September 15, 2008 WMS Update BDUG 2008

1. 1 September 15, 2008WMS UpdateBDUG 2008 Wealth Management Services

2. 2 Agenda New Product Offerings Alternative Investment Products Service (AIP) Managed Account Service (MAS) Product Initiatives Mutual Fund Profile Service Standardized Data Reporting (SDR) Transfer Automation 403(b) Information Sharing

3. 3 Wealth Management Services Alternative Investment Products Service (AIP)

4. 4 Alternative Investment Products Service What are Alternative Investments? The term �Alternative Investment� refers to any non-traditional, non � 1940 Act collective asset Hedge Funds Fund of Hedge Funds REITS Private Equities Others

5. 5 Alternative Investment Products Service NSCC is developing a suite of services that will result in a seamless, automated exchange of standardized trade-related account information for alternative investment products The service will: Streamline manual processes from subscription documentation through trade settlement Link broker dealers, fund managers, administrators and custodians through a central network

6. 6 Alternative Investment Products Service Environmental Scan Alternative product usage exploding Generally private, periodically traded and illiquid Registered and unregistered portfolios Periodic offerings, with processing nuances (holdbacks, escrow funding, etc.) Low volumes, high transaction values Multiple inefficiencies in the way this asset class is bought, sold and valued Lack of standardization and automation in information exchange, transaction processing, reporting, valuation and settlement activities

7. 7 Alternative Investment Products Service Customer Challenges Multiple players across organizations need access to the same information Lack of regulation and standardization has resulted in multiple redundant processing strategies within and between organizations Interdependent organizations are not able to share information (e.g., brokers and funds) creating gaps and inefficiencies Back-office staff may not have sufficient experience to keep up with the increasing complexity of security types creating backlogs and delays

8. 8 NSCC�s Solution: AIP

9. 9 Alternative Investment Products Service Product Overview: AIP Features Subscription/Purchase Processing Tender Offer/Redemption Processing Exchange Processing Commissions Processing Activity & Distribution Processing Reporting Position Valuation Activity and Distributions Account Maintenance (ability to edit, modify and audit changes) Workflow (compilation and distribution of sub-account documents)

10. 10 Alternative Investment Products Service Product Benefits - Reduced Operational Costs Streamline multiple connections through a �one-to-many� service that links trading, recordkeeping and settlement partners through a single connection Reduce cycle-time and rework through the use of standard templates, processes and information descriptions (e.g., security profiles) Eliminate time-consuming, paper-based matching and confirmation of trades Increase speed of settlement through information capture and workflow capabilities Aggregate settlement to one or two wire transfers per settlement date

11. 11 Alternative Investment Products Service Product Benefits - Enhanced Risk Management Improve customer privacy using our secure network, enabling information to be protected Enhance investor confidence with detailed and accurate position and valuation reports Increase transparency via end-to-end audit trail of all trade-related activities

12. 12 Alternative Investment Products Service Current Status Business specifications and development of the first phase is complete, second phase planning has begun Major development of core services completed Partner testing in PSE began July 14, 2007 NSCC Rule Filing SR-NSCC-2007-12 was approved on May 2008

13. 13 Wealth Management Services Managed Accounts Service (MAS)

14. 14 Managed Accounts Service What are Managed Accounts? Individual investments accounts offered by financial consultants who provide personalized advisory services Brokers hire asset managers to actively manage the account using an asset-based fee structure Managed accounts combine several services that are designed to meet the investor�s specific needs and goals Services include investment planning, policy development, manager search and selection, portfolio management, performance measurement and trade execution � all wrapped into one comprehensive investment program

15. 15 Managed Accounts Service Obstacles to growth Rigid market structure Multiple connections and manual processes High risk and operational costs Fee compression and shrinking margins No economy of scale for Investment Managers Disincentive for smaller firms to enter business

16. 16 Managed Accounts Service Why Focus on Managed Accounts? Fastest-growing retail product in the financial services industry (18% growth rate) Total AUM = $1.4Trillion 3.0 Million accounts Expected to be a leading beneficiary of the $12 Trillion wealth transfer over next 20 years

17. 17 Managed Accounts Service Current State: Redundant Many to Many

18. 18 Managed Accounts Service What Is It? A central gateway for seamless communication of information required to establish and maintain managed accounts Links all trading parties to one standardized platform through a single connection The service - the first of its kind - automates the flow of data for a wide variety of managed accounts products while reducing errors and operational risks Eliminates paperwork, fax, email

19. 19 Managed Accounts Service Disparate Processes One Standard Message First-of-its-kind service for this industry First-of-its-kind service for this industry

