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Diversifications by CSD in China Progress and Initiatives

Diversifications by CSD in China Progress and Initiatives. Member Presentation for the ACG 14 General Meeting December 3, 2010 Mumbai, India SHEN Bing China Securities Depository and Clearing Co. Ltd. Contents. Diversification on the Rise Rationale behind CSD’s Diversification

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Diversifications by CSD in China Progress and Initiatives

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  1. Diversifications by CSD in China Progress and Initiatives Member Presentation for the ACG 14 General Meeting December 3, 2010 Mumbai, India SHEN Bing China Securities Depository and Clearing Co. Ltd

  2. Contents • Diversification on the Rise • Rationale behind CSD’s Diversification • Progress & Initiatives—SD&C's Perspective • Opportunities and Challenges

  3. Diversifications by CSD are clearly on the rise. Diversification on the rise • DTCC's Services Spectrum • Asset Service • Global Corporate Actions • OTC Derivatives • Wealth Management • Insurance & Retirement • Euroclear Services • EMX Message System • Funds Settlement • Stock Loan data • Asset Servicing • Proxy voting • Securities Lending and Collateral management • NSDL's Value-added Services and other Activities • Lending and Borrowing • Tax information • National Skills Registry

  4. Rationale behind CSD’s Diversification • Incentives for Creating New Market and New Services • A relatively mature market for traditional depository and settlement services • Increasing pressure for lower price and costs • Possible leverage on CSD’s resources and skills • Market Demand and Regulatory Requirement • Diversifying customer needs • Development and innovations of financial products and trading mechanism • Changing regulatory environment

  5. Value proposition is key for successful diversification. Rationale behind CSD’s Diversification • Value for Participants and Customers • High efficiency and service level • Lower cost for market participants • Safety of assets and information

  6. Progress & Initiatives – SD&C's Perspective There are still many diversifying opportunities in a developing market.

  7. Characteristics of SD&C's CSD Services • Fully Dematerialized Securities Book-entry System Providing STP Depository and Settlement Services • A CSD that is highly integrated with trading and clearing systems • A CSD that also Perform Registration Functions

  8. SD&C’s Funds Services • Established in 2003 • Market share of 30% • Potential New Products to Cover

  9. Collateral Management Initiative • Increasingly used Pledge Services • Collateral Management Services

  10. Information & Data Services Initiative • Statistics and Data Services • Notary Services • Securities Industry Data Warehouse • IT Infrastructure Support for the Securities Industry

  11. OTC market Services Initiative • Depository & Registration Services for Equity OTC market • Repository for OTC derivatives

  12. Opportunities and Challenges • Competition & Cooperation along the Value Chain • Strategic Business Case • Regulatory Constraint • Risks Management Mind the gaps!

  13. A Few Questions to be Considered • Does diversification create value for the industry and synergy for CSD’s business? • Does it help CSD to reap benefits from market development? • Does it introduce new risk exposures and how do we monitor and mitigate them? • Does it help the CSD to gain sustainable competitive advantage?

  14. Thank you

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