Jay Baum Lars Petersson December 15, 2003 Slide 1 Depository Trust & Clearing Corporation Managing Paper for The Financial Services Industry

Jay Baum Lars Petersson December 15, 2003 Slide 2 Subsidiaries

Jay Baum Lars Petersson December 15, 2003 Slide 3 Settlement of Broker-to- Broker Trade Buying Broker Selling Broker Marketplace 2 NSCC 4 DTC Brokers are given instructions to buy or sell on behalf of their client Trade is made on an exchange or Marketplace (Day T) Details of the trade are sent to the NSCC NSCC processes and records the trade. Details and contracts are sent to the brokers with figure for net money settlement DTC is instructed to move securities from Selling broker’s account to Buying broker’s account (T+3)

Jay Baum Lars Petersson December 15, 2003 Slide 4 Operations Risk Management Unit (ORM) Risk and Control Self-Assessment –common framework –common language Database of “Risk Events” –actual losses –near misses –opportunity costs Key Risk Indicators Established Reporting and Review Schedule

Jay Baum Lars Petersson December 15, 2003 Slide 5 “Risk Universe” People & Culture –Key Person –Internal Theft –Fraud Execution, Delivery & Process Management –Data Input –Customer Service –Financial Controls –Financial Reporting –Legal/Regulatory –Information Management Technology –Interface –Network Failure –Software Corruption Business Continuity –Communication –Alternate sites –Data access External –Corporate Espionage –Third Party Risk