1. 1 EPFSF Lunch discussion on « Clearing and Settlement » at the European Parliament in Brussels on 13th October 2010 ________________________________________________ Notes from Vivien Levy-Garboua, Senior Advisor at the Directorate General of BNP Paribas

2. 2 EPFSF Lunch discussion on « Clearing and Settlement » at the European Parliament in Brussels on 13th October 2010 ________________________________________________ 1.Exchanges are much more competitive than they used to be need for a stable ground on which to rely. We cannot have complexity at all levels. Hence the importance of a stable framework for post trade infrastructures. 2.Post trade = CCP’s(+TR)EMIR CSD’sNew directive « announced » for 2011 There is a need for such a directive on CSD’s

3. 3 EPFSF Lunch discussion on « Clearing and Settlement » at the European Parliament in Brussels on 13th October 2010 _____________________________________________________ 3.EMIR / CCP’s – EMIR goes in the right direction  CCP’s are of a systemic nature  Safety /efficiency trade off. There is no trade off – The risk part is not negociable, it can not be a « risk return » type of choice.  The Risk Management tool of a CCP is crucial. CCP’s take counterparty risk.  CCP’s should be regulated  Access to CB money intra-day / over night CCP’s should be banks CCP’s should be linked to their monetary zone  Interoperability must not be done at the expense of the risk taken A CCP must be able to refuse to deal with another CCP n>2 is very different from n=2 when you speak of interoperability  There will be a need for consolidation, on a regional basis  Intragroup transactions should not be obliged to go through a CCP : when my AM works with FI its BNP vs BNP

4. 4 EPFSF Lunch discussion on « Clearing and Settlement » at the European Parliament in Brussels on 13th October 2010 _____________________________________________________ 4.CSD’s Role n°1 :Notarial vote / Regalian Role / Central Banks for Securities. 1)Relation with issuers 2)Creation of dematerialized securities in its systems 3)Registration of the Securities 4)Control of the integrity : Supply = Demand in number of shares + Sometimes : 5)Information on the life of the share (elementary Corporate Action)

5. 5 EPFSF Lunch discussion on « Clearing and Settlement » at the European Parliament in Brussels on 13th October 2010 _____________________________________________________ 4.CSD’s Role n°2 :Settlement / DVP 1)DVP in CB money – Guarantee this process 2)Enable the circulation of securities 3)Guarantee the existence of securities and cash + Sometimes : 4)A technical role in the lending / borrowing of securities without taking any counterparty risk. Only operational risk A CSD should not take any liquidity risk / counterparty risk – Only operational risk. The new Directive (i) should regulate this part which is « Public utility » / not for profit / Central Bank for Securities (ii) should define the conditions under which a CSD can develop other « non regalian » activities.