The first order driven pan-European MTF Faster, Cheaper, Smarter

The first order driven pan-European MTF Overview In response to client demand Chi-X is addressing competitive issues in both the trade execution and post trade space to provide a more efficient and cost effective wholesale solution that will compete with the European Exchanges. The Chi-X market model offers an order driven central limit order book with micro second performance and an embedded pan-European market structure. The operating model: 10x faster and 1/10th of the cost The Chi-X market model is anonymous both pre and post trade with a guaranteed non exclusive central counterparty framework. The first order driven pan-European MTF

The first order driven pan-European MTF Overview Chi-X is now live with the following key milestones having been achieved: 30th June 2006: License application approved by FSA 30th March 2007: Commencement of trading with a centrally cleared counterparty service on the Dutch & German markets 29th June 2007:Launch first FTSE 100 stocks with full CCP Service 28th September 2007:Launch first CAC 40 stocks with full CCP service Chi-X will continue to increase the number of traded securities leading up to and beyond MiFID go live on 1st November 2007, based on a process driven approach Chi-X provides a MiFID compliant alternative for clients ‘best execution’ policy and can already demonstrate important price improvements relative to the primary markets The first order driven pan-European MTF

Chi-X Value Proposition MiFID Technology Financial Regulatory Best Execution/ Functionality The Core System Connectivity Market Data Trading Tariffs Clearing and Settlement Chi-X Value Proposition The first order driven pan-European MTF

The first order driven pan-European MTF Regulatory Framework "New legislation will transform the landscape for the trading of securities and introduce much needed competition and efficiency” Charlie McCreevy Commissioner in charge of Internal Markets and Services. Legislation has permitted the creation of new pan-European MTF’s (multi-lateral trading facilities) authorised and regulated in their “Home State”. Once authorised, a firm will use the MiFID passport to provide order matching services to customers in other EU member states. Currently under ISD, a service is regulated by the member state in which the service takes place. Instinet Chi-X is an FSA authorised securities firm, operating as an Alternative Trading System (ATS) pre MiFID. Post MiFID Chi-X will automatically become an authorised MTF. The first order driven pan-European MTF

The first order driven pan-European MTF Regulatory Hurdles FSA needed to rule on outstanding policy issues – January 2006 HM Treasury approval for SDRT – February 2006 ISO - Swift needed to issue us with a MIC – CHIX – March 2006 Crest needed to establish a TSO designation: Flag ‘N’ – May 2006 LSE needed to admit Instinet Chi-X to the list of approved ATSs allowing LSE members to deal with us – May 2006 License application approved by FSA – June 2006  The first order driven pan-European MTF

The first order driven pan-European MTF Best Execution Article 21 of MiFID, ‘Best Execution’ is undoubtedly the most heavily debated directive Requiring minimum standards of pre trade transparency for shares traded on regulated markets as well as post trade transparency obligations. Intermediaries will have to justify and regularly review their execution policy to ensure clients are receiving best execution, based on liquidity, price and speed to market. If alternative trading venues regularly match or improve these criteria there will not only be a commercial but legislative requirement for them to check different sources of liquidity before executing an order. . The first order driven pan-European MTF

Stock Exchange Dead Ends Seller on Chi-X @ 5.34 BEST PRICE AHEAD BEST PRICE AHEAD STOCK EXCHANGE Seller @ 5.35 Buyer @ 5.34 The first order driven pan-European MTF

Trading Functionality Chi-X is a pan-European Central Limited Order Book Chi-X takes into account functionality of the local market with additional functional enhancements Non-matched orders may be added to the Chi-X Central Limit Order Book, a database of available limit orders, where they wait to be matched in price-time priority All Chi-X orders are anonymous on the order book The first order driven pan-European MTF

Trading Functionality Market monitoring based on dynamic price range checking and percentage of volume checks A Clearly Erroneous Trades policy protects participants All Chi-X orders are valid for the day by default with unexecuted open orders cancelled at the end of the trading day Continuous Trading Hours: 07.35 until 17.35 CET A combination of ISIN, Currency and MIC can be used to uniquely identify an instrument as well as SEDOL, Instinet symbol, vendor codes (e.g. Reuters and Bloomberg) and exchange codes The first order driven pan-European MTF

