The Creation of a Market the Western

The Creation of a Market : the Western European markets experience Maria Ivanova / Andrea S. Tranquillini Presentation to the 2 nd AECSD Conference

Summary Maria Ivanova / Andrea S. Tranquillini Presentation to the 2 nd AECSD Conference 2 Moscow, 5 October 2005

Organisational Structure Clearstream Banking S. A. Luxembourg CBL (ICSD) Maria Ivanova / Andrea S. Tranquillini Presentation to the 2 nd AECSD Conference Clearstream Banking AG Frankfurt CBF (CSD) 3 Moscow, 5 October 2005

Our company Global market coverage 41 markets European coverage Canada USA - Austria - Belgium - Czech Republic - Denmark - Estonia - Finland - France - Germany - Greece - Poland - Hungary - Portugal - Iceland - Slovak Republic - Ireland - Spain - Italy - Sweden - Luxembourg - Switzerland - Netherlands - Turkey - Norway - United Kingdom -Russia (Jan. 2006) South Korea China Japan Hong Kong Mexico Thailand Singapore Argentina Malaysia Uruguay Indonesia South Africa Maria Ivanova / Andrea S. Tranquillini Presentation to the 2 nd AECSD Conference 4 New Zealand Australia Moscow, 5 October 2005

Our company The size of our core activities * Including Xetra, floor trading at FWB, regional German stock exchanges, US Broker. Tec and MTS Group Maria Ivanova / Andrea S. Tranquillini Presentation to the 2 nd AECSD Conference 5 Moscow, 5 October 2005

Our Company Our Objectives We are committed to reducing costs for Market Participants Maria Ivanova / Andrea S. Tranquillini Presentation to the 2 nd AECSD Conference 6 Moscow, 5 October 2005

Conditions for an efficient market infrastructure Best Practice and regulatory bodies International Best Practice Organisations • CPSS/IOSCO • Hague Convention European Union • European Commission (Lamfalussy and Giovannini reports, WG Internal Market) • European Parliament • European Central Bank National Regulators and Central Banks Market Associations • The Group of 30 • ECSDA • ICMA / ISSA Maria Ivanova / Andrea S. Tranquillini Presentation to the 2 nd AECSD Conference 7 Moscow, 5 October 2005

Conditions for an efficient market infrastructure The drivers - 1 Maria Ivanova / Andrea S. Tranquillini Presentation to the 2 nd AECSD Conference 8 Moscow, 5 October 2005

Conditions for an efficient market infrastructure The drivers - 2 Maria Ivanova / Andrea S. Tranquillini Presentation to the 2 nd AECSD Conference 9 Moscow, 5 October 2005

1) CPSS IOSCO Maria Ivanova / Andrea S. Tranquillini Presentation to the 2 nd AECSD Conference 10 Moscow, 5 October 2005

2) EUROPEAN UNION The Giovannini committee Maria Ivanova / Andrea S. Tranquillini Presentation to the 2 nd AECSD Conference 11 Moscow, 5 October 2005

The 15 Giovannini Barriers (2 nd Report) Implementation schedule 2 y. & 3 m. Barrier 7 Harmonise operating hours Barrier 1 Harmonise communication infrastructure Barrier 4 Guarantee intra-day settlement Barrier 6 Harmonise settlement periods Barrier 3 Harmonise corporate actions rules Barrier 8 Harmonise securities issuance Within 3 years 2 years & 3 m. 2 years Barriers by deadline Barrier 11 Open tax withholding services Barrier 12 Remove local tax collection Barriers 13, 14, 15 Ownership of securities Barrier 2 and 9 Openness of C&S services Barrier 5 Remote access to C&S Barrier 10 Remove primary dealers restrictions NOTE: Due to the non-enforceability of the 2 nd Giovannini Report, deadlines are only indicative and fixc expected completion date since start. Maria Ivanova / Andrea S. Tranquillini Presentation to the 2 nd AECSD Conference 12 Moscow, 5 October 2005

3) ECSDA Working Groups Maria Ivanova / Andrea S. Tranquillini Presentation to the 2 nd AECSD Conference 13 Moscow, 5 October 2005

