1. ServiceExpertiseIntegrityServiceExpertiseIntegrity northerntrust.com P R I N C I P L E S T H A T E N D U R E Topics in Regulatory Reform Derivatives Regulation: Dodd-Frank and Its Implications for the Buy-Side September 12, 2012

2. 2 Derivatives Regulation: Dodd-Frank and Its Implications for the Buy-Side Welcome Thank you for joining todays interactive webinar on Derivatives Regulation: Dodd- Frank and Its Implications for the Buy-Side Moderator: Judson Baker, Northern Trust Key Note Speakers: Joe Palumbo, Ernst & Young Nathan Howell, Sidley Austin Topics to be Addressed: Final Dodd-Frank rulings and guidance Key definitions such as "swap," "major swap participant," "active funds" and "financial entity" End-User exceptions Phase-in Periods Swap data recordkeeping and reporting requirements

3. BEIJING BRUSSELS CHICAGO DALLAS FRANKFURT GENEVA HONG KONG HOUSTON LONDON LOS ANGELES NEW YORK PALO ALTO SAN FRANCISCO SHANGHAI SINGAPORE SYDNEY TOKYO WASHINGTON, D.C. Dodd-Frank Title VII CFTC Implementation Northern Trust Presentation N Howell – September 12, 2012

4. Overview Overall CFTC implementation status Clearing mandate End user exemption Phased compliance Exchange trading mandate Reporting Recordkeeping/retention

5. Status of DFA Implementation SEC is stuck in a holding pattern DFA effective July 21, 2011 (unless…) CFTC Order (expires October 12, 2012) CFTC has finalized 80%+ of rulemaking Compliance dates depend on each rulemaking CFTC has yet to finalize capital/margin rules or cross- border rules

6. Overview of Mandated Clearing No mandatory clearing until CFTC issues a mandate Any mandate must follow a notice and comment period Once issued, a clearing mandate only applies to those swaps that fit within the four corners of the mandate To date, no clearing mandate issued

7. CFTC Clearing Proposal CFTC has proposed to mandate clearing of several interest rate swaps and index CDS Comment period has ended Unclear when CFTC will issue the mandate, but likely soon Once mandated, clearing will be phased in

8. CFTC Phased Compliance Rules Cat 1 – Cat 1: 90 days Cat 2 – Cat 1 or 2: 180 days All others: 270 days Does not apply to swaps in which one of the parties relies on the end-user clearing exemption

9. Phased Compliance Categories Category 1: swap dealer, SBS dealer, MSP, MSBSP, active fund Category 2: commodity pool, private fund, 4(k) entities (excl. third-party subaccounts) Active Fund: private fund that is not a third-party subaccount, 200 or more swaps per month over trailing 12 months Third-party subaccount: acct. managed by independent manager resp. for clearing documentation

10. End-User Clearing Exemption Section 2(h)(7) of CEA No mandatory clearing if: –Not a financial entity –Using the swap to hedge or mitigate commercial risk (broadly defined) –Notice to CFTC of how it meets financial obligations assoc. with non-cleared swaps Clearing becomes optional

11. Financial Entities Swap dealer, SBS dealers MSPs, MSBSPs Commodity pools Private funds Employee benefit plans (whether or not subject to ERISA) BHCA 4(k) entities

12. Exceptions to Financial Entity Definition Financing affiliates – primary business of providing financing; uses swaps for hedging commercial risks relating to rates or forex, 90% or more of which arise from financing the purchase or sale of products, 90% or more of which are mf. by parent or another sub Certain small regulated financial institutions ($10 billion or less in assets)

13. Exchange Trading Mandate If subject to mandatory clearing, must also be traded on a regulated futures market or a SEF Exception if no futures market or SEF makes the swap available to trade Rules for SEFs not yet final Rules on available to trade not yet final

14. Reporting Reporting obligations follow a waterfall Dealers > MSPs > End-users Dealers will principally be responsible for reporting swap data Certain swap data will be made publicly available

15. Recordkeeping and Retention Extensive records required to be kept by all trading parties Type of data depends on when the swap was entered into Retention for life of the swap plus 5 years

16. World Offices

17. © 2012 Northern Trust Corporation northerntrust.com N O R T H E R N T R U S T Thank you for participating in todays webinar Please contact Jud Baker at 312-444-7102 or jb193@ntrs.com regarding any additional questions. Todays webinar was recorded and the replay will be sent to all invitees by the end of this week. Please feel free to share with your colleagues.

