SETTLEMENT

BOLSA DE VALORES NACIONAL, S.A.

GUATEMALA

ACSDA Leadership Forum

Gabriela Escamilla, Deputy Chief Executive Officer

October 8, 2007

Contents

• Current Trade Settlement

• Trade Settlement using a Payments System – LBTR

• Settlement for Book Entry Securities

• Projects

BVNBVN

Current Trade Settlement

BROKER BBROKER BBANKBANK 1 1

CustomerCustomer SEL

PURCHASE OF

A CASHIERS

CHECK

BROKER ABROKER A

PRESENTATION OF CASHIER´SCHECK

T$T$

P$P$

PSPS

TSTSTRSTRS

P$P$

T$T$

PSPS

TSTS

TRSTRS

55

55

CURRENTCURRENT

Total = Available + TransitTotal = Available + TransitTrade Settlement: Funds: 5 - Securities10Trade Settlement: Funds: 5 - Securities10

AVAILABLEAVAILABLE

CURRENTCURRENT

AVAILABLEAVAILABLE

BVN CONFIRMS

THE FUNDS

55

00

1010

10101010

CURRENTCURRENT

AVAILABLEAVAILABLE

CURRENTCURRENT

AVAILABLEAVAILABLE

CHECKREQUESTED BYA STOCKBROKER

55

55

CHECK

00

00

T$ = Third party Account - Funds

P$ = Propietary Account - Funds

PS = Propietary Account - Securities

TS = Third party Account - Securities

TRS = Securities in Transit Account

Current Trade Settlement

Current Trade Settlement

Trade Settlement

Using a Payments System- LBTR

Link with the Payments System - LBTR

• In 2006 a Real Time Gross Settlement System with the Central Bank (LTBR) was implemented

• Towards the end of 2006 settlements of Term Certificates of Deposit issued by the Central Bank and traded at BVN started using such system

• In the short term it is expected that all the securities market transactions will be settled using the LBTR system

LBTR Link

• The LBTR link to BVN’s Electronic Settlement System (SEL) is partial: Currently, funds transfers from LBTR to SEL are manually inputted while the transfer of funds from SEL to LBTR is automatic.

• The following diagram is duplicated for each type of currency used in settling transactions.

BVNBVN

Accounts Structure at LBTR

LBTR

Broker ABroker A

BANK 2BANK 2 BANK 1BANK 1

Broker BBroker B

$$

$$

$$

DepositDepositAccountAccount

DepositDepositAccountAccountSpecial Settlement Special Settlement

AccountAccount

AMOUNTAMOUNTBrokerBrokerAccount (Own or third party)Account (Own or third party)

AMOUNTAMOUNTBrokerBrokerBanKBanK

Payment Instructions Payment Instructions Message whereby a Broker or a customer, in its place and by its own account, Message whereby a Broker or a customer, in its place and by its own account,

instructs a bank participating in the LBTR System so that by charging its instructs a bank participating in the LBTR System so that by charging its account, it will transfer funds pursuant to the information contained in such account, it will transfer funds pursuant to the information contained in such

message. message.

CUSTOMERCUSTOMER

BVNBVN

SEL Accounts Structure

SEL

Broker ABroker ABroker BBroker B

$$

$$ $$

P$P$ P$P$CCFCCF

TRF _ transit funds accountTRF _ transit funds accountP$ – Propietary funds P$ – Propietary funds

account account T$ – third party funds T$ – third party funds

accountaccountPS – Propietary securities PS – Propietary securities

accountaccountTS – third party securities TS – third party securities

accountaccountTRS – in transit securities TRS – in transit securities

accountaccountAS – available securitiesAS – available securities

CCF – account for the consolidation of fundsCCF – account for the consolidation of fundsRB y RA – auxiliary receiving account /brokerRB y RA – auxiliary receiving account /brokerDB y DA – auxiliary delivering account /brokerDB y DA – auxiliary delivering account /broker

