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BRAZILIAN CLEARING AND DEPOSITORY CORPORATION

CBLC. CBLC. October 8, 2007. BRAZILIAN CLEARING AND DEPOSITORY CORPORATION. CLEARING AND SETTLEMENT SERVICES. CBLC. 18.93. 20. 12.07. 18. 16. 14. 8.58. 12. 7.75. Quantity - Nº (million). 10. 8. 6. 4. 2. 0. Number of settled trades – Until July. CBLC IN NUMBERS.

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BRAZILIAN CLEARING AND DEPOSITORY CORPORATION

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  1. CBLC CBLC October 8, 2007 BRAZILIAN CLEARING AND DEPOSITORY CORPORATION CLEARING AND SETTLEMENT SERVICES

  2. CBLC 18.93 20 12.07 18 16 14 8.58 12 7.75 Quantity - Nº (million) 10 8 6 4 2 0 Number of settled trades – Until July CBLC IN NUMBERS Evolution of Securities Settlement Transactions - (USD billion) 450 400 350 $ 232 300 250 Volume - USD (billion) $ 336 $ 159 200 $ 118 150 $ 188 100 $ 121 50 $ 91 0 2004 2005 2006 2007* Financial volume – Until July Financial volume – After July Obs.: Exchange rate from July 31st * Until July 2007

  3. CBLC Novation Clearing Services Settlement Services CSD Settlement CBLC CLEARING AND SETTLEMENT SERVICES Risk Management Services Central Bank Money Settlement

  4. CBLC Novation Clearing Services Settlement Services CSD Settlement CBLC CLEARING AND SETTLEMENT SERVICES Risk Management Services Central Bank Money Settlement

  5. CBLC Real Time CLEARANCE & SETTLEMENT SERVICES STP – STRAIGHT TRHOUGH PROCESSING Trade matching and confirmation are automated. The trades are locked in for settlement to CBLC. Fixed Income Equities Derivatives

  6. CBLC Novation Clearing Services Settlement Services CSD Settlement Risk Management Services CBLC CLEARING AND SETTLEMENT SERVICES Central Bank Money Settlement

  7. CBLC Novation Settlement Services CSD Settlement Clearing Services Risk Management Services CBLC… AS A CENTRAL COUNTERPARTY - CCP Central Bank Money Settlement

  8. CBLC BOVESPA’s Trading Systems CBLC’s Risk Management, Clearing and Depository Services CENTRAL COUNTERPARTY Equities Derivatives Fixed Income Securities Lending • Trading information is captured on a real-time basis and in a STP fashion • All trades are previously collateralized CBLC becames a CCP at this moment STP

  9. CBLC RISK MANAGEMENT SERVICES Special Net Worth CBLC Model Settlement Fund Collateralization Participants Requirements Hybrid model: Collateralization and Settlement Fund

  10. CBLC RISK MANAGEMENT SERVICES DEALING WITH FAILURES DELIVERY PAYMENT • 1st: Securities Lending • 2nd: Buy-in Procedures • 1st: Collaterals posted by the defaulter • 2nd: Settlement Fund • 3rd: Special Net Worth

  11. CBLC 100,000 2,500 USD 1,931 90,000 80,000 2,000 70,000 USD 1,294 60,000 1,500 Quantity volume (USD million) 50,000 93,751 USD 783 40,000 1,000 USD 453 30,000 61,254 20,000 500 30,883 25,968 10,000 0 0 2004 2005 2006 2007* Treated delivery failures - volume (R$) Nº of treated delivery failures SECURITIES LENDING SERVICES - BTC Evolution of the quantity and volume of delivery failures treated by BTC Exchange rate as of July 31st, 2007 * Until July 2007

  12. CBLC Novation Clearing Services Settlement Services CSD Settlement Risk Management Services Central Bank Money Settlement CBLC CLEARING AND SETTLEMENT SERVICES

  13. CBLC Novation Clearing Services CSD Settlement Settlement Services Risk Management Services Central Bank Money Settlement CBLC… AS A SECURITIES SETTLEMENT SYSTEM - SSS

  14. CBLC CLEARANCE & SETTLEMENT SERVICES NET SETTLEMENT • Multilateral netting across different markets and instruments (equities, derivatives and fixed income instruments) • SFI-DVP Model 3 (BIS) SETTLEMENT CYCLE T+3 Equities - Cash T+1 Equities - Derivatives Fixed Income T+0 T+1

  15. CBLC CLEARANCE & SETTLEMENT SERVICES GROSS SETTLEMENT • Public offerings, initial public offerings, privatizations, special services and fixed income instruments • SFI-DVP Model 1 (BIS) SETTLEMENT CYCLE T+0 T+n Equities T+0 Fixed Income

  16. CBLC Sell-side CSD Account Buy-side CSD Account CLEARANCE & SETTLEMENT SERVICES CBLC’s DVP process CBLC Settlement Account at the Central Bank 3 p.m. 10 a.m. CBLC Settlement Account at the CSD S Buy-side Central Bank Account Sell-side Central Bank Account 3:25 p.m.

  17. CBLC • CENTRAL BANK MONEY April 2002 - New Brazilian Payment System (SPB) • Mitigation of Systemic Risk • Compliance with best practices and BIS’s international recommendations • CBLC: one of the SPB’s clearings RELATIONSHIP WITH CENTRAL BANK SPB Central Bank National System Financial Network (XML) STR CBLC Account CBLC

  18. CBLC TRANSFER NETWORK SYSTEM - STR Real Time Gross Transfers Overdrafts not allowed SPB PRINCIPLES RELATIONSHIP WITH CENTRAL BANK CBLC Settlement Account Central Bank Bank X Bank Y

  19. CBLC CLEARANCE & SETTLEMENT SERVICES SPECIAL SERVICES • TESOURO DIRETO • Developed by Brazilian National Treasury in a partnership with CBLC • Enables natural people to acquire Federal Government Bonds directly through the internet • PUBLIC OFFERING SUPPORT SERVICES • Operational support for the IPOs • Centralization of institutional and retail investors allocation process • Gross Settlement Services

  20. CBLC PUBLIC OFFERING SUPPORT SERVICES Public Offering Evolution - Quantity and Volume (USD billion) 52 60 USD 25 46 % 42 50 USD 20 40 118 % USD 15 20 USD (billion) 30 $ 21.0 144 % USD 10 13 20 $ 14.4 USD 5 10 $ 6.6 $ 2.7 0 USD 0 2004 2005 2006 2007* Number Volume Exchange rate as of July 31st, 2007 * Until July 2007

  21. CBLC RAQUEL FERRARI SILVA BEATO Settlement Services Supervisor rbeato@cblc.com.br (55) 11 3233-2181 THANK YOU!

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