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Emerging Business Models and Alliances: What’s Now and Next in ACSDA CSDs?

Emerging Business Models and Alliances: What’s Now and Next in ACSDA CSDs?. ACSDA 2011 General Assembly Bermuda, Mar. 23, 2011 Presentation by William Aimetti, DTCC. [service name] is an offering of [subsidiary name], a subsidiary of The Depository Trust & Clearing Corporation.

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Emerging Business Models and Alliances: What’s Now and Next in ACSDA CSDs?

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  1. Emerging Business Models and Alliances: What’s Now and Next in ACSDA CSDs? ACSDA 2011 General Assembly Bermuda, Mar. 23, 2011 Presentation by William Aimetti, DTCC [service name] is an offering of [subsidiary name], a subsidiary of The Depository Trust & Clearing Corporation

  2. Emerging Business Models and Alliances: the background • Technology erasing borders and making world’s economies interlinked. • Investors have assumed a more global perspective. • Financial institutions are both leading and following customers across borders. • Domestic or "home market" biases are giving way to opportunities for cross-border investment. • Regional and national markets becoming global markets driven by cross-border capital flows and competition.

  3. Seeing Opportunities in the Infrastructure • Examining ways to leverage technology and expertise together with other markets operators. • Exploring ways to expand product offerings and be responsive to market growth and new products/asset classes. • Looking to take advantage of local market knowledge and focus. • Seeking better and more consistent risk management. • GOAL: share in “critical mass”

  4. Making Opportunities Happen • DTCC continues to look for opportunities to work with other markets through links, MOUs and agreements: • We have 14 Links with other market infrastructures providing depository accounts or pledge facilities with other CSDs, including MERVAL’s newly approved DTC account. • We have 12 MOUs for general cooperation with CSDs throughout the world and are currently planning to sign 2 more. In certain cases, these are progressing to more specific project agreements.

  5. DTC’s International Links • CSDs to strengthen their position as critical links in the global infrastructure. • Non-US investors to hold eligible US securities locally via their own CSD, with custody centralized and serviced for their CSD by DTC. • US participants and investors to pledge eligible US securities abroad via pledgee accounts owned by other CSDs. • Issuers of DTC-eligible securities to economically reach non-US investors. • Enables securities deliveries and receives among US and international brokers, banks and any other members of other linked CSDs. MERVAL

  6. DTCC’s Memoranda of Understanding DTCC’s Memoranda of Understanding DTCC has signed 12 MoUs with market infrastructures since 2003 2003 2004 2005 2006 2007 2008 2009 2010

  7. DTCC and DCV: A Win-Win Approach • In 2010, DTCC and Depósito Central de Valores, S.A. (DCV) agreed to having DTCC make a 10% equity investment in DCV and take a seat on DCV’s Board as a way to • Collaborate on developing broader offerings in Chile and potentially in partnership with others in the ACSDA region • Benefit from DCV’s local market knowledge • Together build new models and proofs of concept for expanding capabilities and reducing risk at lower costs through sharing of DTCC’s scale • Looking for all to be partners in this. .

  8. Progress to date: Business Continuity • Challenge: Strengthen DCV business continuity capacities • Problem: while DCF has its primary data center in Santiago and a secondary technology and data center 500 kilometers away, much of Chile is vulnerable to earthquakes and the devastation they bring. • Response: Back data up over the course of the day on DTCC technology thousands of miles away in North America, so that DCV can re-spool and reboot at any time.

  9. BCP and Disaster Preparedness • 3 Key Objectives we have in common: • Rapid recovery and timely resumption of critical operations following a wide-scale disruption • Rapid recovery and timely resumption of critical operations following the loss or inaccessibility of staff in at least one major operating location • A high-level of confidence, through ongoing use or robust testing, that critical internal and external continuity arrangements are effective and compatible • Regulatory and industry demand for strong business continuity practices and policies

  10. DTCC Data Centers • Multiple operating and level-4 data centers, functioning 24/7 • Data centers capable of extremely rapid market data replication. • Capacity planning for extreme market spikes • Frequent testing and disaster preparedness drills, including mandatory communications testing with customers • Highly resilient, self-healing telecommunications network • Liaison with international, national and state disaster/homeland security organizations

  11. How You and We Would RestoreYour Data, Systems and Operations Your Headquarters Site #2 • Geographically dispersed back-up facilities for both technology and business • Redundant functionality • Responsive data storage systems • Quick recovery time • Resilient communications network and telecom system • Remote command and control Regional Centers Out-of-Region site hosted by DTCC Site #3 You connect here (not in NYC!)

  12. Progress to date: Mutual Funds • Challenge: • Little automation in processing of DCV member brokers’ and pension funds’ investments in offshore funds in Europe. Means: • High costs • Barriers to entry Response: • DCV joins Fund/SERV, the highly efficient fund processing service run by DTCC’s National Securities Clearing Corp • Creates pilot group to sponsor broker/dealers seeking to expand mutual fund market.

  13. Confidential 2011 Wealth Management Services - Offshore Mutual Funds Business Plan Access to Mutual Funds Services DTCC Mutual Fund Service: Fund/SERV Brokers and Banks 40,000 US Funds DTCC Fund/SERV 5,000 Offshore Funds e.g., Luxembourg, Dublin Settlement DTCC 2011: UK and Euro Settlement US Brokers’ and Banks’ Settlement Banks for NSCC/DTC In USA DTCC’s UK/Euro Settlement Bank US Brokers’ and Banks’ UK/Euro Settlement Banks

  14. More Possibilities among ACSDA CSDs • Extend business continuity services to other CSDs in the Americas • Explore other technology cooperation • Extend depository services • Expand pledging and collateral management tools • Collaborate on corporate actions and XBRL • Support your OTC Derivatives and your regulators’ need for information • Bottom line: Promoting best of breed initiatives and partnerships in Americas region through ACSDA

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