The Securities and Exchange Commission as a matter of policy, disclaims responsibility for any private publication or statement of any of its employees. The views expressed herein are those of the author and do not necessarily reflect the views of the Commission or of the authors colleagues on the staff. 1 CPSS-IOSCO PRINICIPLES CPSS-IOSCO PRINICIPLES FOR FINANCIAL MARKET INFRASTRUCTURES

Overview of the Review of Standards Summary of the Principles for FMIs Report Issues for Central Securities Depositories CPSS-IOSCO Projected Timeline 2

Principles for Financial Market Infrastructures (2011 ) The Recommendations for securities settlement systems (2001) The Core principles for systemically important payment systems (2001) The Recommendations for central counterparties (2004 ) 3

24 PRINCIPLES FOR FMIs: systemically important payment systems, central counterparties, central securities depositories, securities settlement systems and trade repositories 5 RESPONSIBILITIES FOR RELEVANT AUTHORITIES REGULATION AND OVERSIGHT OF FMIs REGULATORY AND OVERSIGHT POWERS DISCLOSURE OF POLICIES FOR FMIs APPLICATION OF PRINCIPLES FOR FMIs COOPERATION WITH OTHER AUTHORITIES 8 ANNEXES: to include: mapping of standards, select RSSS recommendations, matrix of key considerations to specific FMIs, guidance for CCPs for OTC derivatives, and oversight for critical service providers. 4

HOLISTIC APPROACH UPDATES AND HARMONIZES EXISTING PRINCIPLES RECOGNIZES LEGISLATIVE, JUDICIAL AND JURISDICTIONAL CONSTRAINTS PROMOTES SIGNIFICANT INTERACTION BETWEEN PRINCIPLES COMPREHENSIVE AND PROVIDES BROAD BUT FLEXIBLE GUIDANCE 5

PRINCIPLES 3 THROUGH PRINCIPLE 7: COMPREHENSIVE RISK MANAGEMENT, CREDIT RISK, COLLATERAL, MARGIN AND LIQUIDITY RISK DEFINITION OF EXPOSURES RECOMMENDED LEVEL OF COLLATERIZATION OF CURRENT EXPOSURES REQUIRED LEVEL OF FINANCIAL RESOURCES REGULAR AND RIGOROUS BACK AND STRESS TESTING EXPLICIT REFERENCE TO INTERDEPENDENCIES AS A FACTOR PRO-CYCLICALITY AND PROHIBITION OF WRONG-WAY RISK DEFINITION OF ADEQUATE COLLATERAL 6

NEW PRINCIPLE 24 ON TRADE REPOSITORIES (access to market data) NEW PRINCIPLE 19 ON TIERED PARTICIPATION ARRANGEMENTS (indirect participants) NEW PRINCIPLE 14 ON SEGREGATION AND PORTABILITY (protect customer positions and collateral) NEW PRINCIPLE 15 ON GENERAL BUSINESS RISK (hold capital to cover business losses ) 7

SPECIFIC REQUEST FOR FEEDBACK ON: 1. CREDIT RISK 2. LIQUIDITY RISK 3. SEGREGATION AND PORTABILITY 4. GENERAL BUSINESS RISK 5. ACCESS AND INTEROPERABILITY 8

RSSSConsultative report principle or responsibility Recommendation 1: Legal FrameworkPrinciple 1: Legal basis Recommendation 6: CSDsPrinciple 11: Central securities depositories; Annex C Recommendation 7: Delivery versus paymentPrinciple 12: Exchange-of-value settlement systems Recommendation 8: Timing of Settlement finalityPrinciple 8: Settlement finality Recommendation 9: CSD risk controlsPrinciple 4: Credit risk; Principle 5: Collateral Recommendation 10: Cash settlement assetsPrinciple 9: Money settlements Recommendation 11: Operational reliabilityPrinciple 17: Operational risk Recommendation 12: Protection of customer securities Principle 14: Segregation and portability; Principle: 16: Custody and investment risk; Annex C Recommendation 13: GovernancePrinciple 2: Governance Recommendation 14: AccessPrinciple 18: Access and participation requirements Recommendation 15: EfficiencyPrinciple 21: Efficiency and effectiveness Recommendation 16: Communication procedures and standards Principle 22: Communications procedures and standards Recommendation 17: TransparencyPrinciple 23: Disclosure of rules and key procedures Recommendation 18: Regulation and oversightResponsibilities of central banks, market regulators, and other relevant authorities Recommendation 19: Risk controls in cross-border links Principle 20: FMI links 9

RSSS Annex C: Selected RSSS marketwide recommendations Recommendation 2: Trade ConfirmationAnnex C Recommendation 3: Settlement CyclesAnnex C Recommendation 4: Central CounterpartiesAnnex C Recommendation 5: Securities LendingAnnex C Recommendation 6: Central Securities Depositories Annex C Recommendation 12: Protection of customers securities Annex C 10

UPDATES THE GUIDANCE CONTAINED IN RECOMMENDATION 6 OF THE RSSSS PRINCIPLE DIRECTED TO THE CSD NOT THE MARKET GENERALLY COVERS KEY OPERATIONS OF A CSD ALSO ADDRESSESS CSD LINKS 11

140 DAYS MARKET CONSULTATION TO JULY 29, 2011 FINAL REVIEW AND REVISIONS AUG-DEC 2011 FINAL REPORT PUBLISHED EARLY 2012 RELEVANT AUTHORITIES IMPLEMENT NEW STANDARDS END 2012 FMIs TO ADOPT NEW STANDARDS END