20. 20 Managed Accounts Service Direct connectivity

21. 21 Managed Accounts Service Benefits � Value Proposition Centralized service creates shared cost at industry level Reduces FTEs and processing risk � no human intervention Streamlines connectivity between sponsors and Investment Managers � eliminates barriers to Sponsor platforms Leverages existing infrastructure known for reliability, security and unparalleled client data integrity Sets standard for business continuity New accounts funded in hours vs. weeks Increases operating margins � scalability Creates audit trail

22. 22 Wealth Management Services Current Initiatives

23. 23 Mutual Fund Profile Service Automates the flow of non-transactional information between fund companies and intermediary firms in a centralized system using standardized formats System re-designed in November 2007 to improve data availability and access Three databases�-- Security, Participant and Distribution�-- comprise the repository, which allows participants to exchange accurate and timely information on individual securities, firm and fund member profiles, and projected and actual distribution declarations Participants are able to update their data in a pre-programmed format supported by DTCC WebDirect

24. 24 Mutual Fund Profile Service Database Redesign Objectives Data Dictionary- Standardize data elements Additional fields Required fields (data points) Added edits to assist in ensuring data integrity Eliminate redundant data entry for funds Enhanced reporting and download tools via DTCC WebDirect ~Objectives identified based on consultation with our members~

25. 25 Mutual Fund Profile Service Relational Database Four main levels Management Company Share Class Fund Portfolio Security Issue ID

26. 26 Mutual Fund Profile Service Security Issue Database via DTCC WebDirect Hierarchy Management Transaction Screen Share Class Set Up Fund Portfolio Set Up Data Management Transaction Screen Create Update View Delete

27. 27 Mutual Fund Profile Service Current Initiatives Implement Data Assurance Program Support Fund Disclosure Reform Proposal (Summary Prospectus Data) Support industry electronic document delivery/warehousing efforts

28. 28 Standardized Data Reporting (SDR) What is SDR? An enhancement to Networking that helps fund companies and insurance carriers better monitor trading frequency by investors whose transactions are housed in omnibus and super omnibus accounts Enhances ability to ensure that a fund's market-timing policies are being applied The enhancement supports the operational needs of fund companies and intermediary firms to comply with SEC Rule 22c-2

29. 29 Standardized Data Reporting (SDR)

30. 30 Standardized Data Reporting (SDR) Benefits Centralized Platform Standardized Data Formats Supports XML Messages Information Available at the Detailed or Summary Levels Accompanying Best Practices Guide and User Guide Regular Networking fees apply

31. 31 Transfer Automation Automating Transfers with Mutual Fund Companies Transfers from fund companies to firms Transfers from firms to fund companies Current State Transfers between fund companies and banks and brokers are often processed manually Lengthy process time Dissatisfied customers Transfer of accounts is the #4 compliant received by the SEC Proposed legislation may require cost basis to be passed on all transfers

32. 32 Transfer Automation Solution: Create a Translation Service by leveraging NSCC�s ACATS and Mutual Fund Services to streamline the account transfer process between brokers, banks and mutual fund companies Looks like a ToRA and/or ACATS Fund/SERV transaction to the Fund Looks like an ACATS transaction to Broker/Dealers and Banks

33. 33 Transfer Automation Benefits Single "pipeline" for all transfers Leverages existing systems/files resulting in low development costs Increased level of client satisfaction Increased turnaround time Immobilizes paperwork Reduces costs

34. 34 Transfer Automation Next Steps Receive commitments from broker/dealers, banks and mutual funds Define rules and required agreements Regulatory meetings DTCC development Industry testing/system implementation

35. 35 403(b) Information Sharing New Regulations applicable to the 403(b) marketplace take effect January 1, 2009 and require information sharing amongst vendors (mutual fund companies and insurance carriers) and employers/plans, their aggregators and TPA�s. The information sharing is intended to facilitate supervision by the employer of employee plan activities such as contributions, withdrawals, loans, etc.

36. 36 403(b) Information Sharing Highlights and Missions SPARK Institute approached DTCC to assist them in providing a standardized process to transmit data DTCC process will support IRS requirements for 403(b) information sharing by January 1, 2009 by providing centralized data routing, editing for compliance to industry standard layouts and data security DTCC is working with the SPARK 403(b) task force to define DTCC business rules to the SPARK record formats

37. 37 Wealth Management Services Questions� More Information: Relationship Management: 212.855.8877 www.dtcc.com/products/wealthmgmt/ Membership: 212.855.8877(option 4, sub-option 2, sub-option 2) Customer Service: 888.382.2721(option5, sub-option 5)