Order Types / Conditions Allowed Tick Size & Order Types Order Types / Conditions Allowed Chi-X LSE Limit  Market Iceberg Execute or Eliminate Fill or Kill Hidden No Mid Peg Primary Peg Chi-X facilitates potential price improvements by allowing participants to work within the spread of the equivalent listed exchange. The first order driven pan-European MTF

The first order driven pan-European MTF Price Improvement The first order driven pan-European MTF

Basis Points Savings On Chi-X For Centrally Cleared Stocks Month % of Trade between the spread Improvement (BPS) April 2007 58% 1.60 May 2007 54% 1.50 June 2007 69% 2.67 July 2007 60% 2.17 Aug 2007 44% 2.04 Sep 2007 45% 1.84 Average 55% 1.97 The first order driven pan-European MTF

Liquidity: Early Results From Chi-X Launching Chi-X is a process, not an event Chi-X currently trades UK, German and Dutch index constituents with full EMCF clearing. French equities are scheduled to go live by the end September 2007 and Belgium, Swiss and Scandinavian securities by the end Q4* Trading highlights Philips Kon 44.07% of combined Chi-X/ Euronext volume ING 29.87% of combined Chi-X/ Euronext volume Royal Dutch Shell A 27.34% of combined Chi-X/ Euronext volume Fortis Ord 23.83% of combined Chi-X/ Euronext volume *Note:These markets represent 79% of trading activity on a pan-European basis by turnover The first order driven pan-European MTF

Daily Trading Trend Analysis The first order driven pan-European MTF

Chi-X Value Proposition Technology MiFID Financial Regulatory Best Execution/ Functionality The Core System Connectivity Market Data Trading Tariffs Clearing and Settlement Chi-X Value Proposition The first order driven pan-European MTF

The first order driven pan-European MTF The Core System A low cost, leading edge, open access technology model Re-engineered 4th generation trading system with high speed connectivity into the core system Standardised connectivity – FIX 4.2 High throughput, low latency facilitating the trading of high volumes Platform independent, with IP based connections eradicating the need for any Chi-X specific hardware being deployed on client sites The Chi-X core matching engine is a proprietary system that resides on the Linux operating system The core matching engine runs out of the primary data centre, with real-time fail-over functionality at the secondary data centre The first order driven pan-European MTF

Speed: Roundtrip Latency By Venue June 2007 Trading Venue Average Latency (milliseconds) Chi-X 2 LSE SETS 20 Deutsche Börse Xetra 37 Euronext 75 OMX 137 Borsa Italiana 174 SWX 284 VIRT-X 291 Source: Instinet Europe Exchange Linkages gateway internal system performance measurement statistics for average DMA order messaging during April 2007. These Instinet internal figures are for round trip latency message acknowledgement based on sending an average number of messages to the exchange system and obtaining a response back to Instinet's system over the course of a normal trading day. Please note: These figures are provided for illustrative purposes only and are not intended to represent an independent performance measure of latency. The first order driven pan-European MTF

Trading System Capacity Chi-X is built on scaleable low cost hardware enabling increases in current capacity quickly and easily at low cost Trading Venue Core cash equity system order flow capacity (messages per second) Instinet Chi-X* 30,000 London Stock Exchange** 3,500 virt-x*** 65 Source: *Independent Test with transact tools proved capacity in excess of 16000 messages per second. ** London Stock Exchange *** virt-x The first order driven pan-European MTF

Connectivity / Market Data Standardised FIX4.2 protocol. No other specific applications or architecture required. Connection to network via Radianz or similar. We recommend minimum bandwith of 64K for market access and 256K for market data. Chi-X is vendor neutral with regards to Smart Routing technology. A test market is available to obtain conformity. A list of 3rd party vendors who already provide a Chi-X compliant solution is also available on the web site. Real Time data feeds can be accessed directly via a CHIXMD feed, from the Chi-X web site bookviewer, or via third party data vendors in standardised format. There are no connection fees and market data is provided free of charge. The first order driven pan-European MTF

