1. CLS Impact on the Market & Industry Paul Gleeson, CIO GM Cash & Commodities Operations Thurs 21 April, 2005

2. 2 Contents: Overview Impact Concerns Considerations

3. 3 Overview  CLS has been successful  Volumes have increased, but so has the market  Stable Platform; Only one major issue in March 2003

4. 4 Impact  Clearly a reduction in settlement risk, but it is hard to quantify the tangible benefit  Operational efficiencies potentially gained through increased automation of: –Confirmation –Settlement –Nostro –Fails / Compensation

5. 5 Concerns  CLS cost associated with clearing is substantial  Reduced settlement risk versus introduction of liquidity risk  Increased Membership  Time to market of new deliverables

6. 6 Considerations  Do we as members want to fund additional development?  What are the development priorities of the industry?  Netting is again being discussed – Do you feel this is something we need?  Should CLS become a confirmation system as well as clearing?  Do we believe that building NDF and Options capability will provide benefits?  Should we open up membership to CLS?