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Euroclear Interconnecting the CSD

Euroclear Interconnecting the CSD. Presentation at AMEDA Marrakech, 21 October 2009 By Bernard Ferran. Agenda. Presentation of Euroclear Group Focus on Euroclear Bank To deliver a Domestic Market for Europe Target 2- Securities Link Up Markets Connecting the CSD to Euroclear Bank. 2.

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Euroclear Interconnecting the CSD

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  1. Euroclear Interconnecting the CSD Presentation at AMEDA Marrakech, 21 October 2009 By Bernard Ferran

  2. Agenda Presentation of Euroclear Group Focus on Euroclear Bank To deliver a Domestic Market for Europe Target 2- Securities Link Up Markets Connecting the CSD to Euroclear Bank 2

  3. Euroclear groupOwnership structure 3 * NCSD Holding

  4. Euroclear groupKey Figures 4

  5. Euroclear serves clients in their own language across time zones Euroclear group In the world… Representative office New York, USA EMXCoHertfordshire, United Kingdom Euroclear UK & Ireland XtrakterLondon, United Kingdom Euroclear FinlandHelsinki, Finland Euroclear SwedenStockholm, Sweden Representative office Frankfurt, Germany Representative office Tokyo, Japan Euroclear NederlandAmsterdam, The Netherlands Representative office Beijing, China Euroclear Bank Euroclear Belgium Brussels, Belgium Euroclear Bank Branch Hong Kong, China Representative office Singapore, Singapore Euroclear FranceParis, France 5

  6. Euroclear GroupReduces overall cost and risk for the market Risk STP Risks mitigation through Industry with large economies of scale • Standardisation • Central Counter-Party - Harmonisation - Automation Unit Costs Scale Euroclear is an infrastructure services provider for commoditised post-trading services, aiming proactively at facilitating trading and post-trading in particular by way of risk and cost reductions in the market, including through cost efficiency measures and consolidation 6

  7. Euroclear Group Today • More than 50% of foreign holdingsin European Government bonds • 869 European Participants • 576 non-European Participants • More than 60% of total Germanbond settlement • 22 European markets • 18 non-European markets • Approximately EUR 250 bn cross-market, cross-instrument triparty collateral • More than 400,000 bonds,equities and funds • Close to 85% turnover market share vis-à-vis Clearstream 7 ST008

  8. Agenda Presentation of Euroclear Group Focus on Euroclear Bank To deliver a Domestic Market for Europe Target 2- Securities Link Up Markets Connecting the CSD to Euroclear Bank 8

  9. Focus on Euroclear Bank Features • User-governed • Belgian incorporated bank • Supervised by: • Belgian Banking and Finance Commission (“CBFA”) • National Bank of Belgium • EUR 2 billion of total shareholder’s equity • 4 times the BIS regulatory capital requirement • Strong financial ratios • Superior credit rating : AA+ (S&P, Fitch) 9

  10. Focus on Euroclear Bank Total: 1332 clients North America Japan 11.4% 5.2% Latin America 4.8% Asia 13.6% Africa 0.9% Europe Middle East 44.2% 4% UK 15.9% 10 ST009

  11. Focus on Euroclear BankFull services offered 11

  12. Focus on Euroclear BankYour direct access to markets • 40 major debt markets • Argentina, Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Nasdaq Dubai, Finland, France, Germany, Greece, Hungary, Hong Kong, Indonesia, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Malaysia, Mexico, The Netherlands, The Philippines, New Zealand, Norway, Portugal, Romania,Russia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Thailand, U.K., U.S. • 30 major equity markets • Argentina, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Hong Kong, Ireland, Israel, Italy, Japan, Luxembourg, Malaysia, Mexico, Nasdaq Dubai, The Netherlands, Norway, Portugal, Singapore, Slovakia, Spain, Sweden, Switzerland, U.K., U.S. • 40,000 mutual and hedge funds 12

  13. Agenda Presentation of Euroclear Group Focus on Euroclear Bank To deliver a Domestic Market for Europe Target 2- Securities Link Up Markets Connecting the CSD to Euroclear Bank 13

  14. Domestic Market for EuropeEuropean trading, clearing and settlement still very fragmented 14

  15. Domestic Market for EuropeThe answer of Euroclear Group 15

  16. SPC SPCMSPTM SSE ESES Completion rate 100% 100% 73% 19% Domestic Market for EuropeThe implementation of the Single Platform is progressing well       • Single Settlement Engine with technical netting • Common Communication Infrastructure providing a single entry point with ISO SMPG compliant messaging and harmonised user screens • Common Custody Platform with timely and accurate information on corporate actions, real-time credit of income proceeds, and consolidated reporting • Harmonised lifecycle management to allow internalisation of settlement across group markets • Group collateral management with single pool • Central bank money settlement with demand driven auto-collateralisation • Further service enhancements and standardisation across custody and settlement services 16

  17. Domestic Market for Europe Delivering the building blocks of single platform... Communication Infrastructure Collateral Management Service Enhancements Benefits of full Single Platform Group account structure               Transaction management Pooling of assets ISO messages Harmonised settlement instruction lifecycle Interoperability between full/domestic Harmonised user screens Matching at party level Dual network providers Access to central bank liquidity Internalisation of full & domestic settlement Improved interoperability with group markets Synchronous validation Group billing Harmonised validation and matching Partialling and splitting Dedicated Liquidity Model Dedicated liquidity Demand-driven auto-collateralisation 17

