1. GC Access Break-out session Euroclear Collateral Conference,
Tuesday, 13 May 2014

2. A market driven by new regulations
Themes
Impact
Solvency & liquidity
High demand for high quality collateral and term lending
Capital cost Indemnifications
Repo market contraction?
LCR, NSFR, Leverage ratio
Counterparty exposure limits
Basel III
OTC Derivatives
Punitive capital charges for non CCP cleared OTC Derivatives
High demand for high quality collateral
DF /EMIR
Reducing systemic risk
Minimum haircuts
Increased transparency
Limits on cash reinvestment
Reduction Demand ?
Funding cost
Collateral velocity reduced?
Shadow Banking
Limit speculation
Tax on financial transactions
Requirement for reasonable expectation to borrow
Increased cost to borrow
Short Selling/FTT
Increasing settlement efficiency
Mandatory buy-ins
Penalty regime
Increased demand fails coverage
CSDR

3. What about the future …
‘Repo and securities lending are set to play an absolutely central role in the post-reform landscape’
Quote from a speech given by Andrew Hauser, Head of Sterling Markets Division, Bank of England, and Chair of the Securities Lending and Repo Committee
(At JP Morgan’s Collateral Management and Securities Financing Forum, March , London)

4. GC Access A new route to the market…
Drivers
Trends
Euroclear Offering
Fail
Curing
Market volume driven
Securitites lending and
borrowing
Automatic
Borrowing
Collateral
conversion
Increasing need for high quality collateral (EMIR, Dodd Frank, Basel III)
GC Access
Opportunity
Borrowing
Investment Strategies
(short selling, cheapest to deliver, ..)
Reduced leverage & limiting regulation 4

5. GC Access A new route to the market…
Direct exposure on
Euroclear Bank
Borrowers
Direct
Custodian/Agency
Street
lending
Exclusives
GC Access
Unique positioning
Leverage Euroclear’s 30 years+ risk management expertise in SLB to access the street lending market. Exposure is on Euroclear Bank, driver of the securities loan is street lending (a.o. to fail driven for the SLB program).
Get collateral segregated in your securities account for maximum safety
Settlement driven
Automatic Fail
Driven lending
… building on 30 + years of experience 5

6. Collateral conversion
GC Access
What’s in it for borrowers?
Focus on high quality collateral
Extension of existing autoborrow service
You borrow from Euroclear Bank at street levels
You pledge collateral to Euroclear Bank and authorize the unward pledge of the collateral to the lender
Limited number of collateral profiles
Collateralisation using TSL
We do the rest!
Collateral conversion
Status
Pilot activity started Q1 2014
Gradually building lending supply

7. GC Access What’s in it for Lenders?
Generate additional lending revenues
The safest environment
Complementary to our Automatic fail-driven lending program
30+ years of experience
Similar legal protection and set-up
Borrower community already in Euroclear Bank
No additional workload, we take care of everything
Benefit from Triparty collateral management without the need to be a Triparty specialist: we do the triparty set-up and instruct on your behalf
No additional costs
Positioning:
Idea to convey here is that we are not comparable with a agent lender as we have a much greater span of control
Also given the systemic importance of Euroclear we are subject to strong risk management and have may layers of defense in place

8. Pledge set-up benefits for borrowers
Pledge agreement
Transfer of collateral from the borrower to Euroclear Bank, and
From Euroclear Bank to the Lender
The borrower remains the legal owner of the collateral securities
Allows for unwind of the loan and recovery of collateral in default situations

9. Multiple lines of defence ensure the best lender protection …
Strict Borrower approval
Stringent borrower admission process
Specific GC Access credit line
Borrower default has no impact on you
Euroclear Bank guarantee (AA rated) covers all Borrower’s obligations
Loan unwind in case of Euroclear Bank default
Collateral in your name to protect against Euroclear Bank and Borrower default
Positioning:
As an ICSD we know that safety matters in today’s world more than ever and that is why we offer a unique lender protection
The EB Guarantee is not new and something we have been offering for 30 years in our automatic program.
If borrowers fails to return securities or enter into insolvency Euroclear steps in – Your risk is on Euroclear
However we also recognise that you need protection in the unlikely event of EB insolvency and so we offer you a solution where in addition to he Guarantee you hold collateral in a segregated account in your name. Should EB default you can enforce your pledge and liquidate collateral
Putting both these protection measures together is unique and offers you the safest possible environment

10. GC Access Operational Flow

11. GC Access Loan arrangement Loan Arrangement Loan Confirmation
Contact the Desk via Bloomberg, , or tel
(bloomberg e mail)
Send your locates or review pool availability
Daily confirmation of trades end of day
Pool
Availability
Borrower Request
GCA
Desk
GCA
Borrower
Euroclear offer
Loan Confirmation
GCA
Desk
GCA
Borrower

12. GCAccess Loan settlement – A pre-paid model
Collateral
Collateral
Collateral 1
Pledge
Pledge
Pre-collateralisation
of loan exposure
Triparty FOP
Triparty FOP
Borrower Main Trading account
EB Account
Lender collateral account
Loan 2
Loan
Loan
Once collateralised
Loan generation
Settlement Delivery FOP
Euroclear Bank Transit account
Settlement Delivery FOP
Lender Main Trading account

13. Loan Management Corporate Actions Monitoring Monitoring of
Income proceeds
GCA Desk
Lender Main Account
Automatic compensation of income proceeds, redemptions, mandatory corporate actions
A recall will be triggered if lenders wish to participate in a voluntary corporate action
Lenders to instruct a recall for meetings if they wish to elect

14. Loan management Recalls Monitoring Monitoring of Settlement activity
Corporate actions
GCA Desk
Lender Main Account
Recalls are generated
Upon Lender request
When a Lender has an upcoming delivery instruction
For certain corporate actions
Recall periods T + 2 or T+1 (UK Gilts, US Treasuries)

15. Reporting Data Information Report Frequency Format Channel
Collateral and Loans
Position
Security information (rating, country, issuer type, currency)
Valuation
Applicable haircut
Margin report
Once a day at the end of day
CSV file
Pdf
Triparty Collateral and Exposure Statement
2, 14, or 16 times per day
MT569
SWIFT
Triweb
10 times per day
MS access
Secured website
Collateral
Security identification
Statement of holding
Once a day at end of day
MT535
Loan balances and fees
Loan balances
Fees
Loan balances and fees
Optional (daily, weekly, monthly)
Excel CSV
PDF 15

16. GC Access How to get started to borrow?
Confirm
Your agreement to the contractual documentation
GC Access Terms and Conditions
GC Access Operating Procedures
Your reporting options
Agree with EB on a dedicated credit line for GC Access activity
Agree with credit documentation
Credit letter
GC Access General Conditions
GC Access Collateral Agreement
GC Access Securities Borrowing Conditions

17. GC Access How to get started to lend?
Register for the service by confirming:
Your agreement to the contractual documentation
GC Access Terms and Conditions
GC Access Operating Procedures
Your lender profile
Your lending cap
Your reporting options