Global Corporate Actions ACSDA Leadership Forum October 9 th 2007 David Hands DTCC Solutions Product Management David Hands DTCC Solutions Product Management Dan Lu Nanjun Deng Yingman Jiang GCA VS Operations Shanghai

Global Corporate Actions - ACSDA Leadership Forum Oct 9th Global Corporate Actions: A global challenge that CSDs can play an important role in developing solutions Agenda A look at Global Corporate Actions Complexity of Global Corporate Actions DTCC Solutions - GCA Validation Service The role ASCDA can play in Global Standards Agenda A look at Global Corporate Actions Complexity of Global Corporate Actions DTCC Solutions - GCA Validation Service The role ASCDA can play in Global Standards

Global Corporate Actions - ACSDA Leadership Forum Oct 9th Corporate Actions cover all parts of the globe with different levels of complexity and volumes GCA VS announces more than 900,000 Corporate Actions yearly North America leads the world in the number of Corporate Actions announced* yearly ~70% Cash Dividends is the dominate Announced Event Type ~30% GCA VS announces more than 900,000 Corporate Actions yearly North America leads the world in the number of Corporate Actions announced* yearly ~70% Cash Dividends is the dominate Announced Event Type ~30% Source: GCA VS – DTCC Solutions (July ’06 – August ’07) * Announced events does not include scheduled payments (eg Bond Interest) US/CA = 54.8% (Scale adjusted)

Global Corporate Actions - ACSDA Leadership Forum Oct 9th Time and effort required to process a Corporate Action announcement (Benchmarked against US/Canada) Volume vs Complexity - Corporate Actions By Country Source: DTCC GCA Validation Service, data 1 to 30 September Corporate Action Announcement Effort (Relative) and Volume (Relative) by Regional Average Corporate Action Announcement Effort (Relative) and Volume (Relative) by Regional Average US/Canada Asia Europe Central America Africa Middle East South America Relative Volume Relative Effort Volume vs Complexity - Corporate Actions By Country Source: DTCC GCA Validation Service, data 1 to 30 September Corporate Action Announcement Effort (Relative) and Volume (Relative) by Regional Average Corporate Action Announcement Effort (Relative) and Volume (Relative) by Regional Average US/Canada Asia Europe Central America Africa Middle East South America Relative Volume Relative Effort Markets that are more mature and have higher volumes are relatively easier to validate the terms of the Corporate Action

Global Corporate Actions - ACSDA Leadership Forum Oct 9th Corporate Actions can be complex and extend over a period of time, thereby, increasing risk to ALL Parties A UK Rights Issue can go through many stages requiring timely notification and action all of which increase risk The Rights Issue can last for a couple of months before the event reaches its conclusion A Rights Issue may not go through all these stages which adds further complexity A UK Rights Issue can go through many stages requiring timely notification and action all of which increase risk The Rights Issue can last for a couple of months before the event reaches its conclusion A Rights Issue may not go through all these stages which adds further complexity United Kingdom Rights Issue

Global Corporate Actions - ACSDA Leadership Forum Oct 9th Similar Corporate Actions can be processed differently between markets, even within the same market, increasing risk A Market that issues shares in ‘bearer’ form will issue entitlement ‘coupons’ (including Cash dividends) which can be tradable A Market that issues shares in ‘registered’ form will issue entitlements directly to the shareholder or where a shareholder choice is permitted a form/right will be issued Issuers within a Market may treat the same type of Corporate Action differently A Market that issues shares in ‘bearer’ form will issue entitlement ‘coupons’ (including Cash dividends) which can be tradable A Market that issues shares in ‘registered’ form will issue entitlements directly to the shareholder or where a shareholder choice is permitted a form/right will be issued Issuers within a Market may treat the same type of Corporate Action differently Netherlands Stock Optional Dividend (late 1990’s)

