Cross-Border Panel Discussion ACSDA Leadership Forum Lisa Argento, International Cecilia Humphrey, Americas Representative October 10, 2007 ACSDA Leadership Forum Lisa Argento, International Cecilia Humphrey, Americas Representative October 10, 2007

2 Global Factors Are Transforming Markets Rapid Advances in Technology Enabling Ease of Access, Driving Volumes Emergence of New Growth Markets Complex Trading Strategies Explosion of Financial Instruments Global Competition for Risk-Managed Returns Rapid Advances in Technology Enabling Ease of Access, Driving Volumes Emergence of New Growth Markets Complex Trading Strategies Explosion of Financial Instruments Global Competition for Risk-Managed Returns

3 Today, Investors Are Demanding Global … despite diverse regulatory structures, taxes, laws, accounting practices, complicated by culture, currency and time zones

4 Todays Markets Are Reshaping Cross-border Exchange Mergers For-profit and Demutualized Exchanges Consolidation and Mergers in the Market Infrastructures Sector Exchanges Buying Stakes in Other Markets Cross-listed Issues and Indices Cash Markets Growth Dwarfed by Futures, Derivatives, Options Rise of Alternative Trading Platforms Cross-border Exchange Mergers For-profit and Demutualized Exchanges Consolidation and Mergers in the Market Infrastructures Sector Exchanges Buying Stakes in Other Markets Cross-listed Issues and Indices Cash Markets Growth Dwarfed by Futures, Derivatives, Options Rise of Alternative Trading Platforms

5 Transformed Exchange Ownership

6 EuroCCP & Turquoise Turquoise – Consortium of Major Financial Institutions Launching New Pan-European Trading Platform DTCCs EuroCCP Subsidiary Selected to Provide a Clearing & Settlement Solution for Turquoise Turquoise – Consortium of Major Financial Institutions Launching New Pan-European Trading Platform DTCCs EuroCCP Subsidiary Selected to Provide a Clearing & Settlement Solution for Turquoise

7 MOUs – Cooperation & Collaboration Signing Memoranda of Understanding with Asian Infrastructures: Taiwan Securities Central Depository (TSCD) - August 2003 Japan Securities Depository Center, Inc. (JASDEC) - August 2003 Korea Securities Depository (KSD) - April 2004 ChinaBond (CDC) – December 2006 ChinaClear (SD&C) –June 2007 National Securities Depository Ltd., India – June 2007 Central Depository Services of India Ltd -- June 2007 Pakistan Central Depository (CDC) –July 2007 Signing Memoranda of Understanding with Asian Infrastructures: Taiwan Securities Central Depository (TSCD) - August 2003 Japan Securities Depository Center, Inc. (JASDEC) - August 2003 Korea Securities Depository (KSD) - April 2004 ChinaBond (CDC) – December 2006 ChinaClear (SD&C) –June 2007 National Securities Depository Ltd., India – June 2007 Central Depository Services of India Ltd -- June 2007 Pakistan Central Depository (CDC) –July 2007

8 Global Conferences & Meetings Active participation in many global organizations: –ACSDA –ISSA, SIFMA Cross-Border –Global Standards Groups – ISITC, SMPG –CSD9, Korea, April 2007 –Asia-Pacific CSD Group (ACG), Beijing, September 2007 –Sibos, Boston – October 1- 5, 2007 –ACSDA, CCP12, ISITC & SMPG Meetings in Boston Active participation in many global organizations: –ACSDA –ISSA, SIFMA Cross-Border –Global Standards Groups – ISITC, SMPG –CSD9, Korea, April 2007 –Asia-Pacific CSD Group (ACG), Beijing, September 2007 –Sibos, Boston – October 1- 5, 2007 –ACSDA, CCP12, ISITC & SMPG Meetings in Boston

9 CSD Linkages Cross-Border Collateral Pledges Custody and Book-Entry Deliveries Clearance and Settlement vs. Payment Central Counterparty Guarantee Links

10 Why Consider Linking? Promote global markets and issuance by providing other markets with US local support for their trading of US issues Similarly, gain support for international issues from their local infrastructures. Promote best practices and establish global standards for settlement Link messaging should be based on ISO standards Link eligible securities expanded as needed Jointly address inefficiencies relevant to cross-border transactions or asset servicing Overall goal: Enable participants to process increased cross-border transaction volumes at lower cost and risk levels, and maximize participants capital effectiveness

11 Current CSD Links – Clearing, Settlement and Custody Canadian Depository For Securities account, with full DVP and clearing.

12 Clearstream Banking Frankfurt (Germany) Central Depository Pte Ltd (Singapore) Cavali (Peru) Caja de Valores (Argentina) CRESTCo (UK), now Euroclear UK Necigef (Euroclear Nederland) Hong Kong Securities Clearing Company Tel Aviv Stock Exchange Clearing House (Israel) Monte Titoli (Italy) JASDEC (Japan) Current CSD Links into DTC – Custody and Book-entry Delivery

13 Agent Banks Indirect Links into DTC

14 Current CSD Links into DTC- Pledgee Accounts Canadian Derivatives Clearing Corporation CBLC Brazil

15 Current DTC Links into CSDs - Canadian Depository for Securities - Clearstream Frankfurt - SIS SegaInterSettle - Canadian Depository for Securities - Clearstream Frankfurt - SIS SegaInterSettle

16 DTCCSD CSD Participant DTC Participant Securities Delivery Payment Arrangement DTCs Current CSD Links

17 ACSDA Cross Border Links Committee Arrangements for knowledge sharing and implementation of technology Develop linkages with growing markets to strengthen the markets for foreign investment. Establish global standards and capability development Settlement Advisors for Ibero-America Stock Exchange Federation Market Links Project Arrangements for knowledge sharing and implementation of technology Develop linkages with growing markets to strengthen the markets for foreign investment. Establish global standards and capability development Settlement Advisors for Ibero-America Stock Exchange Federation Market Links Project

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