Future Product Development Smart Routing Technology Trade Feeds and Consolidated Market Data Off Order Book Trade Reporting Service MIS Data Analysis The first order driven pan-European MTF

Chi-X Value Proposition Financial MiFID Technology Regulatory Best Execution/ Functionality The Core System Connectivity Market Data Trading Tariffs Clearing and Settlement Chi-X Value Proposition The first order driven pan-European MTF

The first order driven pan-European MTF Trading Tariff Trading fees on Chi-X for execution are: 0.20bps rebate for passive execution 0.30bps charge for aggressive execution Trade reporting charges are £210 pcm The first order driven pan-European MTF

Trading Costs: Chi-X ‘vs’ Exchanges Trading Venue Trading Costs (bps) Instinet Chi-X 0.05* London Stock Exchange 0.51* Deutsche Börse Xetra 0.57* Euronext Paris 0.50* * based on a passive/aggressive execution ratio of 50:50. Source: Instinet Europe internal statistics based on average daily DMA trades, volume and consideration. The first order driven pan-European MTF

(£500 if not a participant) Trade Reporting Costs Trade reporting off exchange trades to each trading venue: Trading Venue Reporting costs Monthly fee per trade report Instinet Chi-X £210 (£500 if not a participant) £0 London Stock Exchange N/A £2.75* virt-x £2,100 min activity charge £0.10** * Maximum charge ** High Volume Service Chi-X will allow systematic internalisers to use trade reporting services to meet their MiFID Article 28 post trade disclosure requirements The first order driven pan-European MTF

Per workstation per annum fee for Market Data Costs Chi-X Market Data is non fee liable with no license fees The following market data costs apply for members of each exchange for domestic data. All charges are in local exchange currency. Trading Venue License Fee (per annum) Per workstation per annum fee for level 2 data Trading Venue License Fee (per annum) Per workstation per annum fee for level 2 data Instinet Chi-X £0 Euronext € 36,750 € 696 Deutsche Börse Xetra € 32,400 € 816 London Stock Exchange £66,000 £1,260 Source: Exchange websites The first order driven pan-European MTF

The first order driven pan-European MTF   Industry Cost Savings Estimated annual savings of Euros 140 million generated for market participants if Chi-X received 25% of Total UK, German and Dutch Market Volumes Annual Industry Savings in Euros $mm Industry Utilisation of CHI-X   Market Vendor 25% 100% Trading UK LSE 67 270 Germany Xetra 45 180 Holland Euronext 28 112 Total savings 140 562 The first order driven pan-European MTF  

The first order driven pan-European MTF Clearing & Settlement An open non exclusive horizontal market model with initial central counterparty services through Fortis EMCF. Trading access rights uncoupled from clearing and settlement Dedicated solution for wholesale cash equity financial markets Focus on an efficient, maximum STP / minimum touch solution Use of domestic CSDs An interoperable solution respecting the interests and trade flows of the wholesale market participants The first order driven pan-European MTF

The first order driven pan-European MTF Market Model Structure MTF Trading Trading Participant Trading Participant Trading Participant Trading Participant MCF Clearing Clearing Participant Clearing Participant Clearing Participant Settlement Settlement Agent Domestic CSD Settlement Participant Domestic CSD Settlement Participant Domestic CSD Settlement Participant Relationships Trading Participant Every Trading Participant requires a Clearing Participant (GCM equivalent) to guarantee trades / credit risk Clearing Participant Every Clearing Participant will need to execute a Clearing Service Agreement Settlement Agent Every Clearing Participant will need to have a Settlement Agent at the domestic CSD MCF Multilateral Clearing Facility The first order driven pan-European MTF

Stocks Settling In The Domestic CSD Trading Participant Trading Participant Post Trade Participant Post Trade Participant MCF Netting / Compression Position management (S-2 to S-1) Stock Loan Risk DVP Novation etc …. CSD CSD CSD The first order driven pan-European MTF