4) G 30 Recommendations on C&S Recommendation Monitoring organisation 1 Eliminate paper and automate communication, data capture and enrichment 2 Harmonise messaging standards and communication protocols 3 Develop and implement reference data standards (ISIN numbering) 4 Synchronise timing between C&S systems and payment FX systems 5 Automate ans standardsize institutional trade matching 6 Expand the use of Central counterparts 7 Permit securities lending and borrowing to expedite settlement 8 Automate and standardise assets servicing processes, inclusing CA, Tax relief and restriction to foreign ownership 9 Ensure financial integrity of providers of C&S services 10 Reinforce risk mgmt practices of users of C&S services 11 Ensure final simultaneous transfer and availability of assets. 12 Ensure effective business continuity and disaster recovery planning 13 Address the possible failure of a systematically important institution 14 Stengthen assessment of the enforceability of contracts 15 Advance letgal certainty over rights to securities, cash, or collateral 16 Recognise and support improved valuation and closeout netting arrangements 17 Ensure appointment of appropriately experienced and senior board members 18 Promote fair access to securities C&S networks 19 Ensure equitable and effective attantion to stakeholders interests 20 Encourage consistent regulation and oversight of C&S service providers Maria Ivanova / Andrea S. Tranquillini Presentation to the 2 nd AECSD Conference North American committee, European Monitor Committee, Asia/Pacific Regional Committee ISSA, SWIFT North American committee, European Monitor Committee, Asia/Pacific Regional Committee Association Global Custodians ISSA Price. Waterhouse. Coopers North American committee, European Monitor Committee, Asia/Pacific Regional Committee Association Global Custodians Legal Subcommittee – ISDA, EFMLG, CPSS/IOSCO Legal Subcommittee, UNIDROIT, Hague Conference, CPSS/IOSCO, ISDA, EUPFL Legal Subcommittee, ISDA, EFMLG, EUPFL Regional co-chairs 14 Moscow, 5 October 2005

5) ISSA (International Securities Services Association) Maria Ivanova / Andrea S. Tranquillini Presentation to the 2 nd AECSD Conference 15 Moscow, 5 October 2005

Conditions for an efficient market infrastructure Preliminary steps Maria Ivanova / Andrea S. Tranquillini Presentation to the 2 nd AECSD Conference 16 Moscow, 5 October 2005

The « G 8 » markets experience compared to Russia USA Germany France United Kingdom Official Ent. Comp. rules NO YES YES Record date YES YES Ex date NO YES YES Pay Date NO YES YES Legal enforcment NO YES YES Central Securities registry NO YES YES Centralised source for CA NO YES YES Central Securities Depository 0 2 1 1 1 2 1 1 Nominee account NO YES YES omnibus-third party account NO YES YES Single numbering Agency NO YES YES YES YES New Issues regulation Maria Ivanova / Andrea S. Tranquillini Presentation to the 2 nd AECSD Conference 17 Japan Canada Italy Moscow, 5 October 2005

The example of the German Market BAFIN Ministry of Finance Deutsche Börse AG Bundesbank Stock Exchanges Berlin Bremen Düsseldorf Stock Exchanges Stock Frank. Hamburg Hannover furt Xetra Eurex Exchanges Stock Munich Stuttgart EUWAX Exchanges Stock Exchanges Clearstream Banking Frankfurt (CBF) National Numbering Agency Centralised source of CA information CBF as a router and intermediary of market info towards the Registrars. No Central Securities Registry Registrars WM Maria Ivanova / Andrea S. Tranquillini Presentation to the 2 nd AECSD Conference 18 Moscow, 5 October 2005

…and of the Russian Market (2007? ) FSFM Ministry of Finance Central Bank of Russian Federation MICEX Group The Asian The Nizhny The Stock Exchanges Samara Pacific Russian Novgorod Petersburg Currency MICEX The Rostov The Siberian The Ural Regional Interbank Currency and Stock Exchange Trading System Stock MICEX National Settlement Mercantile House Exchange Stock Exchange Interbank Currency Exchange Stock and Currency Exchange Interbank Exchange Stock Exchanges Stock Exchanges National Depository & Clearing Centre National Numbering Agency Centralised source of CA information CSD as a router and intermediary of market info towards the Registrars. No Central Securities Registry Registrars ? Maria Ivanova / Andrea S. Tranquillini Presentation to the 2 nd AECSD Conference 19 Moscow, 5 October 2005

Our approach and Conclusion Maria Ivanova / Andrea S. Tranquillini Presentation to the 2 nd AECSD Conference 20 Moscow, 5 October 2005

Contacts Maria Ivanova Andrea S. Tranquillini Customer Relations Management Northern and Eastern Europe E-mail: mivanova. cb@clearstream. com Tel: +352. 243. 36381 Fax: +352. 243. 636381 Mobile: +352. 021. 295239 Network Relationship Management Central and Eastern European Countries E-mail: atranquillini. cb@clearstream. com Tel: +352. 243. 32477 Fax: +352. 243. 632477 Mobile: +352. 021. 214619 Maria Ivanova / Andrea S. Tranquillini Presentation to the 2 nd AECSD Conference 21 Moscow, 5 October 2005