1. CSDs : Industry Challenges
ACSDA
CSDs : Industry Challenges
and Strategies
Prepared By: Jorge H Jaramillo
ACSDA´s President

2. ACSDA Member´s Profiles 2015 achievements WFC Work

3. Securities on Deposit by Type
Bermuda – BSD (95%)
Brazil – BM&FBOVESPA (99%)
Canada – CDS (99.9%)
Colombia – DECEVAL (61%)
East.Carib – ECCSD (63%)
Jamaica – JCSD (93%)
Mexico – Indeval (58%)
Peru – CAVALI (60%)
S. Africa – STRATE (71%)
United States – DTCC (60%)
Venezuela – CVV (99%)
Bolivia – EDV (other- term deposits)
Brazil –CETIP (other- derivatives)
Chile – DCV (Mix)
El Salvador – CEDEVAL (bonds & govs)
Panama – LatinClear (bonds)
Paraguay - BVPASA (bonds)
Uruguay – BVM (International)
Argentina – CVSA (67%)
Dom. Rep. – CEVALDOM (92%)
Guatemala – CVN (97%)
Jamaica – JamClear (85%)
Nicaragua – CENIVAL(79%)
Uruguay – BCU (85%)
+% are Equities
Mixed
+% are Government

4. Number of Transactions 2015

5. ACSDA Members 2015 Achievements and 2016 Goals: Risk
PFMIs
Service/Application Availability
Governance
Information Security
CVSA (Risk Mgmt)
BM&FBOVESPA
EDV
DCV
DECEVAL
CEDEVAL
CEVALDOM
ECCSD
CVN
INDEVAL
JCSD
LATINCLEAR
CAVALI
BCU
CVSA
EDV
BM&FBOVESPA
DCV
DECEVAL
CEVALDOM
EDV,
BM&FBOVESPA (State-owned Issuers),
LATINCLEAR
BVM
EDV
DECEVAL (Data Governance)
CEVALDOM
CEDEVAL
CAVALI
Settlement Cycles
Dematerialization
CCP Development
CDS (T + 2)
DCV (Cut-offs)
CVN (Model 2 BIS)
CAVALI (Intra-day)
DTCC (T+2)
DCV
CDS
DECEVAL
CVN
BCU
CETIP
DECEVAL
DTCC

6. ACSDA Members 2015 Achievements and 2016 Goals: Technology
Trading Platforms
CVSA/MERVAL: DMA, Millenium
BMF&BOVESPA: DMA
JCSD: On-line trading
BVM: transaction software
New or Upgrade to Core Systems
Hardware & software: EDV, BM&FBOVESPA, DCV, CDS, DECEVAL, ECCSD, BVPASA, BCU
INDEVAL: Upgrades to DALI
CAVALI: High availability data infrastructure
Other
Connection to Central Bank: DCV &CVN
SWIFT: CVSA, DCV (15022), DTCC, INDEVAL (20022)
DTCC: Blockchain
CVSA-MERVAL, BM&FBOVESPA, JCSD- Trading platforms
EDV, DCV, CDS, DECEVAL, ECCSD, INDEVAL, BVPASA, CAVALI - New Software and Hardware.
DCV – SWIFT 15022, electronic signature.
DCV, CVN – New connection to Central Bank
BM&FBOVESPA – New functionality for depository system.

7. ACSDA Members 2015 Achievements and 2016 Goals: Services
CVSA: International Sub-custody for CSDs & Corporate Actions,
Collateral Management: MERVAL, DTCC, CDS, DCV (electronic pledge)
Currency Settlements: CDS (corporate actions) & DCV (MILA-Peru and Mex)
Mutual Fund Services: DCV (FundSettle), INDEVAL(Euroclear), CEDEVAL, CENIVAL, BVM
Issuer Services Enhancements: CDS & DECEVAL
New Instruments: BM&FBOVESPA, EDV, DCV, DECEVAL, CVN, JCSD.
Proxy Voting: BM&FBOVESPA and DCV
Quality Service: EDV, DECEVAL, CEVALDOM
DCV: Securities Lending, Repos

8. 2015 Main Initiatives
Public Regional good initiatives – IADB
IADB – Seminar Sponsorship – Senior Leadership Summit
Cyber Resilience – IOSCO letter of support
PFMI – AGC Disclosure tool – WFC task force
Profiles – Market and member updates
Webinars: Blockchain, Client Services, Swift developments
Executive Committee meetings

9. IADB Project: Regional Public Goods Initiative
In 2014, we asked the IADB´s Capital Market Group a way to obtain technical assistance in a way of not reimbursable funds. We were oriented to participate in a project called The Regional Public Good Initiative - RPGI from the Bank.
Regional Public Goods Initiative : “The Initiative for the Promotion of Regional Public Goods (RPG Initiative) is based on the rationale that the countries of Latin America and the Caribbean (LAC) share challenges and opportunities for development that can be addressed or seized upon more effectively and efficiently at a regional level through collective action and cooperation.
The 2016 call for proposals was opened in February of this year, with deadline of April 7th, ACSDA submitted a proposal to support ACSDA´s members in the adoption of the PFMIs.
The 2016 Call for proposals of the Inter-American Development Bank (IDB) Regional Public Goods Initiative (RPG Initiative) received a record number of 117 proposals from groups of countries in Latin America and the Caribbean (LAC). Countries presented proposals requesting USD 104 million in financing.
Proposals selected for financing under the 2016 CFP of the RPG Initiative are expected to be approved as technical cooperation projects of the IDB in October of 2016 and start disbursing in the first quarter of 2017.
The RPG Initiative is the Bank’s most prominent grant instrument to support intra-regional cooperation and the collective design of development solutions in LAC. It includes projects related to Market Integration, social protection, water management, health amoung others.

