1. Page 1 © 2008 Thomas Murray Ltd. Corporate Actions 8 th AMEDA Meeting South Africa, 23-24 October 2008

2. Page 2 © 2008 Thomas Murray Ltd. Agenda  CSD Service Diversification m Corporate Actions Features m A CSD Activity – Pros & Cons  Challenges  Corporate Action Risk Analysis (TM Methodology) m Asset Servicing Risk Ratings for AMEDA CSDs

3. Page 3 © 2008 Thomas Murray Ltd. Service Diversification For CSDs Why should CSDs diversify from core services? - Stabilise or increase revenue - React to Market Demands (Utility approach) - Disintermediate custodians (Competitive approach) Obstacles to diversification? - Ownership and Governance - Competition with owners/participants discouraged - Abuse of ‘de-facto’ monopoly - Lack of expertise and/or commercial ideology

4. Page 4 © 2008 Thomas Murray Ltd. Corporate Action Features Types Mandatory – easy to automate, static conditions, no investor input required Voluntary – difficult to automate, variable conditions, investor input required Securities – natural for CSD to service Cash – natural for banks to service Stages Information – receipt, validation, enhancement, distribution, monitoring Calculation – shareholder identification, entitlement calculation, tax Execution – instruction receipt & management, securities settlement, income payment

5. Page 5 © 2008 Thomas Murray Ltd. Corporate Actions Issues Should Asset Servicing be centralised in the CSD? Pros Efficiency Standardisation Revenue stream Regulation Disclosure …………. Cons Risks Monopoly Servicing Lack of expertise No banking facilities Competition …………..

6. Page 6 © 2008 Thomas Murray Ltd. Corporate Actions Challenges - Direct links to Issuers & Participants - Straight Through Processing - Uniform messaging (e.g. ISO 15022/20022) - Proactive and customer focussed attitude - Banking licence(?) - Legal amendments

7. Page 7 © 2008 Thomas Murray Ltd. Corporate Actions

8. Page 8 © 2008 Thomas Murray Ltd. Risk Analysis of Corporate Actions

9. Page 9 © 2008 Thomas Murray Ltd. Corporate Actions Asset Servicing Risk - The risk that a participant may incur a loss arising from missed or inaccurate information provided by the depository, or from incorrectly executed instructions, in respect of corporate actions and proxy voting. This risk arises when a participant places reliance on the information a depository provides or when the participant instructs the depository to carry out an economic transaction on its behalf. If the depository fails either to provide the information or to carry out the instruction correctly then the participant may suffer a loss for which the depository may not accept liability. The depository may provide these services on a commercial basis, without statutory immunity, or it may provide the service as part of its statutory role, possibly with some level of protection from liability. This risk is likely to become much higher when international securities are included in the service.

10. Page 10 © 2008 Thomas Murray Ltd. Corporate Actions Receipt of Corporate Action information. - Requires a reliable ‘official’ source - Multiple information sources allow for verification/’data scrubbing’ Distribution of Corporate Action information - Requires timely, accurate, efficient and comprehensive event notification Receipt of Corporate Action Instructions - Requires pro-active client servicing - Multiple and efficient electronic means of receiving information - Straight Through Processing Processing of Corporate Action Instructions - Requires timely, accurate and comprehensive event processing Proxy Voting Asset Servicing Risk Criteria

11. Page 11 © 2008 Thomas Murray Ltd. Corporate Actions Clear statement of liability - Investors need to be aware of the liability assumed by CSD and custodian in the event of an error - Manual processing of asset servicing operations more common - Likelihood of error is higher for Asset servicing - Potential losses can be high Managing corporate actions effectively is perhaps the biggest potential risk exposure Asset Servicing Risk Criteria

12. Page 12 © 2008 Thomas Murray Ltd. Rating AAA AA+ AA AA- A+ A A- BBB BB B CCC CC C CSD AS1 AS2 AS3 AS4 AS3 AS4 AS1 AS2 Comparative Chart Average Americas - TM Proprietary Rating Average Eastern Europe – TM Proprietary Avge West Euro – TM Proprietary Avge Asia Pac – TM Proprietary Average Africa – TM Proprietary Avge Mid East – TM Proprietary Asset ServiceRating CSD Info Collection Info Dissemination Receipt of Instructions Execution of Instructions Proxy Voting CriticalImportantLess important AS5 Asset Service Criteria Asset Servicing Risk Corporate Actions

13. Page 13 © 2008 Thomas Murray Ltd. Rating AAA AA+ AA AA- A+ A A- BBB BB B CCC CC C AAA AA+ AA AA- A+ A A- BBB BB B CCC CC C Absolute Rating - Highest Rating Public CSD TM Rating of 14 CSDs in AMEDA (Note 6 CSDs unrated for ASR) Average Rating - Highest Rated Regions Rating AMEDA Asset Servicing Rating Market Comparisons Average Rating – Africa/Mid East Gap between top and bottom rated AMEDA countries