PANAMANIAN SECURITIES MARKET Iván A. Díaz General Manager March 2016

Agenda Key Initiatives Technological Innovations Investment Plans Local Market Improvements Risk Management Asset Recovery and Segregation Market Overview CSD Growth

KEY INITIATIVES

Technological Innovations Efforts are in progress to implement a new trading system for the Panama Stock Exchange. This project is currently a priority. During the year 2014 Latin Clear changed its custody and asset management platform to a web server system. Likewise, since 2014 Latin Clear is part of the Swift community complying with ISO We will be working with Swift to create an interface to take it to achieve Straight Through Processing (STP), in order to automatize Latin Clear’s back office with Swift and face new challenges due to increased regional and international operations.

Investment Plans Leverage the competitive advantages of Panama in order to create a regional securities Hub (e.g. use of the USD, attractive fiscal policies for local and international investors, compliance with AML regulations) Consolidate Latin Clear’s presence throughout Central America by exploring cross-border custody agreements with Guatemala, Honduras, and Dominican Republic.

Local Market Improvements Since January 2014, Latin Clear has a T+2 settlement cycle, which is the standard for all types of securities (government, corporate, equity – both primary and secondary market). Latin Clear’s projections in the international market (which will be discussed ahead).

Risk Management Latin Clear has invested substantial human and financial resources to implement the infrastructure for the replication of its operations both in and outside the production center. Likewise, we have established an action plan jointly with the Panama Stock Exchange to have a robust business continuity system to minimize any type of risk for the Panamanian securities market.

Asset Recovery (Insolvency or Bankruptcy) The regulations in the Panamanian securities market and the internal procedures of operations of Latin Clear maintain an adequate and clear normative in terms of third-party asset management in the CSD. Latin Clear has insurance policies with the most prestigious insurance company in Panama, which has the best rating in terms of insurance, in order to provide trust to the market on asset protection. We maintain insurances as follow: Bankers Blanket Insurance (BBB), Professional Indemnity, Securities Replacement, Cyber Crimes.

Asset Segregation Latin Clear has by law an adequate segregation of assets under custody. The CSD uses the Omnibus Account model (like Canada, USA and Mexico, Chile). Nevertheless, the CSD must maintain segregation of proprietary and third-party assets of Participants. Both the Superintendence of Securities and Latin Clear as a self- regulated organization conduct routine inspections (monthly by Latin Clear) to verify compliance with this legal principle.

Market Overview Regional integration in Central America. Latin Clear maintains CSD links with Costa Rica, El Salvador and Nicaragua. Since April 2014, Latin Clear maintains a link with Euroclear, called “i-Link”. In the first phase of this project, approximately 5.0 billion of the country’s internal debt are maintained, which means they are 100% euroclearables.

Market Overview The most important news for both Panama and the national and international financial sector is the removal of the country from the FATF’s grey list. The complete news is available in our website

CSD GROWTH

Custody Balances (2001 – 2015)

Custody Breakdown At December 31, 2015

Detail (Market)December 2015December 2014Variation % Fixed Income 7, , % Equity 4, , % Government Securities 4, , % Investment Funds 1, , % Promissory Notes % Total 18,037 16,39210% Custody Breakdown (In Millions of USD)

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