1. Spanish Clearing and Settlement Reform London, 13th May 2015

2. Current situation of the Reform. Test and Calendar Jesús Benito. Chief Executive Officer of Iberclear, BME Participant Entities in IBERCLEAR Jesús Benito. Chief Executive Officer of Iberclear, BME Members in BME Clearing. Onboarding Manuel Andrade. Managing Director Sales, BME Clearing, BME Market Members in BME Beatriz Alonso-Majagranzas. Equity Unit Deputy Director, BME Migration. Calendar and Highlights Beatriz Alonso-Majagranzas Equity Unit Deputy Director, BME Agenda

3. Reform current situation. Testing & calendar Jesús Benito CEO of Iberclear, BME

4. Spanish equity market STOCK EXCHANGE CCP IBERCLEAR BME PROJECT IMPACT STOCK EXCHANGE Changes in interfaces BME CLEARING CCP New infrastructure ARCO – IBERCLEAR SYSTEM New system NEW TRACEABILITY AND SUPERVISION SYSTEM

5. Reform Calendar2014201520162017… PHASE I- EQUITY PHASE I PHASE II PHASE II- EQUITY & FIXED INCOME

6. Current situation Legal framework  Law 24/1988  Royal Decree  Regulations  Circulars Migration design  Documentation CTA 27/04 CTA 27/04 Functional design  Functional doc.  Procedures manual Local CSDs SFI Model PTIFees Testing Phase

7. 2015 MAYJUNJULAUGSEPOCT Testing Phase Voluntary testing Certification mandatory testing Daily Activity PRODUCTION connectivity Start-up & Migration 18/05 – 17/07 22/07 – 28/07 01/07 - 30/09 29/07 – 05/08 26/08 – 02/09 09/09 – 16/09 23/09 – 30/09 10/08 – 14/08 Settlement T+2

8. Participants in Iberclear Jesús Benito CEO of Iberclear, BME

9. Participants in Equity (SCLV platform) Participants in Fixed Income (CADE platform) Certification tests Contents Participants in Iberclear

10. Before the 15th of May they have to state their intention of PARTICIPATING IN arco Indicating membership condition NOT PARTICIPATING IN arco Indicating to what Participant will they transfer the securities 18th of May – 17th of July CERTIFICATION TESTS Mandatory for Participants using their own Technical Means Before the 4th of September Request for opening accounts in arco In order to undertake the migration process Before the 31st of July Presenting arco membership contracts Participants in Equity (SCLV platform)

11. Before the 17th of July CERTIFICATION TESTS for CADE Participants which are also acting as the Agent Bank for any of the issuances registered in the platform Participants in Fixed Income (CADE platform)

12. SCLV Participants using their own Technical Means in arco CADE Participants acting as Agent Bank for any of the registered issuances Performed in the FORM testing environment Certification Guide with the details of tests Specific testing ISIN codes Open period from the 18th of May to the 17th of July Pending to determine the date for these tests: Corporate Actions Supervision Sending registrations requested by the issuer Who? How? When? Results Certification Tests IBERCLEAR will send each Participant a report after the end of the period The Participant will send a suitability certificate to IBERCLEAR IBERCLEAR will inform on the passing of the mandatory tests

13. Members in BME Clearing. Onboarding. Manuel Andrade Managing Director Sales, BME Clearing, BME

14. A new segment for BME Clearing Members in BME Clearing Necessary Documentation Conformance tests Margins Open accounts Summary Index

15. The onboarding process is very quick and simple Membership dossier will be available by the end of this month From August 11 till September 1 you can submit the dossier BME Clearing approval till September 30 August 10 Expected date for approval of the new segment From August 11 You may sign in by sending the documentation requested Members in BME Clearing

16. Need to sign only: - In case of being a clearer: Agreement CM and BMEC POA (authorization to settle in Iberclear accounts) LRSLoan (only for lenders) - In case of NOT being a clearer: Agreement NCM and BMEC Agreement NCM and GCM In case of just being an Ordinary NCM: Agreement ONCM and BMEC Agreement ONCM and GCM Form of general info and contact persons List of authorized signatories Existing Members Necessary documentation

17. Form/request to join as a member Form of general info and contact persons Request certification to Spanish regulator Questionnaire with seven questions Certification of Spanish regulator Photocopy of bylaws Agreement Member and BMEC Agreement GCM and NCM Target 2 account Credit rating New Members Necessary Documentation

18. Who? List of tests and certifications: Set-up allocation references, filters and parameters Trades with external and internal allocations with no parameters and with filters Trades with module of parameters Trades including the account or the allocation reference in the order Hold and release Cancelation of Last Resort Securities Loan Member certifies BMEC that it correctly receives and interprets the information sent by BMEC BMEC will confirm with Iberclear that member has passed test of submitting bilateral trades from Iberclear for clearing at the CCP BMEC will confirm with SIBE that kill button test has been passed Compulsory to achieve membership in BME Clearing In case of ISV it will be sufficient to have its conformance test From May 18 till July 17 Conformance tests When? Tests

19. Position Margin (by October 6) October 7 at 9am trades will start to be booked. The intra day limit to book trades increasing margins is set to be the Individual Margin plus 5% of your equity (with a cap of 10 m for less than BBB- or non rated). From that moment, if you exceed the limit we call you to post the excess plus 20% of excess. Strongly recommended to ADVANCE margin to cover risk of 1 day. How much? Approximately the amounts obtained within the test we will be running with real trades. Default Fund Individual Margin (not mutualized) Individual Margin (not mutualized) Position Margin Margins Contribution to the Default Fund (by September 30) ICM: 0.5 m GCM: 1 m 2% of all position margins called for all the accounts (by September 30) ICM: min. 0.5 m and max. 1 m GCM: min. 1 m and max. 1.3 m

