERVICES PROVIDED Maintain HW & SW Clearing & settlement Depository and custody Information and supporting services Other services

6. September 19, 2005TSESC TYPE AND FORM OF SECURITIES Eligible securities: Equities Corporate bonds New securities: Derivatives, Mutual Funds, and Real Estate Investment Trusts (REIT) Form of tradable securities: Immobilized or de-materialized

7. September 19, 2005TSESC HOLDING SYSTEM Existing system: Direct Holding System Shareholders and issuing companies have direct relationship TSE maintains position of all shareholders Shares can be bought or sold through any broker

8. September 19, 2005TSESC cont. HOLDING SYSTEM New holding system to be implemented: Hybrid Holding System Combination of direct and indirect system Shareholders would relate to the issuing companies through the brokers TSESC would maintain position of all shareholders New procedure: movement of client position from one broker to another

9. September 19, 2005TSESC ORDER TO FINAL SETTLEMENT PROCESS Order placement Physical presence of buyer & seller at brokerage office Buy and sell orders are filled out Provision of documents Buyer: birth certificate and receipt of money Seller: birth certificate and physical certificate Depository of issued certificates Trade matching

10. September 19, 2005TSESC Cont. ORDER TO FINAL SETTLEMENT PROCESS Share delivery Immediate (T+0) movements of shares to a blocked buyer account Shares cannot be traded before settlement on T+3 Holding announcements are printed Physical presence of buyer Payment Netting happens between members at T+3 TSE becomes CCP with no guarantee Physical presence of seller at brokerage office

11. September 19, 2005TSESC RISK CONTROL AND MANAGEMENT Price limits Short selling not allowed Brokerage collaterals - minimal Netting for payment obligations TSE acts as CCP with no guarantee New mechanisms may be introduced

12. September 19, 2005TSESC DEVELOPMENTS New Trade, Clearing, and Settlement Solution Provider: ATOS-Euronext Study phase has been completed New solution would become operational in 2006 New CDS company Ground work is complete May transact post-trade processes for other Exchanges (i.e., TME, IACE, & PE) New instruments OTC market (non-listed companies) Trade through other currencies (Kish Island) Complete immobilization or dematerialization Allowing short selling Lending and Borrowing Market