Société Générale Securities Services Egypt

1. Société Générale Securities ServicesEgypt • Custodians – CSDs: working together

2. POST-TRADING SERVICES An industry in the shadow • Plumbing and Finance • Ironically post-trading services are called the “plumbing of the building”. • Provides the infrastructure for the financial markets to operate smoothly & effectively • A well regulated and effective clearing and settlement system brings all forces working together for the ultimate goal: • the service of the end-client (retail investor / broker-dealer / investment bank, etc) P. 1

3. THE TWO MAIN ACTORS Similar but… • Securities Depository Central Securities Depository (CSD) is an organization • holding securities on behalf of issuers (safekeeping) and offering notary functions, typically in a dematerialized environment, • that enables book entry transfers of securities positions (settlements). • Many CSD’s also carry-out pre-settlement operations (clearing). • Finally CSD’s offer corporate actions services to participants, issuers and occasionally to end-investors (Investor CSDs). • Custodian Financial Institution with main goal to • protect and safeguard the assets of its clients. • Within its main responsibilities are clearing & settlement of clients’ transactions, • safekeeping of assets, • handling of corporate actions, collection of income. • When the same bank holds assets for their clients in many countries / markets then this institution can be considered as Global Custodian. P. 2

4. THE TWO MAIN ACTORS …so different • CSDs • Clientele basis: participants to the CSDs. • Typically local brokers, custodian banks and local issuer companies • Monopoly / Centralized Functions • Strict one-size procedures for all participants • Regulatory Authority • Non-banking institution • Custodians • Clientele basis: Broker-Dealers, Mutual Funds, Insurance Companies, Investment Companies, Global Custodians, … • Strict selection procedures • Tailor-made solutions depending on client’s needs • Heavily regulated & audited • Banking Status P. 3

5. Clearing and Settlement Registration of issues Corporate Actions Treatment Securities Lending & Borrowing Services to end-investors Linkages with other CSD’s Services to Issuers Administration of market risk Trustee (Occasionally) LET US GO DEEPER! CSDs P. 4

6. LET US GO DEEPER! Custodians • Trustee Services • Investments Control • Regulatory Controls • NAV checking • Fund Distribution Services • Central/local or sub TA services • Paying agent services • Transfer Agent Services • Liquidity Services • Securities Lending and Borrowing • Cash Reinvestment • Intraday Liquidity • Foreign Exchange • Collateral management services • Trade / Execution Services • Clearing & Settlement Services • Clearing Services • Settlement Services • Margin Calls • Custody Services • Global Custody • Corporate Actions Treatment • Tax Services • Ad-hoc Cases • Tailor Made Reporting • Distinct services • Outsourcing services • White label services • Valuation services (e.g. OTC derivatives) One custodian settling in many domestic markets P. 5

7. “TOGETHER” CSDs Service Portrait Service to participants Service to issuers • Each Actor plays a discrete role in the market • A strong interconnection that combined, serves the investment community • vertical and horizontal array of services offered • efficient mitigation of Risk • synchronization between business & regulatory actors • Post trading services reach end-clients through the mediation of the two key actors Service to Institutionals Service to end clients Custodians P. 6

8. COMPOSING THE PUZZLE CSDs - Custodians F/X Services Global Custody Services Reporting Participant Level Reporting, Client Level Linkages with other CSDs Tax Services Client Level Corporate Actions, Client Level Corporate Actions, Issuers level Cash Management Client Level Treasury Services Client Level Settlement Participant Level Clearing participant Level Risk Management Participant Level Risk monitoring per Client P. 7

9. COMPOSING THE PUZZLE The Classical landscape Reporting Participant Level Corporate Actions Issuers level Reporting, Client Level Corporate Actions, Participants Level Corporate Actions, Client Level Tax Services Client Level Cash Management Client Level Clearing Settlement Participant Level Clearing & Settlement Client Level Risk monitoring Client level Risk Management Participant Level Treasury Services Client Level CSDs Custodians P. 8

10. COMPOSING THE PUZZLE The enhanced landscape Reporting Participant Level Introduction of new products / best practices Corporate Actions Issuers level Reporting, Client Level Enhanced IT Infrastructure Corporate Actions, Participants Level Corporate Actions, Client Level Lobbying Efforts Transfer of Knowledge and know-how Tax Services Client Level Cash Management Client Level Clearing Settlement Participant Level Increase Business innovation Clearing & Settlement Client Level Visibility of domestic market Risk monitoring Client level Homogeny across Global Markets Single window for many markets Risk Management Participant Level Treasury Services Client Level CSDs Custodians Custodians’ plus P. 9

11. COMPOSING THE PUZZLE The overall market effect Reporting Participant Level Introduction of new products Corporate Actions Issuers level Reporting, Client Level Enhanced IT Infrastructure Automation of Corporate Actions Important side market effects: new IPOs Corporate Actions, Participants Level Foreign Indirect Investments / liquidity Corporate Actions, Client Level Market liberalization Transfer of Knowledge and know-how Visibility of domestic market Lobbying Efforts Tax Services Client Level Increase Business innovation Cash Management Client Level Homogeny across Global Markets Clearing Settlement Participant Level Clearing & Settlement Client Level Automated Linkages with CSDs STP Processes Standardization in market messaging Risk Mitigation Risk monitoring Client level Introduction of best practices Single window for many markets Cost Efficiency Risk Management Participant Level Treasury Services Client Level Operational Efficiency CSDs Custodians Custodians’ plus Market Effect P. 11

12. WORKING TOGETHER influencing decisions • Emerging markets primarily: GCs may use their lobbying power to trigger market developments • Turnaround • Auto-repo capabilities • Derivative products • Novation techniques • Swift reporting services P. 12

13. WORKING TOGETHER Looking ahead • It is vital for the close collaboration between the two main actors of the post-trading environment. With cooperative effort they need to: • Resolve any obstacle in the securities services industry • Undertake public initiatives to reduce cost for end-investors • Increase the efficiency for domestic settlement • Promote new products and post-trading mechanisms • Under our view CSDs • Should perform centralized clearance / settlement / notary function, encompassing the role of the core market infrastructure, while Custodians • should actively represent the market forces that thrive competition P. 13