20. You may open accounts sending an e-mail with a specific form. By default we will open the accounts reported in the form with static data to be sent before June 12. From September 9 you may send us modifications. Open accounts

21. May 29: Membership dossier is available May 18 till July 17: Conformance tests August 10 or before: Approval of the new segment by CNMV From August 10 or before till September 1: Members will be sending the dossier From September 1 till 30: BME Clearing will approve memberships From September 9: Modify account set-up Till September 30: Post contribution to DF and Individual Margin Till October 6: Advance position margin. Summary

22. BME Clearing Member Area

23. BME Trading Members Beatriz Alonso-Majagranzas Equity Unit Deputy Director, BME

24. BME Trading Members Contracts for Trading Members Conformance Tests New Fields in Order Messages Index

25. Designation of Clearing Member (to perform conformance test with) Submit declaration of test performance with or without service provider (back office) Deadline for counterparty members in the SICAV segment to designate a Clearing Member and Clearing Account Before May 15 BME Trading Members Before July 31 Before September 4 Submit certificate of suitability Distribution of Conformance Test results Market Member Contracts Signed

26. Adhesion Contract All market members have to sign it (up to 4 member codes) Acceptance of new market regulation (stock exchange regulations) Uniformity along the rest of infrastructures Simplify current process Kill button contract To be signed by Non-Clearing Trading Members (tripartite) Part of the Adhesion Contract Requires conformance test Notice of February 24, 2015 Contracts for Trading Members

27. 1. Adhesion contract to the condition of Member of a Stock Exchange To be signed by all members of the different Exchanges. In addition, it is foreseen: The certification of traders designated by the member and those that will be needed in order to request their training A notification by the market member to the Exchange of its Clearing member at BME Clearing An authorization to the Clearing member to use the technical facilities that enable to interrupt its trading activity 2. Tripartite contract: Market member, Clearing member and Sociedad de Bolsas to grant access to technical resources (BME PC Terminal) 3. Tripartite contract: Market member, Clearing member and BME Clearing to enable the Kill Button facility Contracts for Trading Members CONTRACTS WITH THE GOVERNING BODIES OF THE EXCHANGES

28. Order testing (FIX 4.0) Kill Button function Conformance Test SIBE SMART Ownership communications Market members will have to inform when testing has been fulfilled in order to be verified OWNERSHIP COMMUNICATIONS TRANSACTION REPORTING Reception of files

29. Who? When? How? Conformance Test Kill Button Market members To be completed together with the Clearing member From May 18 to July 17 Market members will receive a proposal of dates to complete the test Access of the clearing member through BME PC The clearing member code used in the market will be used in the CCP

30. Who? When? How? Conformance Test Ownership Communications Market members From May 18 to July 17 Ownership communications and ammendments: Ownership communication of trades with BME Clearing Ammendments to ownership previously communicated Reception of information: Generated files for market members Information requests and reception of requested information Members will certify the reception and interpretation of information

31. 1. Clearing Member* 2. Allocation Reference 3. Mnemonic 4. Clearing account* 1.Identification of the receiving participating entity 2.Clearing account of the receiving entity 3.CCV (Securities account) of the receiving participating entity 4.Identification of delivering participating entity 5.Clearing account of the delivering entity 6.CCV (Securities account) of the delivering participating entity * Fields that must be filled in by the counterparty member of SICAVs MARKET ORDERS New Fields in Order Messages TRADES THAT ARE NOT SETTLED THROUGH IN CCP

32. Equities Private Web

33. The migration. Calendar and highlights Beatriz Alonso-Majagranzas Equity Unit Deputy Director, BME

34. First day of arco settlement Last day of SCLV negotiation Start of the CCP Start of the PTI Last day of SCLV settlement Disconnection of AUD for Equities TU 06/oct/15 W 07/oct/15 TH 08/oct/15 F 09/oct/15 S 10/oct/15 SU 11/oct/15 M 12/oct/15 Migration. Key dates

35. Migration Mailing of forms and documents completed by the entities for the configuration of the post-trading real environment: Market Members, BME Clearing members and Iberclear participating entities. May 12 Pre-production environment configured to test go live and migration July 29 June 12 Last day for the entities to submit the Communication Configuration Go live and migration October 7 - 12

36. Last window and ‘end of day’ process Balance sent to all the entities (all the accounts and all the ISIN codes) Validation required by all the entities (vía e-mail) (The process of sending balances will begin 3 weeks before the migration, to make it easier for the entities) Balance conversion arco Balance sent to all the entities Validation of the balance conversion required by the all the entities Reorganization of the balances among the entity accounts Validation of the reorganized balance Migration Iberclear October 9 October 10 SCLV

37. FIX 4.0 protocol will be available in July Incorporation of the new reform fields as an option (orders with validity post Octubre 7, 2015) The current FIX protocol will be discontinued Implementation of Information required for the Reform AUD for Equities will be discontinued Migration The Market

38. Members in BME Clearing. Onboarding. Manuel Andrade Managing Director Sales, BME Clearing, BME

39. Conclusions Risk management through a CCP MIFID II traceability standards from trading venues till final custody Practices and processes adapted to T2S