  18. Domestic Market for EuropeTimelines 18

  19. Agenda Presentation of Euroclear Group Focus on Euroclear Bank To deliver a Domestic Market for Europe Target 2- Securities Link Up Markets Connecting the CSD to Euroclear Bank 19

  20. TARGET2 - SecuritiesScope of proposal In July 2006, ECB announced that it was evaluating opportunities to provide efficient settlement services for securities transactions in central bank money on a single platform (TARGET2-Securities or “T2S”) In July 2008, ECB Governing Council decided to launch T2S (after intense consultation period on business requirements) T2S deals with settlement in central bank money only, no custody or asset servicing, no issuer services, no settlement in commercial bank money (these services remain with the (I)CSDs) Open to euro and non-euro zone currencies Implementation around 2013/2014 20

  21. TARGET2 - SecuritiesWhat is it? “ A technical platform to support CSDs in providing core, borderless and central settlement services” “ The objective is to achieve harmonised and commoditised DVP settlement in central bank money in euros (and possibly other currencies) in substantially all securities in Europe” “Users need only open a single account with a single CSD to settle any transactions in securities in T2S with any participant” “ T2S … will be operated on the Target2’s cash platform to exploit synergies with T2 to the fullest extent possible” ECB, December 2007 21

  22. TARGET2 - SecuritiesChanges implied CSDs can offer a single access to T2S for settlement but lack appropriate and cost/risk effective asset servicing capacity for foreign securities T2S addresses settlement of Euro-zone securities bringing the benefits of: • Harmonisation of settlement • Further interoperability between markets • Pooling of liquidity via T2 But will require appropriate asset servicing solutions, coping with: • split between asset servicing and settlement, • lack of harmonisation of CA and tax which require market proximity, links with local intermediaries • remaining market specifics settlement features, • credit and liquidity needs driven by an RTGS system 22

  23. TARGET2 - Securities Clients’ requirements Clients will reassess the way to access European markets Choices will vary across client profiles, markets and product segments and will be driven by: Settlement efficiency Liquidity Cost Deadlines Required service level Asset optimisation (credit, collateral and liquidity) 23

  24. TARGET2 - Securities Euroclear to address different clients’ needs … CCI 24

  25. TARGET2 - Securities ... supported by Single Platform developments 25

  26. Agenda Presentation of Euroclear Group Focus on Euroclear Bank To deliver a Domestic Market for Europe Target 2- Securities Link Up Markets Connecting the CSD to Euroclear Bank 26

  27. Link Up Markets 27

  28. Link Up Markets Example 28

  29. Agenda Presentation of Euroclear Group Focus on Euroclear Bank To deliver a Domestic Market for Europe Target 2- Securities Link Up Markets Connecting the CSD to Euroclear Bank 29

  30. Connecting the CSD to Euroclear BankAccess to local markets Clients / Investors Clients Clients / Investors Clients Clients / Investors Clients Global Global Global Global Global Global custodians Custodians Custodians custodians Custodians custodians Local agent Local agent Local agent Local agent Local agent Local agent Partial or Full support Partial or Full support CSD CSD CSD CSD CSD CSD Flexibility per market 30

  31. Connecting the CSD to Euroclear BankAccess to local markets Clients / investors Clients Clients / investors Clients CSD CSD CSD CSD Euroclear Bank(single account) 40 markets Issuing CSD CSD CSD Flexibility per market 31

  32. Connecting the CSD to Euroclear BankWhat can Euroclear Bank offer you ? Full services Settlement (DvP or FoP), asset servicing, tax, collateral management, Lending & Borrowing, Forex) Link to 40 markets Direct to CSD or via local agents Proven track records 19 CSD connected to us Midclear, Takasbank, MCDR, Nasdaq Dubai, SD Indeval, Caja de Valores, Monte Titoli, KPDW, Austraclear, NDC, LCSD, KSD, TDCC, Euroclear Belgium, Euroclear France, Euroclear UK&Ireland, Euroclear Sweden, Euroclear Finland, Euroclear Nederlands, More to join from Latin America, Middle East/Africa, CIS, South Europe and Asia 32

  33. Connecting the CSD to Euroclear BankWhat can Euroclear Bank offer you ? Example of full in-sourcing Euroclear Bank acts as the Irish CSD for bonds Attractive Pricing for a full services Strong in Eurobonds, D.R., European Equities and all Fixed-income markets, Mutual Funds Recognises the economy of scale Partners of Euroclear Bank Smaller/some local clients are rerouted to their CSD which offer a domestic & international services Training/education, advisory on how to best operate outside of your home market Servicing the multi-listed purposes 33

  34. Connecting the CSD to Euroclear BankWhy you should connect to Euroclear Bank ? Expand your area of expertise by offering, both Domestic and International Diversify your source of revenues, maximise your existing infrastructure Take advantage of the Euroclear Bank’s 40 years of experience Times are changing, you need to act now to seize the opportunities Thank you 34

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