Emerging Trends in Post Trading Space Shikkoh Malik 27 October 2011

Regulatory Changes Infrastructure Evolution Impact on Custodians

3 Major heading Regulatory Changes What’s in the air (Globally)?  UCITs (Undertaking of Collective Investments in Transferable Securities)  DODD-FRANK  EMIR (European Market Infrastructures Regulation)  SLD (Securities Law Directive)  AIFMD

4 Major heading Regulatory Changes What’s in the air in Emerging Markets? In the emerging & frontier markets its a mixed bag as some markets might still be trying to find their feet in terms of having regulations for all spheres of capital markets (especially post trading environment) while others might be revisiting existing regulations. But in general, following is being considered:  Framework around segregation of duties  “Custody with Custodians ”  Independent NAV calculation for Funds  Identification of functions as separate service lines (Fund admin etc)  Laws & Regulations governing infrastructure companies  Opening up of capital markets  Access to Foreign Investors  Foreign Ownership Limits  Enhancing the depth of markets

5 Major heading Infrastructure Evolution  Consolidation Of Exchanges  Discussion around CCPs are “a la mode” again  Ideas of regional platforms ASEAN Initiative  And there are the T2Ss of this world

6 Major heading Impact on Custodians  Politicised regulatory regimes  Enhanced focus on risks through out the supply chain  Enhanced reporting requirements  Rise in cost base due to increased investments in internal & external infrastructure and enhanced risk premium  Pressure on margins  Loss of revenue streams owing to market/regulatory environment  Monumental exercise of re-building trust* in the system Where does the remit of a custodian start and more importantly where does it “ stop ”

7 Major heading The way forward  Build awareness around the asset protection the custody/depository chain brings  Share global best of breed practices with stakeholders in Middle East & Africa  Work with the regulators & market entities on liquidity enhancement mechanism  Give confidence to investors around the stability of post trading flows/infrastructure  Make the process of investing in Middle East and Africa easier for investors  Build agent networks that are robust & financially strong

8 Major heading AFRICA Footprint: 3rd-Party: Russian Federation Botswana Ghana Kenya Mauritius Tanzania Uganda Zambia Zimbabwe Malawi Namibia Rwanda MENA Footprint: 3rd-Party: Bahrain Oman Pakistan Qatar UAE (3) Egypt Kuwait Saudi Arabia NORTH ASIA China (2) Hong Kong Korea Taiwan SOUTH EAST ASIA Indonesia Malaysia Philippines Singapore Thailand Vietnam SOUTH ASIA Bangladesh India Sri Lanka Footprint Markets Australia New Zealand Footprint: 3rd-Party: 2 Securities Services – Core Region Network Coverage Map Direct Third-Party Agents 6 Cote d’Ivoire Nigeria South Africa 12 Footprint: 3rd-Party: Japan 1 Regional Custody Service Hubs 4