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Global Trends in Asset Servicing – Extending Beyond the Traditional Custody Model

Presentation to: Atlantic Connection

Date: July 13, 2011

FOR LIMITED DISTRIBUTION

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Benjamin Johnson, VP, State Street Global Services, Latin America and Caribbean

Speaker

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Agenda

Overview Of The Traditional Custody Model

Market Events And The Impact On Financial Services

The Custody Model - Today

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Overview Of The Traditional Custody Model

• Safekeeping – Maintaining a record of the securities owned.

• Settlement – Processing of trade orders and transmitting payments.

• Asset Servicing – Processing the rights and obligations associated with securities which includes:

– Income Collection

– Corporate Action Notifications

– Tax Withholding and Reclaims

– Proxy Voting

– Statement of Holdings

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Market Events And The Impact On Financial Services

• Global Financial Crisis

• Basel III

• Dodd Frank Wall Street Reform and Consumer Protection Act

• Troubled Asset Relief Program

• Flight to Quality

• Growth of Global Economies

• Countries Enact Pension Reforms

• Large Pool of Institutional Assets Demand Global Solutions

• Increase in Cross Border Investments

• Regulatory Reporting

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Today’s Pressures on Asset Owners and ManagersIn the wake of the financial crisis, institutional investors and investment managers like you face significant new challenges

Institutional Investorsand

Investment Managers

Regulatoryscrutiny

Cost and revenue

pressures

Increasedcomplexity of

investment structure

Marketvolatility

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Asset Owner Requirements in Today’s Environment

Asset Owners Required Solutions

Analytics across all asset and instrument types

Comprehensive reporting and modeling capabilities

Timely and accurate performance and risk metrics

Services to understand complex portfolio

dynamics

Broader compliance coverage

Reduced cost of ownership

Analytics for traditional and alternative investments

Global solutions and presence

Investment Diversification

Liquidity Management

Monitor Increasing Market Volatility

Manage Risk

Keep up with new regulations

Operational Costs Management

Focus on Alpha

Consistent service solution across regions

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The Custody Model - Today

• Safekeeping – Maintaining a record of the securities owned.

• Settlement – Processing of trade orders and transmitting payments.

• Asset Servicing – Processing the rights and obligations associated with securities which includes:

– Income Collection

– Corporate Action Notifications

– Tax Withholding and Reclaims

– Proxy Voting

– Statement of holdings

• Fund Services – Core services for investment portfolios which includes:– Investment Accounting

– Net Asset Valuation

– Performance Measurement

– Compliance Monitoring

– Risk Reporting

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Types of Custodians

• Single Market Custodian – A custodian who provides services in a home or local market to serve domestic customers. Common terms used to refer to this custodian are local custodian, agent bank, sub-custodian.

• Multi-direct Custodian – A custodian who tries to capture cross border business by establishing a presence in multiple markets.

• Global Custodian – A custodian who provides services in all the world’s markets to asset owners regardless of their domicile.

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The Complete Investment Picture

Performance and Analytic Services

Financial and Regulatory Reporting

Compliance Services

Risk Services

Information Delivery

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Delivering Services for Your Entire Portfolio

Analytic Services

PerformanceServices

Compliance Services

Risk Services

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The Role Of A Custodian Has Evolved Into More Than Just The Safekeeping Of Assets

ADDITIONAL SERVICES REQUIRED

• Continuous Linked Settlement

• FX Execution

• Derivatives Processing

• Securities Lending

• Collateral Management

• Financial and Regulatory Reporting

• Transition Management

• Research and Trading

• On-line Applications

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Thank you!

Benjamin Johnson, Vice PresidentState Street Global ServicesLatin America & Caribbeanbmjohnson @statestreet.com(617) 664-9410