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New generation of processing environment

Clearstream's new generation processing environment offers a functional solution for internal settlement, ensuring seamless interoperability and maximizing control of cash and securities throughout the full lifecycle. This optimized settlement infrastructure provides real-time processing, validation, matching, and reporting capabilities, resulting in improved settlement efficiency and reduced queuing times.

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New generation of processing environment

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  1. New generation of processing environment October 2008 Jan Willems

  2. Agenda Requirements Functional solution Internal settlement Interoperability Summary

  3. Market developments drive service objectives for new generation lifecycle • with quick time to market • in partnership with the best local providers • avoiding migrationcost for the market • Friction-free service throughoutfull lifecycle • Maximised control of cash and securities at any time • Seamless interoperability toavoid fragmentation of liquidity • Full integration of securities financing and asset servicing

  4. Agenda Requirements Functional solution Internal settlement Interoperability Summary

  5. Clearstream’s existing processing environment • Previous settlement engine was designed and deployed to achieve scale and optimisation • Quality was evidenced in its night time efficiency, processing over 90% of the volume • The old 15 batch daytime deployment leveraged our competence in optimisation • Whilst delivering optimal efficiency, it reached its limits to meet evolving customer requirements • Queuing times for feedback of internal, bridge and external settlement • Suboptimal deadlines

  6. The solution: proven settlement infrastructure with strong optimisation functionalities… • The full set of settlement optimisation functionalityis working in real-time from 04:30 to 18:00 CET

  7. …combined with end-to-end real-time instruction life cycle Real-time processing Settlement Validation Matching Provisioning Reporting • End-to-End fully ISO 15002 • Instruction validation • For internal instructions • For domestic instructions* • Real-time feedback on best matching allegement** • 30 matching exchanges for Bridge instructions • Release for provisioning during settlement window • 3 night-time processing (NTP) batches • Optimised real-time daytime settlement processing from 04:30 to 18:00 CET • Customer query and SWIFT status on settled and pending transactions • Cash balances and anticipated net balance projections • Credit usage and collateral availability report Input ISO 15022 Output ISO15022 * where the market infrastructure offers pre-matching ** for markets with binding matching

  8. Why do we call it a new generation of processing environment and not just a settlement engine? Asset servicing Treasury & securities financing Optimised real-time lifecycle Domestic market and bridge interoperability Internal settlement …because life cycle performance drives the overall service portfolio

  9. Agenda Market trends and requirements Functional solution Internal settlement Interoperability Summary

  10. Unique combination of end-to-end real-time life cycle and optimisation deliver tangible benefits Internal settlement • Extended daytime settlement from 4:30 to 18:00 CET in real-time and without any bottlenecks • 5 minute turnaround for internal transactions • Accelerated settlement without queuing times • Improved settlement efficiency thanks to earlier feedback and better fails management • Higher trading velocity supported by the same assets • Increased Speed • Permanent Optimisation • Greater Efficiency

  11. Agenda Market trends and requirements Functional solution Internal settlement Interoperability Summary

  12. Local agent Local agent Local agent CSD CSD CSD All benefits of using local agents combined with ability to settle in multiple markets worldwide through single window Interoperability Investor /Intermediary Value-added services Clearstream • Single point for funding • Single point for control 30 min turnaround time* Deadline objective:15 min prior tolocal market deadline * where local market infrastructure is real-time

  13. Settlement deadlines in core European markets converging towards objective during H2 2008 Interoperability In addition to the above markets, we are improving our settlement deadlines in 27 other markets and our cash deadlines for 26 currencies. * for against payment transactions only, time in CET

  14. The bridge has seen radical improvements in recent years Interoperability Input deadline Bridge instructions, processing for value SD 20:30 Input deadlineOptional Bridgesettlement (DVP) 15:00 Input deadline Mandatory Bridgesettlement13:00 Input deadlineOptional (FOP)16:00 Mandatory Settlement period OptionalSettlement period Night-time processing Real-time day-time processing (04:30-18:00) SD-1 SD Clearstream Banking 22:00 01:00 04:00 8 settlement exchanges between 08:00 and 16:00 14 settlement exchanges between 08:00 and 17:40 24 settlement exchanges between 06:00 and 18:00 Euroclear Bank 23:30 02:30 05:00 2003 2004-2006 2007 2008 * Input deadline times expressed in CET

  15. Continuous improvement of bridge interoperability - new milestone since July 2008 Interoperability Past Since July 2008 Mandatoryinstructiondeadline • 12:30 • 13:00Compared to internal deadline at EB of 13:30 and CBL of 14:00 Optionalinstructiondeadline • 14:45 • 15:00(+ FOP deadline 16:00) Number ofmatchingexchanges per day • 20 • 30 (almost every 15 minutes throughout day) Number ofsettlementexchanges per day • 10 per ICSD • 15 per ICSD

  16. The new Bridge: Changing your perception Interoperability • Daytime Bridge : an effective infrastructure for secondary market settlement • Settlement efficiency rates over bridge are now equal to internal transactions • Quality of ICSD settlement engines and number of instructions exchanges ensures that the most complex chains of transactions are always resolved • To ensure that the Bridge is sufficiently robust to support evolving market needs, we need to maintain the pace of progress • Joint effort with Euroclear to make continuous improvements to the infrastructure so we eliminate all bottlenecks • Push for full interoperability Future aim to maximise same-day financing and settlement possibilities and to introduce interoperability between the triparty repo systems of the ICSDs

  17. Agenda Market trends and requirements Functional solution Internal settlement Interoperability Summary

  18. Tangible benefits for you • Lifecycle real-time from end-to-end (from instruction validation to reporting) without any bottlenecks • Strong benefits for you through the integration of real-time processing and asset optimisation throughout the day time settlement period • Maximised control and availability of cash and securities at any point of time, supporting greater level of trading activity • Enhanced settlement efficiency • Greater opportunity to re-use settlement results • Less concentration of credit and collateral use • Real-time interaction with securities financing, including substitution and auto-assign

  19. The best model for interoperability, only limited by external factors but not by us • All the benefits of using a local agent combined with the ability to settle in multiple markets worldwide through a single window • Significant service level improvements for core markets in partnership with our domestic providers • New processing infrastructure is ready for real-time, message-based bridge Solution is available now, at no migration cost andwithout any interface and processing changes

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