1. Cross-Border Custody Links Case: Central America and Panama Iván Díaz G. General Manager Central Latinoamericana de Valores, S.A.

2. A Bit of History: Background of the CSDs* in the Region Project sponsored by BID-BOLCEN Duration of the Project: 1995-1998 Countries involved in the project: Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica y Panama. Project: “Harmonization of the Securities Markets in Central America *(Central Securities Depository)

3. Central Depositories in the region: CEHVAL LATINCLEAR CENIVAL CEVAL CAJA DE VALORES CEDEVAL CEVAL Guatemala Honduras El SalvadorNicaraguaCosta RicaPanama

4. Development of the Securities Markets in the Region

5. – Progress on the equity markets regulation : Costa Rica: Adoption of a securities law in 1997 Panama: New regulatory scenario in 1999 El Salvador: Securities Market Law (1994) and subsequent regulations. El Salvador: Electronic recording of Securities by Book- Entry Law (2002) – Mandatory immobilization / dematerialization as of September, 2003. Nicaragua: A new Capitals Market is approved. November, 2006. Guatemala: The securities market is regulated by the Securities and Goods Law which was approved in 1996. About the Regulatory Framework :

6. Experiences in Panama: Year 2001- in compliance with applicable regulations the mandatory immobilization and/or dematerialization of the market is in effect Year 2002: Latinclear and Ceval of Costa Rica sign an International Custody agreement Latin Clear and Ceval of Costa Rica link their systems electronically. Year 2003: Latinclear signs a a Custody Agreement with Cedeval from El Salvador. Note: Other CSDs in the region have entered into bilateral International Custody Agreements on a reciprocal basis. CSD Developments: International Best Practices and Cross-border Custody Agreements:

7. The structure improves as well as the adoption of international standard. Cross-border custody increases  Based on the establishment of the CSDs and the signing of the custody agreements, international custody activity has become more active, both in the public securities sector and in the private sector. The regulatory bodies have also promoted securities trading beyond the domestic markets :  In 2003, the Regulators of Panama and El Salvador sign an Agreement of Acknowledged Jurisdiction (a more dynamic binational listing)  In May of 2005; the National Securities Commission of Panama accepts Costa Rica as as an Acknowledged Jurisdiction. As a result of the preceding …

8. The Links in Numbers Caso: Latinclear/Cedeval Year 2007 (to 31 Aug)Year 2006Term 0021.9Withdrawals 59159.6101144.8 Total 93.941.1Capital Payments 284.5457.1Interest Payments 223.9865.2Capital payments upon maturity 2027.44269.5Transfers No. Tx Amount (In USD million) No. TxAmount (In USD million) Type of Transaction

9. Market Profile

10. Regional Profile of the Market -CSD’s Numbers December 2006 Detail\Country GuatemalaHondurasEl SalvadorNicaraguaCosta RicaPanama Balance in Custody (US$MM) US$1,166N/AUS$3,992US$230US$13,743US$4,192 %Fixed Income99.8%100.0%88.9%100.0%74%68% % Securities market 0.17%0%11.1%0%26%32% % Immobilized/Dema terialized Local Market 2% Int’l Market. 100% 100% - Physical Securities 83%100%- Physical Securities 87%99.8% Form of proving the existence of the securities : Physical Securities ------Physical Securities Immobilized/ Dematerialized -----Physical Securities Immobilized/ Dematerialized Settlement Cycle T+1 Public T Private+ Repo’s TT Repo’s T+1 MP & MS T+3 TT+1Fixed income T+3 Shares Market T+3 % Make up of the Custody 5%N/A17%1%59%18% Balance of Regional Custody: US$23,323 million

11. Main CSD Services Detail\ Country GuatemalaHondurasEl SalvadorNicaraguaCosta RicaPanama Custody Corporate Events -------- -------- Clearing and Settlement (Stock market) -------- (Stock market) Bilateral Settlement Stock market positions (Stock market) (Latin Clear) International Custody Clearstream--------JPM--------Clearstream BoNY Clearstream Securities Lending -------- Project--------Automatic Loan Project

12. Intruction Routing Model in Central America and Panama

13. FECHA DE OPERACION SETTLEMENT DATE FOREIGN BROKER 1.- PURCHASING TRANSACTION: LOCAL BROKER INSTRUCTS PURCHASE ORDER LOCAL STOCK MARKET INPUTS PURCHASE ORDER (FOREIGN BROKER) CONFIRMS TRANSACTION COMMERCIAL BANK PURCHASES FOREIGN CURRENCY IN LOCAL MARKET SETTLES WITH THE LOCAL INTERMEDIARIE’S ACCOUNT CONFIRMS TRANSACTION PAYMENT CONFIRMS PURCHASE INSTRUCTION (PRICE, DATE AND AMOUNT) INSTRUCTS FUTURE RECEPTION OF SECURITIES FROM ABROAD LOCAL CUSTODIAN TRANSACTION DETAILS FOR LOCAL SETTLEMENT CONFIRMS SECURITIES DEPOSIT IN ITS ACCOUNT UNDER THE NAME OF THE FOREIGN BROKER CONFIRMS DEPOSIT OF SECURITIES IN HIS ACCOUNT FOREIGN CUSTODIAN COMPARE AND MATCH TRANSACTION DETAILS SIMULTANEOUSLY INSTRUCTIONS ROUTING

14. LOCAL ISSUER 2.- DIVIDEND AND INTERST PAYMENT : ANOUNCES ENTITLEMENT AND ITS DETAILS LOCAL DEPOSIT INSTRUCTS FX TRANSACTION COMMERCIAL BANK FOREIGN DEPOSITOR NOTIFIES TYPE OF ENTITLEMENT AND ITS DETAILS DELIVERS CASH IN THE CORRESPONDING FOREIGN CURRENCY FOREIGN BROKER INFORMS ENTITLEMENTS WITH TIMING AND THE CHARACTERISTICS OF THE LOCAL MARKET MAKES CASH PAYMENT DEPOSITS CASH IN THE CORRESPONDING LOCAL CURRENCY INSTRUCTIONS ROUTING

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