Evolution of European Financial Market: Trends & Impact on Payment Systems

1. Romanian Banking Forum 2002 Bucharest, 19 November 2002 The Evolution of the Payment Systems Gianfranco Guidolin, International Business Development

2. European Financial ScenarioMain Drivers New forces are driving the evolution of the European Financial Market: Financial market infrastructure consolidation Introduction of the Euro Economic integration Harmonisation of existing domestic infrastructures

3. European Financial ScenarioEconomic Integration and Introduction of the Euro Euro means: thanks to • price transparency • transaction cost reduction • common rules and legislation • use of standards (IBAN, BIC) Competition Integration

4. European Financial ScenarioFinancial market infrastructure consolidation Consolidation means: • harmonisation • facilitation of cross border transactions • clearing and settlement cost reduction • trading as a commodity • greater competition • efficiency • less fragmentation • clearing and settlement integration • standards

5. European Financial ScenarioSEPA (Single Euro Payment Area) Local Organisational Solutions National Communication Standards Domestic Payment Systems Need for Payment System Harmonisation • Integration of domestic and cross-border payment infrastructures • Same costs for both domestic and pan-European transactions • Reduction of clearing and settlement cycle time • Fair and open access

6. Financial Services Interbanking Companies SECURITY Users Banks Security in the Financial World Security is a common thread throughout the financial world • Strategic approach to security: integrated global solutions instead of single product/service solutions • Co-ordination between physical and IT security • From IT security to business security • Non repudiation ever increasing importance as market dimensions grow SECURITY IS A STRATEGIC ISSUE

7. FINANCIAL MARKET The key framework to support the evolutionary process INNOVATION INTEGRATION Up-to-date, competitive enabling infrastructures: the foundation on which the re-engineering process must be builtensuring efficiency, effectiveness and security

8. Infrastructure Services Application Services Data Base Networking Front End A competitive offering based on innovative, secure and integrated technology SIA: 25 years of expertise Security Since 1977 SIA is the main service provider for Italian financial Institutions, Banks and financial Operators Value and innovation for the financial market

9. Düsseldorf London Frankfurt Amsterdam Basel Paris Tokyo SIAnet New York Lisbon Madrid RUPA Athens The SIA Network The central infrastructure for all financial services with the highest levels of security and reliability: • SIAnet delivers all the financial transactions to national and international members of the financial community • Satellite infrastructure to deliver information to financial markets • Open multi-protocol architecture in optical fibre (wide-band MPLS) • Over 3,600 billion bytes transported with SLA higher than 99,999% in 2001

10. SIA: Security Excellence • First Italian company certified BS7799, Vision 2000 • Charter member of the Global Trust Authority • First Certification Authority recognised by AIPA • SIA designs, develops and manages critical services with a help desk for 24x7x365 guaranteeing high service availability levels Our commitment • SIA Group: • Strategic Partnership: A complete and competitive offering for all security needs

11. Payment systems SIA manages the Italian payment system services: Retail Payment Clearing Subsystem & Wholesale Payment System Exchange Procedures Payment Value Chain Payment Initiation Payment Management Clearing & Settlement Pre-settlement Payment System Data collection Claering & Settlement Guarantees Validation Tickler Pre-settlement Security

12. TARGET EURO1 A B n EBA Indirect Settling Direct Settling Direct Indirect Bank 1 Bank A Bank B Bank 2 STEP2 A recent international successSEPA - EBA (Euro Banking Association) EBA STEP2 is a pan-European answer to banks needs for retail payments: Step2 is aimed at processing high volumes of commercial and retail payments sent to the system through a secure network

13. Markets and Access to Trading Information and Access Markets Trading On Line Order Collection & routing Info collection & distribution Trading Mngt Market access Data dissemination Matching engine Webtrade Italian Stock Exchange Equities, Derivatives, Treasury and Corporate Bonds MTS, EuroMTS, MTS Japan, MID TradeImpact - ATS Global order routing SWIFT ETC Service Provider Financial Info Monitor Trading on-line Trading technology SIA is the leading IT provider for the entire value-chain of the financial markets processes

14. IT outsourcing servicesAn attractive option SIA’s outsourcing offers a reliable approach to addressing the challenges ahead. SIA has already created a Win-Win Relationship with: Monte Titoli TLX eMID Borsa Italiana Euroyard CCG Banca d’Italia Banca Profilo MTS

15. Revenues: € 200 million (+10 %) Net Profit: € 6,4 million (+22 %) Italian clients: over1000 International Clients: over 300 (+ 20%) Infrastructure investments: € 47 million ABE EBA SIA: your reliable partner SIA provides competitive, innovative and secure IT solutions thanks to the right combination of technical expertise, vertical know-how and cost efficiency Figures in 2001 Most recent success SIA chosen by the EBA as the technology partner to build and operate the new pan-European Automated Clearing House for mass payments in Euro www.sia.it

16. The leading IT provider for the financial world