1. How Euroclear manages the interoperability with the different markets

2. Agenda l The Euroclear group l Creating a European Domestic Market, an exemple of cooperation and consolidation among the CSDs of the Euroclear group l Euroclear Banks links with the different markets

3. Euroclear Group structure

4. Q2 2005 Turnover Euroclear Bank CRESTCo Euroclear France ST005 trillion 0 50 100 200 250 350 150 300 6 months 2002 241.9 2003 256.2 2004 307.1 2005 171.4 61 36.3 74.1 85.4 53 103.5 85.5 52.6 118.1 114.4 60.1 132.6

5. Value of securities held Euroclear Bank CRESTCo Euroclear France Euroclear Nederland ST006 Q2 2005 14.6 trillion 0 2 4 6 8 10 12 14 30 June 200220032004 10.9 11.9 13.1 2005 0.7 2.2 3.2 4.8 0.7 2.4 3.5 5.3 5.9 3.8 4.1 2.6 3 0.8 6.7

6. Agenda l The Euroclear group l Creating a European Domestic Market, an exemple of cooperation and consolidation among the CSDs of the Euroclear group l Euroclear Banks links with the different markets

7. Consolidation of settlement is necessary to make European capital markets competitive for issuers and investors European capital markets infrastructure The problem of fragmentation l Settlement is a key component of capital markets efficiency –National markets not a European market –At least one CSD per country –fragmentation has a major impact on efficiency, cost and risk l Both Harmonisation and Consolidation enable efficiency gains, and reduction of costs and risks

8. Our vision is full consolidation of markets within Euroclear Group Full integration of legacy systems and functionality Single Settlement Engine Common User Interface CREST Euroclear France Euroclear France Euroclear Netherlands Euroclear Netherlands CIK Euroclear Bank Euroclear Bank Customer Domestic Service Full Service Agent Central Banks & Payment systems

9. From todays fragmentation towards consolidation CIK E NLE F CREST E B Current situation Positioning & booking Legal record Core Processing Client Communication Interface Legacy Country boundary Step 1 SSE (2006) CIK E NLE F CREST E B SSE ESES-CCI – e-RGV - E2A ESES - SP component ESES - RGV upgrade SSE CIK E NLE FCRESTE B Step 2 ESES (2007) Step 3 Single Platform (in phases from 2008) SSE CIK E NLE FCRESTE B CCI Single Application Platform Legend

10. Conclusion Euroclears business model meets the challenges facing the European markets l Creating efficiency (e.g. reduce costs) and reduce risks while retaining choice and competition l Eliminating differences in technology – both standards and processes l Harmonising market practices and legal/regulatory framework l Offering a settlement model that allows choice of service levels to meet the needs of all issuers investors, and intermediaries

11. Agenda l The Euroclear group l Creating a European Domestic Market, an exemple of cooperation and consolidation among the CSDs of the Euroclear group l Euroclear Banks links with the different markets

12. GE014B Euroclear Banks services Money Transfer Settlement services Custody services Credit and Banking Services Tri-Party services Lending & Borrowing FundSettle Communications Client Services and Support. Migration Team

13. Domestic debt Austria Belgium Denmark Finland France Germany Ireland Greece Italy Luxembourg the Netherlands Norway South Africa Spain Portugal Sweden the United Kingdom Russia Switzerland CS205 Australia Indonesia Malaysia the Philippines Hong Kong Thailand Japan Singapore Against payment Free of payment Argentina USA Canada Mexico New Zealand

14. Equities CS206 Austria Belgium Denmark Finland France Germany Greece Italy Ireland Hong Kong Malaysia Singapore Japan Norway Spain the Netherlands Portugal Sweden Switzerland Luxembourg the United Kingdom Argentina USA Canada Mexico SE Settlement

15. Borrowers Lenders Seller Purchaser 52 % 10 % Broker/dealers 8 % Other participants 4 % 26 % No client sector stands by itself Fixed income Equities Derivatives Activity breakdown by market segment

16. Accessing new markets 1.Issuance of eurobonds -> acceptance of denomination currency -> acceptance of settlement currency

17. 2.Access to the national domestic securities markets Major determining factors guiding the decision to service a market International flows Operational Risk Reputation Risk Liquidity Risk Legal Risk l Sufficient international demand from international investors justifying a link l Operational procedure l Service level agreements l Contractual relationship external agents l Choice of agents – depositories (settlement + payments, asset servicing) l Free access to the currency l Credit Lines with cash correspondents (settlements + payments) l Asset protection l Enforceability of contracts