EMCF: Clearing Tariffs Clearing fee. Charged per line (i.e. per execution). France: 28 euro cents Germany: 20 euro cents +0.00075% order value, cap at 1.2 euro Holland: 28 euro cents. UK: 18 euro cents Settlement fee. Only payable where a net delivery results. Local CSD charge FBGC Cost recovery France: €1.43 €1.00 Total= €2.43 Germany: €0.425 €1.00 Total= €1.425 Holland: €1.35 €1.00 Total = €2.35 UK: €0.52 €1.00 Total= €1.52 NB: FBGC cost recovery includes validation, enrichment, format to meet local CSD message standard, transmission over relevant network, internal cost recovery for staffing, processing etc. The first order driven pan-European MTF

Chi-X Value Proposition MiFID Technology Financial Regulatory Best Execution/ Functionality The Core System Connectivity Market Data Trading Tariffs Clearing and Settlement Chi-X Value Proposition The first order driven pan-European MTF

Chi-X Value Proposition High speed – Over 10 times faster than major European exchange order driven systems Low cost – 90% cheaper than trading on major European markets Standardised connectivity – FIX 4.2 No connection fees. Market Data provided free of charge. Wholesale market CCP solution. Proven price improvement relative to primary markets Continued product development responding to client demand Potential equity participation opportunities for the largest providers of flow The first order driven pan-European MTF

Fast Track: How to get connected to Chi-X 3 Streams: Legal &Compliance This process is to ensure that your firm is adequately regulated and authorised to trade on the order book. Chi-X will also carry out a full ‘Know your Client ‘ exercise at this point. Complete application documents can be found on web site www.chi-x .com (Get Connected/Document Library/Application Forms) Technical Connectivity This stage is to ensure your firm can physically connect to Chi-X via FIX 4.2 and conforms with the Chi-X technical specification. A full Chi-X test platform is available. Clearing & Settlement You will require your General Clearing Member to be connected to EMCF CCP. For detailed information please contact the Chi-X Director of Clearing & Settlement, scott.riley@chi-x.com who will assist you in this process. The first order driven pan-European MTF

Additional Information To learn more about the Chi-X value proposition, please contact : Peter Randall Director, Head of Business Development +44 (0)20 7154 8855 peter.randall@chi-x.com Jonathan Woodward UK, Ireland & Nordic Business Development +44 (0)20 7154 8856 jonathan.woodward@chi-x.com Graham Dick European Business Development +33 (1)7303 8661 graham.dick@chi-x.com Hirander Misra Director - Product Development +44 (0)20 7154 8596 hirander.misra@chi-x.com Scott Riley Director - Operations Website +44 (0)20 7154 8408 www.chi-x.com scott.riley@chi-x.com The first order driven pan-European MTF

The first order driven pan-European MTF ©2007 Instinet, LLC. All rights reserved. INSTINET is a registered mark in the United States. Approved for distribution in Europe by Chi-x Europe Limited which is authorised and regulated by the Financial Services Authority. Instinet, LLC, member NASD/SIPC. Instinet Europe Limited is a subsidiary of Instinet Incorporated. This information is provided for informational purposes only. It does not take into account the particular investment objectives, financial situation, or needs of any individual or entity. Under no circumstances is it to be used or considered as an offer to purchase or sell any security, or as a solicitation or recommendation of the purchase, sale, or offer to purchase or sell any security. While the information has been obtained from sources deemed reliable, neither Instinet nor its licensors, nor any other party through whom the user obtains any such information: (i) makes any guarantees that it is accurate, complete, timely, or contains correct sequencing of information; (ii) makes any warranties with regard to the results obtained from its use; or (iii) shall have any liability for any claims, losses, or damages arising from or occasioned by any inaccuracy, error, delay, or omission, or from the use of the information or actions taken in reliance on the information. Reproduction or redistribution of this information is prohibited except with written permission from Instinet. System response times may vary for a number of reasons including market conditions, trading volumes and system performance. The first order driven pan-European MTF