10. IADB Project: Regional Public Goods Initiative
ACSDA's goal to support the local markets in their efforts to adopt securities market regulations and PFMIs, was presented to the IADB as a key project for capacity development to support market integration projects within the region, a principal aspect of their interest.
We presented ACSDA as a possible vehicle for this year’s call, with the objective to build more capacity within our members to provide the best possible service and support to the capital markets they serve.
ACSDA presented to the IADB – RPGI the project call “Strengthening Compliance on a Regional Basis with the Global Principles for Financial Market infrastructures ” to help members increase their knowledge, capacity and compliance with IOSCO – BIS principles. We worked to obtain support from our members and their supervisors or regulatory authorities. We thank members for their active participation on the project.
The project was presented with the support of 17 ACSDA members, plus 9 supervisory authorities. We have 9 contributors and 11 members benefiting from the program. We are looking for a budget of USD 321,150 to develop the project. The counterparty value of ACSDA to the RPGI is based on member´s work. Each member supporting the project offered 15 working days to help the receiving members. It is essential to have full support from members to undertake the project if approved by the IADB. The estimated value of this effort is USD 352,000
I will like to offer my special thanks to the members and to our Executive Director – Bruce Butterill for the significant time and effort put to the project proposal.

11. ACSDA Members in the RPGI: Supporting and Benefiting FMI
Supporting CSDs
Benefiting CSDs
Supervisory Authorities
1. Argentina: Caja De Valores S.A.
2. Bermuda: Bermuda Stock Exchange
3. Colombia: Depósito Centralizado de Valores
de Colombia Deceval
S.A.
4. Costa Rica : Interclear
Central De Valores S.A.
5. Brazil: Balcão Organizado de Ativos
E Derivativos
6. Chile Depósito Central
De Valores S.A.
7. Mexico: S.D. Indeval, Institución para el Depósito de Valores S.A.de
C.V.
8. Paraguay: Bolsa de Valores y Productos de
Asunción S.A.
9. Uruguay: Banco Central
Del Uruguay
1. Bolivia: Entidad de Depósito de Valores de Bolivia S.A.
2. Colombia: Depósito Centralizado
de Valores de Colombia Deceval S.A.
3. Costa Rica : Interclear Central De Valores S.A.
4. Dominican Republic : Depósito
Centralizado de Valores, S.A.
5. El Salvador : Central de Depósito de
Valores S.A.
6. Guatemala: Central de Valores Nacional S.A.
7. Jamaica: Jamaica Central Securities
Depository
8. Panama : Central Latinoamericana
De Valores, S.A.
9. Peru : Cavali S.A. I.C.L.V.
10. Uruguay : Banco Central del Uruguay
And Bolsa de Valores de Montevideo
1. Bolivia: Autoridad de Supervisión del Sistema
Financiero
2. Bermuda Bermuda Monetary Authority
3. Colombia: Superintendencia Financiera de Colombia
4. Costa Rica : Superintendencia
General de Valores
5. El Salvador: Superintendenta Adjunta
de Valores
6. Jamaica: Financial Services Commission
7. Peru: Superintendencia
del Mercado de Valores
8. Uruguay: Superintendencia
de Servicios Financieros
del Banco Central
del Uruguay
9. Panama: Superintendencia del Mercado de Valores de Panamá.

12. PFMI and AGC - WFC Single Disclosure Tool
WFC approval and funding – 4 Associations participated in the software development cost funding and maintenance fee. ECSDA, AMEDA, AECSD and ACSDA, approved the development and funding at the Singapore Meeting of the WFC.
USD 6,387 was provided to create the tool. Funds were credited to ACSDA´s funds account. Accounting of the project were properly addressed in our statements. ACSDA´s contribution is USD 1,596,80
Annual Maintenance Fee : USD 2,120, ACSDA´s contribution USD 530.
ACSDA´s was the entity signing the contract on behalf of all the regional associations
In October 2015, the contract was signed and the development began.
The end of the development for testing was reached in February The testing of the tool began with the several CSDs working together to deploy the tool.
Important adjustments were addressed to improve the tool functionality .
We need to recognize the important job done by Soraya Belghazi from ECSDA and Bruce Butterill from ACSDA.
The tool is now available for the use of the CSD community.
Rules of use and data management are to be defined.