RBRB

$$

T$T$T$T$

VV

VV

VV

VV PSPSPSPS

TSTSTSTS

DADADBDB

RARA

VVVVTRS TRSTRS TRS

VVASAS

$$TRFTRF

$$

TRFTRF

VVASAS

BVNBVN

Transfer of Funds from LBTR to SEL

LBTR

Broker ABroker A

BANK 2BANK 2BANK 1BANK 1

Broker BBroker B

P$P$

DepositDepositAccountAccount

Deposit Deposit AccountAccount

Special Settlement Special Settlement AccountAccount

INSTRUCTIONINSTRUCTION

INSTRUCTIONINSTRUCTION

$$

TRASFERTRASFER

T$T$

PSPS

TSTS

DADA

RARA

PSPS

TRSTRS

DBDB

TRSTRS TSTS

T$T$

P$P$RBRB

SEL

5555

55

55

55

TRFTRFTRFTRF

ASAS ASAS

SELLER INITIATES

BVNBVN

Delivery versus Payment Settlement

LBTR

BROKER ABROKER A

BANK 2BANK 2BANK 1BANK 1

BROKER BBROKER B

P$P$

Deposit Deposit AccountAccount

DepositDepositAccountAccount

Special settlementSpecial settlementAccountAccount

T$T$

PSPS

TSTS

DADA

RARA

PSPS

TRSTRS

DBDB

TRSTRS TSTS

T$T$

P$P$RBRB

SEL

55

55

1010

10101010

TRFTRF

ASAS

ASAS

TRFTRF

55

55

55

1010

BVNBVN

Transfer of funds from SEL to LBTR

LBTR

BROKER ABROKER A

BANK 2BANK 2BANK 1BANK 1

BROKER BBROKER B

P$P$

DepositDepositAccountAccount

DepositDepositAccountAccountSpecial SettlementSpecial Settlement

AccountAccount

T$T$

PSPS

TSTS

DADA

RARA

PSPS

TRSTRS

DBDB

TRSTRSTSTS

T$T$

P$P$RBRB

SEL

55

33

55

1010

22

22 33

TRFTRF TRFTRF

ASAS ASAS

Book-Entry Securities Settlement

• The Bolsa de Valores Nacional, based on the Securities Market and Merchandise Law developed the rules, procedures and systems for the issuance, trade and settlement of securities recorded by book-entry.

• Currently, the book-entry issuance is not mandatory.

• The system developed by BVN consists of three registries:– Auxiliary registration by the Issuer (RAE)– General Book-Entry registration (RGAC)– Specific Book-Entry registration (REAC)

• System of private auctions: a service that is offered to issuers who use book-entry

Book-entry

Legislation on Book-Entry

• Issuance of Securities

– Article 54 – Securities that are recorded using the book-entry system are set by virtue of the relevant entry in the issuer’s accounting books. The basis for the accounting entry is the legal instrument authorizing the issue.

– Article 56: The person who is registered in the issuers accounting books shall be assumed to be the legitimate beneficial owner of the securities that are recorded in the relevant book-entries, and that person shall exercise the entitlements which said securities confer.

 

• A register which appears in the issuers accounting, and in which all book-entries are recorded using a chronological order.

• This is an informative register, in such a manner that the issuer cannot insert nor modify the information.

• The issuer that is part of the same system has access to the following detailed information:– Placements– Terms– Maturity– Schedule of payments– Investors

Auxiliary Registration by the Issuer (RAE)

General Book-Entry Registration (RGAC)

• The registration is handled by BVN, in which the balances of the stockbrokers are held.

• The RGAC has the general information of all securities placed by the stockbrokers with separate accounts: one for its own accounts and another one for third parties.

• A registration handled by each separate paying stockbroker, which includes a detailed identification of the beneficial owners in the respective book-entries.

• The stockbroker is the one who inserts the identity of beneficial owner of the securities.

• The ownership and amount inserted in the REAC are fed automatically into the RAE.

Specific Book-Entry Registration

(REAC)

STOCK BROKER

ISSUER

ISSUER’S AUXILIARY REGISTRATION

DEBTS

BVN TRADING SYSTEM

BVN’S CSD

REAC–SECURITIES,

INC.

ISSUE

$.100 MILLION

RGAC

DETAILED RGAC

1. An operation is registered at the Stock Exchange. The Exhange’s electronic system generates a copy of the registry of such operation.

2. The operation is sent to the settlement system.

3. The buying stockbroker designates the account to which the securities shall be credited (Negociations system /Settlement system).

Securities, Inc buys $.3 million from this issue on behalf of its client, John Doe.

SOLD

$.3 MILLION

PENDING

$.47 MILLION

SECURITIES INC, OWN – 0

SECURITIES INC, CLIENTS – $.3 MILLION

4. The buying stockbroker proceeds to deliver the funds.

5. Simultaneously:

• The system affects both the RGAC and the REAC.

• The selling stockbroker receives the funds.

• The RGAC proceeds to print the Certificate of ACquisition.

• The Issuer’s RAE is affected.

JOHN DOE – $.3 MILLION

6. Inmediately, BVN’s CSD will deliver a copy of the Certificate of Acquisition to the buying stockbroker, who shall give it to its client

7. The seller stockbroker delivers the funds to the Issuer

CERTIFICATE OF

ACQUISITION

SOLD$.3 MILLION

(Securities Inc.; John Doe)

PENDING

$.47 MILLION

CERTIFICATE OF ACQUISITION

CERTIFICATE OF ACQUISITION

JOHN DOE – $.3 MILLION

Projects

Projects

Separation of the Central Securities Depository and open it to new shareholders

Registration of Foreign Shares and ETF’s so that they may be traded and settled through the Stock Exchange

Certification of the systems being processed

SETTLEMENT

BOLSA DE VALORES NACIONAL, S.A.

GUATEMALA

ACSDA Leadership Forum

Gabriela Escamilla, Deputy Chief Executive Officer

October 8, 2007