Cross-Border Panel Discussion

ACSDA Leadership Forum

Lisa Argento, International

Cecilia Humphrey, Americas Representative

October 10, 2007

2

Global Factors Are Transforming Markets Global Factors Are Transforming Markets

• Rapid Advances in Technology Enabling Ease of Access, Driving Volumes

• Emergence of New Growth Markets

• Complex Trading Strategies

• Explosion of Financial Instruments

• Global Competition for Risk-Managed Returns

• Rapid Advances in Technology Enabling Ease of Access, Driving Volumes

• Emergence of New Growth Markets

• Complex Trading Strategies

• Explosion of Financial Instruments

• Global Competition for Risk-Managed Returns

3

Today, Investors Are Demanding GlobalToday, Investors Are Demanding Global

…despite diverse regulatory structures, taxes, laws, accounting

practices, complicated by culture, currency and time zones

4

Today’s Markets Are ReshapingToday’s Markets Are Reshaping

• Cross-border Exchange Mergers

• For-profit and Demutualized Exchanges

• Consolidation and Mergers in the Market Infrastructures Sector

• Exchanges Buying Stakes in Other Markets

• Cross-listed Issues and Indices

• Cash Markets Growth Dwarfed by Futures, Derivatives, Options

• Rise of Alternative Trading Platforms

• Cross-border Exchange Mergers

• For-profit and Demutualized Exchanges

• Consolidation and Mergers in the Market Infrastructures Sector

• Exchanges Buying Stakes in Other Markets

• Cross-listed Issues and Indices

• Cash Markets Growth Dwarfed by Futures, Derivatives, Options

• Rise of Alternative Trading Platforms

5

Transformed Exchange OwnershipTransformed Exchange Ownership

6

EuroCCP & Turquoise EuroCCP & Turquoise

• Turquoise – Consortium of Major Financial Institutions Launching New Pan-European Trading Platform

• DTCC’s EuroCCP Subsidiary Selected to Provide a Clearing & Settlement Solution for Turquoise

• Turquoise – Consortium of Major Financial Institutions Launching New Pan-European Trading Platform

• DTCC’s EuroCCP Subsidiary Selected to Provide a Clearing & Settlement Solution for Turquoise

7

MOUs – Cooperation & CollaborationMOUs – Cooperation & Collaboration

• Signing “Memoranda of Understanding” with Asian Infrastructures:

− Taiwan Securities Central Depository (TSCD) - August 2003

− Japan Securities Depository Center, Inc. (JASDEC) - August 2003

− Korea Securities Depository (KSD) - April 2004

− ChinaBond (CDC) – December 2006

− ChinaClear (SD&C) –June 2007

− National Securities Depository Ltd., India – June 2007

− Central Depository Services of India Ltd -- June 2007

− Pakistan Central Depository (CDC) –July 2007

• Signing “Memoranda of Understanding” with Asian Infrastructures:

− Taiwan Securities Central Depository (TSCD) - August 2003

− Japan Securities Depository Center, Inc. (JASDEC) - August 2003

− Korea Securities Depository (KSD) - April 2004

− ChinaBond (CDC) – December 2006

− ChinaClear (SD&C) –June 2007

− National Securities Depository Ltd., India – June 2007

− Central Depository Services of India Ltd -- June 2007

− Pakistan Central Depository (CDC) –July 2007

8

Global Conferences & MeetingsGlobal Conferences & Meetings

• Active participation in many global organizations:

– ACSDA

– ISSA, SIFMA Cross-Border

– Global Standards Groups – ISITC, SMPG

– CSD9, Korea, April 2007

– Asia-Pacific CSD Group (ACG), Beijing, September 2007

– Sibos, Boston – October 1- 5, 2007

– ACSDA, CCP12, ISITC & SMPG Meetings in Boston

• Active participation in many global organizations:

– ACSDA

– ISSA, SIFMA Cross-Border

– Global Standards Groups – ISITC, SMPG

– CSD9, Korea, April 2007

– Asia-Pacific CSD Group (ACG), Beijing, September 2007

– Sibos, Boston – October 1- 5, 2007

– ACSDA, CCP12, ISITC & SMPG Meetings in Boston

9

CSD LinkagesCSD Linkages

Cross-Border Collateral Pledges

Custody and Book-Entry Deliveries

Clearance and Settlement vs. PaymentClearance and Settlement vs. Payment

Central Counterparty Guarantee LinksCentral Counterparty Guarantee Links

10

Why Consider Linking?Why Consider Linking?

Promote global markets and issuance by providing other markets with US local support for their trading of US issues

Similarly, gain support for international issues from their local infrastructures.

Promote best practices and establish global standards for settlement

Link messaging should be based on ISO standards “Link eligible” securities expanded as neededJointly address inefficiencies relevant to cross-border transactions or asset servicing

Overall goal: Enable participants to process increased cross-border transaction volumes at lower cost and risk levels, and maximize participants’ capital effectiveness

11

Current CSD Links – Clearing, Settlement and CustodyCurrent CSD Links – Clearing, Settlement and Custody

Canadian Depository For Canadian Depository For Securities account, with Securities account, with full DVP and clearing.full DVP and clearing.

12

Clearstream Banking Frankfurt (Germany)

Central Depository Pte Ltd (Singapore)

Cavali (Peru)

Caja de Valores (Argentina)

CRESTCo (UK), now Euroclear UK

Necigef (Euroclear Nederland)

Hong Kong Securities Clearing Company

Tel Aviv Stock Exchange Clearing House (Israel)

Monte Titoli (Italy)

JASDEC (Japan)

Current CSD Links into DTC – Custody and Book-entry DeliveryCurrent CSD Links into DTC – Custody and Book-entry Delivery

13

Agent Banks

Indirect Links into DTCIndirect Links into DTC

14

Current CSD Links into DTC- Pledgee AccountsCurrent CSD Links into DTC- Pledgee Accounts

Canadian Derivatives Clearing Canadian Derivatives Clearing Corporation Corporation

CBLC BrazilCBLC Brazil

15

Current DTC Links into CSDsCurrent DTC Links into CSDs

- Canadian Depository - Canadian Depository for Securities for Securities

- Clearstream Frankfurt- Clearstream Frankfurt

- SIS SegaInterSettle- SIS SegaInterSettle

- Canadian Depository - Canadian Depository for Securities for Securities

- Clearstream Frankfurt- Clearstream Frankfurt

- SIS SegaInterSettle- SIS SegaInterSettle

16

DTC CSD

CSD Participant CSD Participant

DTC Participant DTC Participant

SecuritiesDelivery

Payment Arrangement

DTC’s Current CSD LinksDTC’s Current CSD Links

17

ACSDA Cross Border Links CommitteeACSDA Cross Border Links Committee

Arrangements for knowledge sharing and implementation of technology

Develop linkages with growing markets to strengthen the markets for foreign investment.

Establish global standards and capability development

Settlement Advisors for Ibero-America Stock Exchange Federation Market Links Project

Arrangements for knowledge sharing and implementation of technology

Develop linkages with growing markets to strengthen the markets for foreign investment.

Establish global standards and capability development

Settlement Advisors for Ibero-America Stock Exchange Federation Market Links Project

18