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STP Nirvana?

ACSDA, Panama - February 21 st 2008. STP Nirvana?. John Falk Director Securities Market Infrastructures. The Path to STP. Coexistence Corporate Actions Proxy Voting SWIFT ISSA survey and ……. Payments Payments initiation (5) Payments clearing and settlement (7)

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STP Nirvana?

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  1. ACSDA, Panama - February 21st 2008 STP Nirvana? John Falk Director Securities Market Infrastructures

  2. The Path to STP • Coexistence • Corporate Actions • Proxy Voting • SWIFT ISSA survey • and ……

  3. Payments Payments initiation (5) Payments clearing and settlement (7) Payments Exceptions & Investigations (14) Cash management (3 + 28) Trade services utility messages (50) Invoice Financing Request (3) Investment funds Securities Trade (18) Securities Settlement (11) Reference Data (3) Securities Management (7) Cash Forecast (6) Other securities Pre-trade / Trade messages (44) Investment funds (23) Securities transaction regulatory reporting (4) Proxy voting (8) Foreign exchange and OTC Derivatives Non-Deliverable Forwards (7) Currency Options (4) Generic (4) ISO 20022 (UNIFI) messages 110 messages 139 messages Payments, Cash and Trade Securities, Forex and Derivs 96 UNIFI messages 153 Candidate UNIFI messages

  4. Securities Coexistence RoadmapProposed version DRAFT Subject to SWIFT Board approval

  5. SWIFTStandards Translation Rules MT MX :25: BIC :61:sub 1 :61:sub 5 Country IBAN <IBAN> <BIC> <Country> <Date> <AcctID> <NtryAmt> • Conversion or transformation from a source format to a target format • Defined rules to transform an MT message to its MX equivalent • Vice versa, MX to MT • No enrichment – business functionality will not be added to the FIN message source target Translation Rules

  6. Traffic tripled since 2001 2007 growth > 21% Corporate Actions and SWIFT traffic growth Annual global corporate actions tends to be consistent Source: SWIFT internal data; DTCC

  7. Pre-Decision Processing Post-Decision Processing Record Date Record Date Stock Available (Pre) Notification Instruction Deadline Registration Research Unconditional Ex Date Decision Deadline Acceptance Pari Passu Decision Processing What can go wrong with a corporate action? Host System not Updated No Notification from counterpart Positions not protected Trading shares not available Missed Deadlines Host system(s) not updated/updated incorrectly Incorrect Information Trading shares not owned No Diary Entry Incorrect decision applied Position Taken Late Positions Disagree Courtesy Checkfree & Celent

  8. STaQS for Corporate Actions • Simulation Testing and Qualification System for CA • Tests for Market Practice compliance defined by Securities Market Practice Group (industry driven) • STaQS for Corporate Actions • Addresses biggest community-wide issue: formatting of notifications and compliance to market practice • Improves consistency, boosts STP • Available • SR2007 : end May 2008 • SR2008 : end July 2008

  9. Issuer Agent Issuer Market Data Provider Stock Exchange Proxy Agency Proxy Agency Proxy Agency CSD CSD Prime Broker Registrar/ Transfer Agent Registrar/ Transfer Agent Custodian Custodian ICSD Investment Manager Hedge Funds Pension Funds Insurance Company Broker SWIFTNet Proxy Voting – flows and roles • 8 new MX messages, developed & piloted for 2 years INITIATOR INFORMATION PROVIDER LOCAL MARKET R O L E S P A R T I C I P A N T S Meeting notification & entitlement Confirmation & Results INTERMEDIARY - FACILITATOR Voting process INVESTOR F L O W S Live since December 2007

  10. Q4 07: SWIFT/ISSA Survey to baseline requirements and current capabilities • Q1 08: Summary requirements distributed to all EU CCP and CSDs • Q2 08: Commitments from all CCPs and CSDs in place and ISSA monitoring/reporting begins • Giovannini Deadline - March 2011

  11. And…

  12. SWIFT pricing SWIFT is not expensive! • NO membership fees since July 2007 • Reduced message traffic fees over many years • Lite to be introduced in July 2008 Bring your community onto SWIFT at an affordable price Talk to us!

  13. June 30th - July 2nd2008 Buenos Aires, Argentina http://www.elus2008.com.ar/index.htm

  14. 15-19 September 2008 Vienna, Austria Securities Markets Infrastructures Dinner on 14th & Meeting on 15th

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