8/2/2019 5_der (1)

1/18

How Euroclear manages theinteroperability with thedifferent markets

8/2/2019 5_der (1)

2/18

Agenda

The Euroclear group

Creating a European Domestic Market, an exemple ofcooperation and consolidation among the CSDs of theEuroclear group

Euroclear Banks links with the different markets

8/2/2019 5_der (1)

3/18

Euroclear Group structure

As of Jan 2005

219 User Shareholders Euroclear Plc Sicovam Holding

Euroclear SA/NV

Amsterdam branch

Paris branch

London branch

Euroclear

Nederland

Euroclear

France SA CRESTCo Ltd

Euroclear

Bank SA/NV

8/2/2019 5_der (1)

4/18

Q2 200Turnover

Euroclear BankCRESTCo Euroclear France

tril

0

50

100

200

250

350

150

300

6 months

2002

241.9

2003

256.2

2004

307.1

2005

171.4

61

36.3

74.1

85.4

53

103.5

85.5

52.6

118.1

114.4

60.1

132.6

8/2/2019 5_der (1)

5/18

Value of securities held

Euroclear BankCRESTCo

Euroclear FranceEuroclear Nederland

Q2 200

14.6

tril

0

2

4

6

8

10

12

14

30 June

2002 2003 2004

10.911.9

13.1

2005

0.7

2.2

3.2

4.8

0.7

2.4

3.5

5.35.9

3.8

4.1

2.6

30.8

0.8

6.7

8/2/2019 5_der (1)

6/18

Agenda

The Euroclear group

Creating a European Domestic Market, an exemple ofcooperation and consolidation among the CSDs of theEuroclear group

Euroclear Banks links with the different markets

8/2/2019 5_der (1)

7/18

Consolidation of settlement is necessary to make

European capital markets competitivefor issuers and investors

European capital markets infrastructureThe problem of fragmentation

Settlement is a key component of capital markets efficiency

National markets not a European market

At least one CSD per country

fragmentation has a major impact on efficiency, cost and risk

Both Harmonisation and Consolidation enable efficiency gains,

and reduction of costs and risks

8/2/2019 5_der (1)

8/18

Our vision is full consolidation of markets within

Euroclear Group

Full integration of legacy systems and functionality

Single Settlement Engine

Common User Interface

CRESTEuroclear

France

Euroclear

NetherlandsCIK

Euroclear

Bank

Customer

Domestic Service Full Service

Agent

Central

Banks

&

Paymentsystems

8/2/2019 5_der (1)

9/18

From todays fragmentation towards consolidation

CIK E NL E F CREST E B

Current situation

Positioning & booking

Legal record

Core Processing

Client Communication Interface

Legacy

Country boundary

Step 1 SSE (2006)

CIK E NL E F CREST E B

SSE

ESES-CCIe-RGV - E2A

ESES - SP component

ESES - RGV upgrade

SSE

CIK E NL E F CREST E B

Step 2 ESES (2007)

Step 3 Single Platform(in phases from 2008)

SSE

CIK E NL E F CREST E B

CCI

Single ApplicationPlatform

Legend

8/2/2019 5_der (1)

10/18

ConclusionEuroclears business model meets the

challenges facing the European markets Creating efficiency (e.g. reduce costs) and reduce risks while retaining

choice and competition

Eliminating differences in technologyboth standards and processes

Harmonising market practices and legal/regulatory framework

Offering a settlement model that allows choice of service levels to meet

the needs of all issuers investors, and intermediaries

8/2/2019 5_der (1)

11/18

Agenda

The Euroclear group

Creating a European Domestic Market, an exemple ofcooperation and consolidation among the CSDs of theEuroclear group

Euroclear Banks links with the different markets

8/2/2019 5_der (1)

12/18

Euroclear Banks services

MoneyTransfer

Settlementservices

Custodyservices

Credit and Banking Services

Tri-Partyservices

Lending&

Borrowing

FundSettle

8/2/2019 5_der (1)

13/18

Domestic debtAustria

Belgium

Denmark

Finland

France

Germany

Ireland

Greece

Italy

Luxembourg

theNetherlands

Norway

South Africa

Spain

Portugal

Sweden

the UnitedKingdom

Russia

Switzerland

Australia

Indonesia

Malaysia

thePhilippines

Hong Kong

Thailand

Japan

Singapore

Against paymentFree of payment

Argentina

USA

Canada

Mexico

New Zealand

8/2/2019 5_der (1)

