KDPW Strategy Dr Iwona Sroka President, KDPW Management Board Warsaw, 9 December 2009

KDPW Strategy The first version of KDPW Strategy was developed in late September The document was based on an in-depth analysis of the main trends in international financial markets, the experience and competences of the KDPW Management Board and managers. The Strategy was broadly consulted with the Polish capital market community in September – December The final Strategy was approved by the KDPW Supervisory Board on 8 December 2009.

KDPW Environment The key task of the Management Board is to prepare KDPW for increased foreign competition and market consolidation. The main threats include: – Aggressive operation of new pan-European MTFs (electronic trading platforms) and their clearing houses; – Formation of a capital group around the Vienna Stock Exchange; – Consolidation of European depositories. The main trends of European integration include: – Target 2 ; – Target 2 Securities. The Strategy is aimed at building the regional position and competitiveness of KDPW. It is a proactive growth strategy, not a defensive strategy.

Integration and Consolidation Integration of systems used by infrastructure institutions Consolidation – combination of infrastructure institutions: – Horizontal integration – institutions offering the same type of service (Euroclear) – Vertical integration – development of silos – institutions offering services at different stages of the transaction chain, e.g., stock exchange, clearing house, depository-settlement system (Deutsche Boerse, BME - Spanish Exchanges) Interoperability – operational interaction among institutions (Link Up Markets) Transnational competition: Issuers (foreign issuers, dual listing) Investors (domestic / foreign investors) Infrastructure institutions (stock exchanges, MTF, CSD, CCP…)

Increasing Competition: Challenges to KDPW Capital Market Target2Securities MiFID Securites Law Harmonisation ( free choice of CSD by the issuer) Consolidation Link Up Markets NEURO CEE Stock Exchange Pan- European MTFs Pan- European MTFs Pan- European CCPs Pan- European CCPs Euroclear Single Platform

KDPW Vision Build a robust capital group by 2013: Anticipate competitive challenges; Build a service portfolio based on state-of-the-art, innovative technologies and solutions creating value for capital market participants; Support the development of a regional centre in Warsaw in active co- operation with other Polish and foreign market participants with KDPW as the main depository-settlement institution in Central and Eastern Europe

Challenges to the Polish market Building a regional financial centre in Warsaw Modern and innovative technologies and solutions Active co-operation of all market participants New clients and markets Development of new business segments Leveraging the potential of the local market and human resources Build a competitive advantage

KDPW Strategic Goals KDPW Strategy 8. Promote the image of the KDPW capital group and its service offering through corporate communications 4. Launch new services growing the value of the capital group 1. Implement a new KDPW business model 7. Strengthen the commitment and competences of capital group staff to implement the Strategy 3. Integrate KDPW with European structures 6. Optimise operating processes of the capital group 2. Position KDPW as the main depository-settlement institution in CEE 5. Improve the quality and scope of existing services

New KDPW Business Model CAPITAL GROUP CLEARING HOUSE CCP CLEARING HOUSE CCP IRGIT OTHER SUBSIDIARIES Flow of intra-Group services Cash flows (service fees, dividends, etc.)

CCP: Central Counterparty Clearing House Creation of a Central Counterparty as a key project reducing the risk and burden to Polish capital market participants. Three main stages of CCP development: – 2010 – spin-off of a settlement guarantor as a separate company with the single task of supporting the liquidity of settlements of regulated market transactions with its own funds – 2011 – creation of a CCP clearing house with a modern risk management system based on SPAN technology – 2011 – CCP equipped with the transaction netting functionality reducing the cost of settlement thanks to significant reduction of settlement instructions submitted to the Depository

Positioning KDPW as the Main Depository-Settlement Institution in the Region Stimulating the activity of Polish market participants in the region as an opportunity to grow the Polish capital market Pursue a joint foreign listing policy together with the WSE and other market participants Improve the profitability of existing interoperability with depositories in the region, develop new transborder interoperability Leverage KDPW experience of CCP development in order to offer settlement services in the markets of the region

Integration with European Structures Reduction of barriers to EUR payments and transborder settlement of securities. Necessary redefinition of settlement service provision by European depositories Target2: KDPW joins the real-time EUR cash settlement system in EU Member States organised by the central banks of France, Germany and Italy Target2Securities: technical readiness to outsource domestic and foreign securities settlement infrastructure to the T2S platform operator. Migration after Poland’s accession to the eurozone.

Launch of New Services Growing the Value of the Capital Group Leveraging the key competences of KDPW as an infrastructure institution in order to enter new market segments by developing central solutions and introducing standards reducing the cost of many systems currently used by market operators – Implementation of Electronic Trade Confirmation 2012 – Development of OTC settlement services 2012 – Implementation of transborder settlement services - Delivery versus Payment (DvP)

Improved Quality and Scope of Existing Services Building KDPW participant loyalty by active improvement of settlement and clearing solutions Omnibus account services for foreign CSDs functionalities of the settlement agent for foreign clearing participants 2011 – hold-release mechanism for matching settlement instructions 2011 – development of a securities lending system 2012 – development of corporate actions services DvP transborder settlements

Development of Staff Competences, Building the KDPW Brand Continuous development of staff skills and competences in order to improve the organisational culture and a proactive approach to business as a factor growing the competitiveness of KDPW. Building the KDPW brand as a leading depository-settlement institution providing state-of-the-art technological services according to high security and reliability standards and at a low cost.

Krajowy Depozyt Papierów Wartościowych (National Depository for Securities) ul. Książęca 4, Warsaw