Global Corporate Actions - ACSDA Leadership Forum Oct 9th Too add to the complexity and timeframes of Corporate Actions most, if not all, of the Issuer communication is in paper A US Tender Offer requires a prospectus to be Issued and filed with the Regulator - Securities Exchange Commission (SEC) The Issuer provides only paper information DTC and Data Vendors ‘translate’ paper into electronic data Lack of STP from the Issuer introduces delay and potential error A US Tender Offer requires a prospectus to be Issued and filed with the Regulator - Securities Exchange Commission (SEC) The Issuer provides only paper information DTC and Data Vendors ‘translate’ paper into electronic data Lack of STP from the Issuer introduces delay and potential error United States Tender Announcement flow example

Global Corporate Actions - ACSDA Leadership Forum Oct 9th CSDs are well positioned to play a pivotal role in developing new processes to enhance STP and reduce Risk CSD8 (8th annual meeting of Central Securities Depositories) Corporate Action breakout sessions focused upon 3 areas: Risks in Corporate Actions Processing Automation and Standardization CSD Roles in Corporate Actions Attendees identified 3 main issues: Standard Format & Delivery (enable STP) Timely and Complete Announcements Centralized process for Corporate Action Announcements See: / Presentations / Breakout Session

Global Corporate Actions - ACSDA Leadership Forum Oct 9th DTCC developed a solution to address Global Corporate Action Announcements by creating a “golden copy” Volume: processed 900,000 global corporate action events in 2006 Location: Offers round-the-clock support from offices in New York, London, Shanghai Sources: gathers information from 160 countries on about 1.6 million separate securities monitored by the validation service Accuracy: service offers “golden copy” data on corporate actions worldwide The GCA Validation Service is a global service that operates with a regional footprint Volume: processed 900,000 global corporate action events in 2006 Location: Offers round-the-clock support from offices in New York, London, Shanghai Sources: gathers information from 160 countries on about 1.6 million separate securities monitored by the validation service Accuracy: service offers “golden copy” data on corporate actions worldwide The GCA Validation Service is a global service that operates with a regional footprint

Global Corporate Actions - ACSDA Leadership Forum Oct 9th DTCC GCA VS clients require near real time notification of Corporate Actions delivered in a standardized manner Corporate Action announcements received from multiple sources are ‘standardized’ Key Data Elements are completed Announcements are separated into Event, Option and Payout details Detailed Text added (where needed) to provide complete coverage of the event Corporate Action announcements received from multiple sources are ‘standardized’ Key Data Elements are completed Announcements are separated into Event, Option and Payout details Detailed Text added (where needed) to provide complete coverage of the event

Global Corporate Actions - ACSDA Leadership Forum Oct 9th DTCC GCA VS provides additional information to provide a complete view of the Corporate Action Statuses Track Accuracy, Timeliness and Completeness of Data Reference to Associated Event for the Same Security Links to Multi-market for the Same Event Reference to Associated Event for the Same Security Links to Multi-market for the Same Event

Global Corporate Actions - ACSDA Leadership Forum Oct 9th A Global effort is needed to manage risk and improve efficiency through effective standardized communication and processing Market Practice Groups created by SWIFT to establish usage rules for ISO The Securities Market Practice Group coordinates global input for ISO / SWIFT Maintenance Group SMPG Corporate Action documentation includes: Global Document for MT564-8 Guidelines for ~20 Countries The European Union is undergoing a ‘harmonization’ effort to standardize processing of the securities industry The ‘Giovannini Group’ identified a number of barriers to standardization including Corporate Actions (Barrier 3) SWIFT Standards leading part of this initiative (Barrier 1) based upon ISO and ISO messaging The European Union is undergoing a ‘harmonization’ effort to standardize processing of the securities industry The ‘Giovannini Group’ identified a number of barriers to standardization including Corporate Actions (Barrier 3) SWIFT Standards leading part of this initiative (Barrier 1) based upon ISO and ISO messaging The need to bring the Issuers closer to the Investor Community is recognized globally Similarly to DTCC, Euroclear is investing in new systems to harmonize processing within the its markets To maximize investment return Euroclear have proposed using ISO20022 to model the communication between the Issuer and CSD The need to bring the Issuers closer to the Investor Community is recognized globally Similarly to DTCC, Euroclear is investing in new systems to harmonize processing within the its markets To maximize investment return Euroclear have proposed using ISO20022 to model the communication between the Issuer and CSD

