The AMEDA Messaging Hub PRESENTED BY: Monica Singer TO: The AMEDA delegation DATE: 28 November, 2010 PLACE: Libya

Our Vision 2 To provide AMEDA members with access to the rest of the world through Link-Up Markets and CSD to CSD links MCDR and STRATE currently connect to Link-Up Therefore through the Hub, AMEDA countries will have access to the rest of the world HUB

As at the end of 2009 there were no CSD to CSD links in Africa 3 MCDR and Strate on AMEDAs behalf driving the activities on the Hub project Recap on activities since last meeting MCDR to focus on Middle Eastern countries and North African Countries (MENA) Strate to focus on sub-Saharan African countries Strate and MCDR to create a link between them HUB

As at the end of 2009 there were no CSD to CSD links in Africa 4 Consensus is that technology should be an enabler not a driver in this process International reaction to the Hub At the ASEA meeting held in Zambia in November 2010 The main theme was that of “attracting African and foreign investors as a result of improved liquidity and transparency through CSD to CSD links” “ A single link into Africa, would make it easier and more attractive for foreign investors to invest in Africa” “Attracting foreign investors into the local market requires a holistic solution to trading, clearing and settlement ” Strate’s London road show Frustration was expressed over the current inefficiencies in local markets

5 MCDR and Strate on AMEDAs behalf driving the activities on the Hub project Recap on activities since last meeting (Cont.) RFI sent to all AMEDA members RFI also sent to non-AMEDA members in the hope they would join AMEDA as well as the Hub project Responses received from Libya, Kuwait, Qatar, Ghana, Zimbabwe and Zambia Interest also shown from Kenya Follow-ups continue with each country to determine their specific needs and how the Hub could assist them in meeting their requirements

6 Each country reflecting unique needs Summary of RFI Responses There is a strong focus on decreasing technology costs High focus on increasing liquidity and transparency in each market CSDs largely have not adopted messaging standards A need to attract both AMEDA and foreign investors to invest in the AMEDA region Some Countries have instigated a Triparty Agreement for the Clearing and Settlement (Egypt, Lebanon and Kuwait) Different levels of sophistication (from world-class technology to manual processing in many cases)

How can this be achieved? AMEDA countries need to build CSD to CSD links 7 One Access/Entry point into and out of the AMEDA region Standardized service across markets With multiple execution points (Sovereign rights of each country are respected) Clearing and settlement in home country Assets remain in home country Adherence to the International Organisation of Securities Commissions (IOSCO) and Consultation of the Committee of European Securities Regulators (CPSS) principles (i.e. DVP, T+3 Settlement cycle) Technology is only an enabler not a driver

The Hub provides solutions for a variety of sophistication for CSDs in the AMEDA region 8 OPTION 1: No CSD or CSD system OPTION 1: No CSD or CSD system OPTION 2: Existing CSD, without messaging standards OPTION 2: Existing CSD, without messaging standards OPTION 3: Existing CSD, with ISO or proprietary message standards OPTION 3: Existing CSD, with ISO or proprietary message standards Possible technology solutions

9 Cost analysis needs to be based on volume expectations as well as additional services which can be offered Costs of the solution Identified volumes for current cross-border transactions are very low – on average 20 transactions in total - per business day from the RFI responses received Information on actual cross-border transactional volume on a country-by-country basis has not been readily available Potential services other than messaging have been identified such as Disaster Recovery, Consulting etc.

10 Strategies have been identified in the cost analysis Costs of the solution Either a transactional cost only comparative to other proprietary message costs at approximately 17 Euro cents per message as well as connectivity costs, or A model whereby member CSDs contribute capital to the over all technology and effectively ‘buy a stake’, such as is the model with Link-Up Markets in Europe The Hub will also enable the provision of other service offerings (such as Disaster Recovery, Consulting, etc.) which can be negotiated as and when the need arises

11 Access to the rest of the world via the Hub Benefits of the solution Access to other members of Link-Up Markets through membership to the Hub Access to higher levels of liquidity Opportunities for CSDs to offer new services and move up the value chain Increased transparency and the mitigation of risk in securities movements Ability to link bi-laterally or on a regional basis

Finalization of costing model and pilots with African and Middle East countries 12 Next Steps Finalize costing model and technology requirements Initial pilot link between Strate and MCDR Identify other non-AMEDA countries to approach about joining the Hub and AMEDA

13 STRATE and MCDR will become the change we want to see in the world. Conclusion STRATE and MCDR as existing members of Link-Up markets strongly believe in the CSD to CSD links model As a result, STRATE and MCDR will build a CSD to CSD link to each other as the Hub’s first pilot This will allow us to create an opportunity to learn from this process and to help others to follow our example

Thank you Monica Singer CEO Strate Ltd