14/18

Equities

Austria

Belgium

Denmark

Finland

France

Germany

Greece

Italy

Ireland

Hong Kong

Malaysia

Singapore

Japan

Norway

Spain

theNetherlands

Portugal

Sweden

Switzerland

Luxembourg

the UnitedKingdom

Argentina

USA

Canada

Mexico

SE Settlement

8/2/2019 5_der (1)

15/18

Borrowers

Lenders

Seller

Purchaser

52 %

10 %

Broker/dealers8 %

Other participants4 %

26 %

No client sector stands by itself

Fixed income

Equities

Derivatives

Activity breakdown by market segment

8/2/2019 5_der (1)

16/18

Accessing new markets

1. Issuance of eurobonds-> acceptance of denomination currency-> acceptance of settlement currency

SETTLEMENT CURRENCIES IN EB DENOMINATION CURRENCIES IN EB

CURRENCY ISO CODE CURRENCY ISO CODE

ARGENTINE PESO ARS UAE DIRHAM AED

AUSTRALIAN DOLLAR AUD BULGARIAN LEV (replaced by BGN) BGL

CANADIAN DOLLAR CAD BULGARIAN NEW LEV BGN

SWISS FRANC CHF BAHRAINI DINAR BHD

CZECH KORUNA CZK BERMUDIAN DOLLAR BMD

DANISH KRONA DKK BRAZILIAN REAL BRL

ESTONIAN KROON EEK BOTSWANA PULA BWP

EURO EUR CHILEAN PESO CLP

BRITISH POUND GBP CHINESE YUAN RENMINBI CNY

HONG KONG DOLLAR HKD COLOMBIAN PESO COP

HUNGARIAN FORINT HUF CYPRUS POUND CYP

CROATIAN KUNA HRK EGYPTIAN POUND EGP

INDONESIAN RUPIAH IDR INDIAN RUPEE INR

ISRAELI NEW SHEKEL ILS KAZAKSTAN TENGE (10/10/2005) KZT

ICELANDIC KRONA ISK KOREAN WON KRW

JAPANESE YEN JPY LEBANESE POUND LBP

KUWAITI DINAR KWD MOROCCAN DIRHAM MAD

LITHUANIAN LITAS LTL MALTESE LIRA MTL

LATVIAN LATS LVL MADEDONIA DENAR (10/10/2005) MKD

MEXICAN NUEVO PESO MXN NICARAGUAN CORDOBA NIO

MALAYSIAN RINGGIT MYR PERUVIAN NUEVO SOL PEN

NORWEGIAN KRONA NOK ROMANIAN LEU (will cease to exist end Dec '06) ROL

NEW ZEALAND DOLLAR NZD RUSSIAN RUBLE (replaced by RUB) RUR

PHILIPPINE PESO PHP RUSSIAN RUBLE (RUB=RUR/1000) RUB

POLISH ZLOTY PLN SAUDI RIYAL SAR

ROMANIAN NEW LEU RON TURKISH LIRA (will cease to exist end Dec '05) TRL

SWEDISH KRONA SEK TAIWAN DOLLAR TWDSINGAPORE DOLLAR SGD UKRANIAN HRYVNIA UAH

SLOVAK KORUNA SKK URUGUAYAN PESO UYU

SLOVENIAN TOLAR SIT VENEZUELIAN BOLIVAR VEB

THAI BAHT THB VANUATU VATU VUV

TURKISH NEW LIRA (TURKISH LIRA as of 01/01/06) TRY CFA FRANC BEAC (Cameroon) XAF

UNITED STATES DOLLAR USD GOLD XAU

SOUTH AFRICAN RAND ZAR SDR INTERNATIONAL MONETRARY FUND XDR

CFA FRANC BCEAO (Sngal, Cte D'ivoire) XOF

Last update: 23 August 2005 ZAMBIAN KWACHA ZMK

2 Access to the national domestic securities markets

8/2/2019 5_der (1)

17/18

2. Access to the national domestic securities marketsMajor determining factors guiding the decision to

service a market

International flows

Operational Risk

Reputation Risk

Liquidity Risk

Legal Risk

Sufficient international demand from international

investors justifying a link

Operational procedure

Service level agreements

Contractual relationship external agents

Choice of agentsdepositories

(settlement + payments, asset servicing)

Free access to the currency

Credit Lines with cash correspondents (settlements +

payments)

Asset protection

Enforceability of contracts

8/2/2019 5_der (1)

18/18