AMEDA Leadership Forum Alexandria, 29 January 2009.

AMEDA Leadership Forum

Alexandria, 29 January 2009

State of the Region*State of the Region*

-2-* Plug types in use

Joint Venture partnersJoint Venture partners

Eight leading European CSDs

-3-

Link Up Markets

50 % market share in settlement volumes and 45 % in asset holdings in Europe

-4-

‘Lis

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/ ‘F

inan

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vice

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. 2000 20132007 2009

Improves

efficiency

Improves

efficiency

Facilitates interoperability

Facilitates interoperability

Increases

choice

Increases

choice

Drives

harmonisation

Drives

harmonisation

Link Up MarketsTARGET2-Cash

Code of Conduct

TARGET2- Securities

Removal of Giovannini Barriers

MiFID

Facilitates integration of European financial markets immediately

Answer to changing environment in EuropeAnswer to changing environment in Europe

-5-

Efficiency through interoperabilityEfficiency through interoperability

DIRECT CROSS-BORDER ACCESS via local CSD infrastructure

Link Up Markets

Other CSDs

Single point of access to 7 participating markets

Settlement in Central Bank Money leveraging TARGET2-Cash

Best-in-class CSD services for all asset classes

Reuse of efficient local CSD-infrastructures

Absorbing differences in market standards

Extension of market coverage worldwide

Launch in 1st half 2009

Today

Future

Other CSDs

Converting and enriching dataConverting and enriching data

Link Up Markets infrastructure“CONVERTER”

CSD1 IN

MT543

Data 2Data 1

Data 3

MT543

Data 4

Data 1

Data 2

Data 3

CSD2 OUT

MT543

Data 3

Data 1

Data 2

Data 4

CSD 1 e.g. Investor CSD(sender)

MT543

Data 2Data 1

Data 3

CSD Internal Systems

• Sending CSD may use proprietary format

• CSD may have CSD-specific usage• CSD defines mapping rules• Sending CSD may need to send

additional information for receiving CSD

MT543

Data 3

Data 1

Data 2

Data 4

Mapping RulesMapping Rules

CSD Internal Systems

CSD 2 e.g. Issuer CSD(receiver)

Fo

rma

t Co

nve

rsio

n,

Tra

nsf

orm

atio

n &

E

nric

hm

en

t

CSD1 IN CSD2 OUT

Fo

rma

t Co

nve

rsio

n,

Tra

nsf

orm

atio

n &

E

nric

hm

en

t

ConverterFormat

• Receiving CSD may use proprietary format

• CSD may have CSD-specific usage• CSD defines mapping rules• Receiving CSD free to transform

CSD2OUT for further use by internal systems

-6-

Definition of common format (“converter format”) per message type

Each CSD maps inbound and outbound formats against converter format.

Converter might introduce additional translation logic, e.g. inserting particular attributes specific to the outgoing format

Individual mapping rules not impacted by changes in other markets and addition of new markets

-7-

Link UpMarkets

CSD 6CSD 4

CS

D 3

CSD 5

CSD 1

?

CS

D 7

CSD 2

Domestic client

Domesticformat

Domestic client

Investor CSD:

• Settlement on accounts in each Issuer CSD (omnibus or segregated)

• Handling of corporate actions, income payments and tax services on individual customer accounts

Issuer CSD:

• Settlement on Investor CSD accounts

• Support to Investor CSD for corporate actions, income payments and tax services

• Support to Investor CSD for market specific services

Client:

• Single account relation with Investor CSD

• Use existing systems/interfaces

• Cross-border DvP settlement

• Payment via Target 2 or cash correspondent

An exampleAn example

Domesticformat

Domesticformat

Domesticformat

Drivers for cost reductionDrivers for cost reduction

Features Benefits for market participants

Direct access to 7 markets via one single, familiar gateway

No changes to the current set-up Rationalisation of links into 7 different markets Unbundling of services with significant fee saving

potential* Cross-border settlement fees Safekeeping fees for non-domestic assets

Consolidation of liquidity and custody pools across all participating markets

Increased liquidity pool allowing for greater securities financing and collateral management product usage

Depository consolidation Greater scale and price advantage with preferred CSD gateway

* Pricing at discretion of each CSD -8-

-9-

Common format based on ISO message types

Incentive for conversion towards common format

Introduction of message formats in Greece

Introduction of MT56x in Spain

Decoupling of format interdependencies between markets

Implementation of standardized link agreements between Link Up Markets CSDs based on ECSDA template

As little room as necessary for bilateral agreements

Issuer CSDs deliver consistent service scope and quality to Investor CSDs

Existing service gaps to be closed standalone or with support of partners

Driving harmonisationDriving harmonisation

Message harmonisation

Message harmonisation

Service harmonisation

Service harmonisation

Link harmonisation

Link harmonisation

Business opportunities for CSDsBusiness opportunities for CSDs

-10-

Issuer CSD

Attract domesticsecurities from cross-

border investors

Investor CSD

Provide cross-border services to domestic

investors

CSD

-11-

Business opportunities as an Issuer CSDBusiness opportunities as an Issuer CSD

Become counterparty of foreign Investor CSD

Expansion of customer base

Direct holdings at lower scale

Attract more inflow by providing efficient services

“As close to market as possible”

Upgrade of existing CSD links to full service

Participate in market harmonization efforts

Position yourself as gateway into the region

Own domestic market

Single window into own regional network

Issuer CSD

-12-

Business opportunities as an Investor CSDBusiness opportunities as an Investor CSD

Transform business model to become specialised custodian for outbound business

Diversify services

Generate new revenue stream

Build cross-border capabilities in-house

Streamline existing cross-border business

Direct access to markets at domestic CSD cost

Simplify setup and maintenance of links

Harmonization as a result rather than a pre-requisite

Access 50% of European market via single technical link

Investor CSD

Implementation planImplementation plan

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1st Release Window 2nd Release Window 3rd Release Window

30 Mar 2009 End of Jun 2009 Nov 2009

CBF

OeKB

SIS

VP

Helex

Iberclear

VPS

CSECSDs

Functionality

Launch of common infrastructure with full functionality

SWIFT connectivity

-14-

OutlookOutlook

Current focus

Extend market coverage – in Europe and beyond

Shift focus towards asset servicing

Enhance service scope, potentially in co-operation with non-CSD partners

Leverage infrastructure, e.g. interface to Eurosystem applications

8 markets representing 50% of European securities processing volume

Format conversion for settlement messages

Best-in-class CSD services

Potential future extensions