1. Working Group # 5 - Report

2. Working Group #5 Principle #11 CSDs 1.What constitutes "compliance" with the Principle? Describe (in specific terms) the state characteristics of a CSD that fully meets the requirements of the Principle. -Detailed rules and procedures including controls, risk management program, strict accounting and audit practices, frequent reconciliation ; in every case, based on the overall principles, as well as particular institutional concerns. -Enable book entry processing and promote dematerialization or immobilization. -Segregation of assets of the CSD’s assets from those of participants

3. 2. In relation to the Key Considerations for the Principle, what metrics/data should a CSD compile in order to demonstrate compliance? How might this data be sourced? …………………. Key Considerations Working Group #5 Principle #11 CSDs -Published rules – to participants and the market as appropriate -Rule infringement violations – fines paid by participants -Frequently reconciled position of account balances -Audit records of number issues, transfers and registrants -Level of awareness of rules – incidents reports -Tracking of transfers & deliveries – book entry vs physicals -Prohibition of debit balances and overdraft – disincentives or penalties in place for violation and to ensure correction How to source - Operations reports; internal audit.

4. 3. What “result levels" with respect to these metrics/data should a CSD achieve in obtaining "compliance"? Why? Working Group #5 Principle #11 CSDs High score, with action plans to enhance performance & results; For material concerns: little room for error, subject to the risk tolerance policy

5. 4. What, if any, provisions should you (as an FMI) be making to ensure continued adherence to the principle (s), for example in times of market or operational distress? Working Group #5 Principle #11 CSDs -Having cross training, with staff capabilities shared across the employees -Intraday collateral protection for posted trades -Business continuity & contingency plans, with testing -Periodic compliance reviews, including end-to-end audits

6. Working Group #5 Principle #12 Exchange of Value Settlement Systems 1.What constitutes "compliance" with the Principle? Describe (in specific terms) the state characteristics of a CSD that fully meets the requirements of the Principle. Simultaneous RTGS Settlement or deferred net settlement with liquidity and collateral protection; with clearly defined risk framework

7. 2. In relation to the Key Considerations for the Principle, what metrics/data should a CSD compile in order to demonstrate compliance? How might this data be sourced? Working Group #5 Principle #12 Exchange of Value Settlement Systems -Settlement records showing incidences of failure -Automated systems that link securities and value transfers -Rules and procedures to cover securities settlement failures -Failure to Pay procedures -Where collateral is used, regular reassessment of value haircuts. Stress testing of haircuts.

8. 3. What “result levels" with respect to these metrics/data should a CSD achieve in obtaining "compliance"? Why? 3. ¿Qué “niveles de resultado” con respecto a estos indicadores / datos debe lograr un DCV para obtener el cumplimiento? ¿Por qué? Working Group #5 Principle / Principio #12 Exchange of Value Settlement Systems -Successful resolution of any fails, with zero to minimum loss -Sufficient collateral and liquidity provision

9. 4. What, if any, provisions should you (as an FMI) be making to ensure continued adherence to the principle (s), for example in times of market or operational distress? Working Group #5 Principle #12 Exchange of Value Settlement Systems -Incentives and sanctions -Business continuity plans -Preparedness and simulations to ensure minimal disruption