13. WFC Activities Participation on Singapore Meeting.
Main Topic Discussed
WFC stakeholders work
WFC Board role definition and communication strategy
The Single disclosure project – IOSCO - AGC questionnaire tool development
E-learning tool for the CSDs – Strate proposal

14. WFC – Main Stakeholders
CSD Associations
ISSA
IOSCO
CSD Members
SWIFT
NASDAQ -OMX
Strategy to define relationship management
and representation
BIS
IMF
WFE
World
Bank
CSD Associations
CPMI
Media
Vendors

15. WFC Relations/ work Initiatives
Single Disclosure Tool
Data Sharing and Information
Stakeholders’
Work Strategy
Working
Groups
e-learning
Strategy
WFC Relations/ work Initiatives
Blockchain
Market
Advocacy
Services Development

16. Beyond The Single Disclosure effort
Product and Services
From Single Disclosure
System
Single Database for Global access
Links
Fee Structures
To CSDs Global
Data Base
CSD Profiles
Market and Country
Data
Benchmarking/
Commercial
possibility
CSD Member Data
Financial Data

17. e-learning application
Source : Monica´s Singer Proposal Document
The WFC e-Learning application could benefit from using some of the generic content which is currently found on the Strate e-Tutor app. These include topics such as:
The international CSD community could benefit from a central e-Learning platform to not only share common training content but to also provide Thought Leadership content in one central place which is free and easily accessible to anybody.
CPSS-IOSCO Training Module
The Role of a CSD
Videos and podcasts from international conferences
Articles and readings relevant to the international market
Podcasts on topics such as Dividends tax and CPSS/IOSCO
The content must be dynamic, relevant and kept up to date on an on-going basis. One of the successes of the Strate e-Tutor application has been that we have requested users both locally and internationally to assist with contributing content.

18. Challenging Times for the Post trade Industry Improving Efficiency and Achieving Stability Amidst Growing Complexity “Celent Report October 2015”
Oliver Wyman

19. Markets Part of the Study
Number / Type of Entity
United Kingdom
United States
Germany
Czech Republic
Japan
Australia
Hong Kong
China
India
Brazil
Mexico
Chile
Six CCPs
Five CSDs
Two ICSDs
Four Service Providers

20. Current Challenges in the Post Trade Industry
New Product and
Services
Support of new asset classes
Respond to
Regulatory forces and changes
Collateral Management
Across markets
Cross Margining across asset classes
Cyber
Security
Harmonization and standardization
Top of the Line
E-services
e-governance, KYC,
Looking for new Markets
International Expansion
Outsourcing Solutions
Cost – Benefit
Regulatory Changes
Asset Servicing a business opportunity
Europe
Technology – Process and Business Architecture
A competitive response
Reduction on Settlement Cycle

21. Regulatory Challenges : Over Regulation
Dodd – Frank
Basel III
CRD IV
MiFID II
EMIR
CSD Regulation
AIFMD
T2S
CPMI – IOSCO FPMI
Lack of Clarity and Coordination In different Jurisdictions
High Complexity to respond
Cost - Investment

22. Cost and Efficiency Gains Market Integration Initiatives
Competition
Portfolio
Diversification
Cost and Efficiency Gains
Higher Returns
Evolution of
Trading
Market Forces
Harmonization
Market Integration Initiatives
Innovation

23. Competition Post Trade Forces Comprehensive Risk Management
Market Safety and
Stability
Governance Structure
Post Trade Forces
Moving in the financial value chain
Explosion of asset classes
Competition
Efficiency
Modernization
Harmonization
Standardization
Innovation

24. Post – Trade Industry By Regions

25. Challenges in the FMI Industry

26. CSD Imperatives Financial Stability Effective management of Risk
Constant pursuit of increased efficiencies and lower unit cost of operations
Compliance with International Standards
CPSS/IOSCO Principles for FMIs
ISO
In-bound and out-bound connectivity with other markets
Diversification/expansion of service offerings to enhance financial position and value proposition

27. CSD Realities
With some minor exceptions, CSDs do not control or even have the potential to impact transaction volumes (in the short run) in a material way
CSDs universally have a very high percentage of fixed versus variable costs
Fixed (or non-variable) costs typically exceed 90% of total expenses
Cost control is important … but no substitute for volume, which is essential
A change in approach has become essential, particularly for CSDs in smaller markets.
In 1982, CDS (Canada) had a business plan that called for 12,600 Exchange trades per day. The cost to settle a trade a trade was CAD That is about $1.42 today. On October 16, 2014 CDS processed a record 3,178,013 exchange trades. In 2014 the cost to clear and settle an exchange trade is less than CAD 0.01

28. CSD Business Challenges
Asset Servicing
Cross Border Environment
International Expansion
Competition
Business
Alliances
Business
Diversification
e-services KYC, e-governance , LEI
CSD Links
Operational Efficiency
Asset Safety and Risk Management
Real time monitoring
Collateral Mobility
and management services across markets and venues
Cyber Security and
IT Strategy to respond to market demands

29. CSDs Operational and IT Challenges
Modernization
Harmonization and Standardization
Compliance and Risk Management enhancements
Respond to new Market regulations
Real time monitoring, real time clearing, and reporting
Shortening settlement cycles
Outsourcing of
core services being offered by the biggest CSDs
Cyber
Security
Mitigation of possible systemic risk
Blockchain
Technology