18. 18 Derivatives Regulation: Dodd-Frank and Its Implications for the Buy-Side Important Information Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. The Northern Trust Company, London Branch (reg. no. BR001960), Northern Trust Global Investments Limited (reg. no. 03929218) and Northern Trust Global Services Limited (reg. no. 04795756) are authorised and regulated by the Financial Services Authority. The material within and any linked material accessed via this communication is directed to eligible counterparties and professional clients only and should not be distributed to or relied upon by retail investors. For Asia Pacific markets, it is directed to institutional investors, expert investors and professional investors only and should not be relied upon by retail investors. Northern Trust (Guernsey) Limited, Northern Trust Fiduciary Services (Guernsey) Limited, and Northern Trust International Fund Administration Services (Guernsey) Limited are licensed by the Guernsey Financial Services Commission. Northern Trust International Fund Administrators (Jersey) Limited and Northern Trust Fiduciary Services (Jersey) Limited are regulated by the Jersey Financial Services Commission. Northern Trust International Fund Administration Services (Ireland) Limited, Northern Trust Securities Services (Ireland) Limited and Northern Trust Fiduciary Services (Ireland) Limited are regulated by the Central Bank of Ireland. Northern Trust Global Services Limited has a Luxembourg Branch, which is authorised and regulated by the Commission de Surveillance du Secteur Financier (CSSF). Northern Trust Luxembourg Management Company S.A. is regulated by the Commission de Surveillance du Secteur Financier (CSSF). Northern Trust Global Investments Limited has a Netherlands branch, which is authorised by the Financial Services Authority and subject to regulation in the Netherlands by the AutoriteitFinanciëleMarkten. Northern Trust Global Services Limited has a Netherlands Branch, which is authorised and regulated in the Netherlands by De Nederlandsche Bank. Northern Trust Global Investments Limited has a Sweden branch, which is authorised by the Financial Services Authority and subject to regulation in Sweden by the Finansinspektionen. Northern Trust Global Services Ltd (UK) Sweden Filial is authorised by the Financial Services Authority and subject to regulation by the Finansinspektionen. Northern Trust Global Services Limited operates in Abu Dhabi as a Representative Office. Our registered office is authorised and regulated by the Central Bank of the United Arab Emirates. The Northern Trust Company operates in Australia as a foreign authorised deposit-taking institution (foreign ADI)and is regulated by the Australian Prudential Regulation Authority. The Northern Trust Company has a branch in China regulated by the China Banking Regulatory Commission. The Northern Trust Company of Hong Kong Limited is regulated by the Hong Kong Securities and Futures Commission. Northern Trust Global Investments Japan, K.K. is regulated by the Japan Financial Services Agency. The Northern Trust Company has a Singapore Branch, which is a foreign wholesale bank regulated by the Monetary Authority of Singapore. The Northern Trust Company operates in Canada as The Northern Trust Company, Canada Branch, which is an authorised foreign bank branch under the Bank Act (Canada). Trustee related services in Canada are provided by the wholly owned subsidiary The Northern Trust Company, Canada, an authorised trust company under the Trust & Loans Companies Act (Canada). Deposits with The Northern Trust Company and its affiliates and subsidiaries are not insured by the Canada Deposit Insurance Corporation. IRS CIRCULAR 230 NOTICE: To the extent that this message or any attachment concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law. For more information about this notice, see http://www.northerntrust.com/circular230.http://www.northerntrust.com/circular230