Global Corporate Actions - ACSDA Leadership Forum Oct 9th ACSDA is well positioned to support and even lead the development of Standards within ACSDA countries ACSDA formed Corporate Action Working Group to address common issues Business Case: Global Initiatives for Corporate Actions require input from ACSDA Countries Attract Investment into local economies with greater Corporate Action disclosure Organization: 3 Regional Chairs: South America, Central America and North America, South Africa and the Caribbean Initial Objective: Map the Corporate Actions landscape within the individual ACSDA countries to provide a foundation for information exchange At the ACSDA 8th AGM (March 2006, El Salvador) agreed to focus upon: Promotion of Best Practices & ISO usage Publishing announcements same day Working with Issuers/Agents for Investor benefit Processing of all Corporate Actions in the Market ACSDA formed Corporate Action Working Group to address common issues Business Case: Global Initiatives for Corporate Actions require input from ACSDA Countries Attract Investment into local economies with greater Corporate Action disclosure Organization: 3 Regional Chairs: South America, Central America and North America, South Africa and the Caribbean Initial Objective: Map the Corporate Actions landscape within the individual ACSDA countries to provide a foundation for information exchange At the ACSDA 8th AGM (March 2006, El Salvador) agreed to focus upon: Promotion of Best Practices & ISO usage Publishing announcements same day Working with Issuers/Agents for Investor benefit Processing of all Corporate Actions in the Market

Global Corporate Actions - ACSDA Leadership Forum Oct 9th While mapping the Corporate Action landscape, we asked the ACSDA members to identify the key issues faced today Deadlines and Communication cited most frequently

Global Corporate Actions - ACSDA Leadership Forum Oct 9th ACSDA members were asked about existing rules which may or may not reduce risk – should markets have specific rules? Roughly a 50/50 split where Record Date rules are applied

Global Corporate Actions - ACSDA Leadership Forum Oct 9th What can you do to help? Support local initiatives that address efficiency and risk management Drive ACSDA to be the key organization in National Market Practice Groups Work together to provide timely and accurate Corporate Action Information The Global Securities Industry requires support from ALL markets Support local initiatives that address efficiency and risk management Drive ACSDA to be the key organization in National Market Practice Groups Work together to provide timely and accurate Corporate Action Information The Global Securities Industry requires support from ALL markets

Global Corporate Actions - ACSDA Leadership Forum Oct 9th Appendix – UK Rights Issue (for slide 5)

Global Corporate Actions - ACSDA Leadership Forum Oct 9th Appendix – Netherlands Stock Optional Dividend (for slide 6)

Global Corporate Actions - ACSDA Leadership Forum Oct 9th Appendix – US Tender Offer Announcement Flow (for slide 7)

Global Corporate Actions - ACSDA Leadership Forum Oct 9th Appendix – GCA VS Overview (for slide 9)

Global Corporate Actions - ACSDA Leadership Forum Oct 9th Appendix – GCA VS Overview (for slide 9)

Global Corporate Actions - ACSDA Leadership Forum Oct 9th Appendix – Standards Organization Overview (for slide 11) The Standard Bodies The Market Representatives US American National Standards Institute Global International Standards Organization TC68 Secretariat TC68 Technical Committee Banking and Related Services Registration Management Chair: Euroclear ISITC National Market Practice Group ISO Standards (secretary SWIFT) SWIFT Maintenance GroupSWIFT National Group SWIFT Harmonization Grp Accredited Standards Committee X9 Financial Industry Standards US Technical Advisory Group TC68 Registration Management Group SC4 – Securities Securities Standards Evaluation Group ISO15022ISO20022 ISO15022 ISO20022 X9D – Securities Processing Registration Authority SWIFT Registration Management Chair: US - ASC X9 Global Market Practice Group