SWIFT in the Securities post-trade space: New options for an old topic

SWIFT in the Securities post-trade space: New options for an old topic SWIFT Operations Forum - Americas Jose Manso, EVP, Middle Office Solutions Lou Piezzo, Senior Business Manager, SWIFT Americas March 2012

Agenda: Overview of Post-trade Products Post Trade Pre-Settlement Roadmap Global ETC Accord for Securities Accord for Treasury Project Amigos SWIFT Operations Forum - Americas 2012 2

SWIFT Post Trade Pre-Settlement Roadmap Solutions Post-trade pre-settlement 1 2 3 4 5 Allocations Confirms / Affirms Matching Netting Settlement Instructions Lite 2 (GETC) Project Amigos MT 515s and Rule 10b-10 Accord for Securities Accord for Treasury Bilateral Netting Reporting CCP Link SWIFT Operations Forum - Americas 2012 3

Basic guidelines Global ETC SWIFT Operations Forum - Americas 2012 4

The need for Global ETC over SWIFT There are still too many trades which are confirmed outside STP channels s need allocations to be electronic, computer-readable and STP-able Regulatory interest in operational efficiency is high and rising The big question is: How do I address this and reduce operating costs at the same time? SWIFT Operations Forum - Americas 2012 5

Global ETC over SWIFT Workflows Features: Investment Manager Global Custodian SETTLEMENT INS (MT 541 or 543) BLOCK TRADE (MT513) ALLOCATION (MT 514) CONFIRM (MT 515) AFFIRM (MT 517) Global ETC / Dealer Settlement Agent or CSD SETTLEMENT INS (MT 541, 543) - Standards Re-usability -Equity & Fixed Income -Exchange of SSIs -Reject or Cancellation possible at each step -Exception processes -Downstream STP -Standard industry workflow models -Secure, reliable, highavailability platform -Highly scalable Benefits: - Simplicity - Meets ETC need - High STP - Low TCO - Low Risk SWIFT Operations Forum - Americas 2012 6

MT515 usage today: 12 Million confirmations per year and growing 230 s WW 89.27% 10.12% 0.61% Americas Asia Pacific Europe, Middle East & Africa 1% 1% Japan 6% Hong Kong 20% 72% Australia Korea, Republic of >1,000 users Singapore SWIFT Operations Forum - Americas 2012 7

Global ETC Community: Initial implementation group (live by Q2 2012) Asset Managers Schroders Legal and General Newton Asset Management Mitsubishi UFJ Asset Management s J.P.Morgan (NY) live for 10b-10 HSBC (NY) live for 10b-10 Morgan Stanley RBC ITG UBS Barclays Capital Goldman RBS SWIFT Operations Forum - Americas 2012 8

Accord Welcome for Securities to SWIFT & Treasury Operations Forum 2012 SWIFT Operations Forum - Americas 2012 9

SWIFT s 2015 Strategy: how is matching involved? Reduce TCO for You, and your Customers Further shorten the decision usage cycle. Campaign to eliminate the faxes/e-mails you send & receive (Re)-invest in Accord renewal Behaviour, look and feel tuneable to personal preferences. Ability to rapidly deploy add l or modified asset classes GUI renewal Ambition to become the default supplier of matching services, available directly, or fully embedded in your Banking/Treasury or Portfolio management systems. SWIFT Operations Forum - Americas 2012 10

Accord: a Software as a Service Family Same infrastructure different service structure Treasury (=MT3xx, MT 600) Securities (MT 515) Flow model Messages exchanged between the parties, are copied to Accord. Both parties submit messages directly to Accord. Choice Reporting /integration Individual: each party takes own decision as to how matching is done (Manually, on Accord, or on local application) Exclusively Real-Time, in pull mode GUI for operators InterAct based API, for integration Collective: both parties must be Accord users, to obtain a match. Real time towards GUI FIN-based reports at 15 minutes intervals for integration in back-office applications (push mode) SWIFT Operations Forum - Americas 2012 11

Matching of Equities and Fixed Income Accord for Securities Matching of MT 515 for Prime versus Executing brokers, or between Executing brokers and the buy side Usage today: top 10 Prime brokers/executing s; ramp up to include +/- 200 2 nd tier brokers Also complemented with 11Year Long Term Archival Live since may 2009; daily average of >18,000 confirmations Available for small brokers: solution via the internet, converting CSV files in MT 515, and on-screen interpretation of reports. SWIFT Operations Forum - Americas 2012 12

Solutions overview: PB/EB Accord for Securities Hedge Fund Executing 2. Real time status updates + exception handling on GUI + full reporting in MT 998 Daily Trade report Prime 1. Automated pre-matching, 3. Accord matching uses: -cross-reference table linking local codes to BICs -table with specific rounding tolerances, per PSET Custodian 4. Settlement OK Agent Agent Custodian SWIFT Operations Forum - Americas 2012 13

Extensions: LIVE Feeding CCPs Accord for Securities MT515 Confirm ACCORD MT548 Status LCH Status Confirmed Trade Chosen CCP CCP Trade MT518 Confirm Euro/CCP MT515 Confirm Alternative CCPs Status X-Clear CCP Reduces costs of settlement Removes Counterparty Risk Full STP from confirmation to settlement CCP SWIFT Operations Forum - Americas 2012 14

Overview FX, FX Options, Money markets, OTC Derivatives, Commodities Accord for Treasury Deal Accord Subscribers (>490 in 72 countries) Banks s Custodians Fund mgrs Corporates Central Banks Users or any type, and any size Real-time reporting & exception handling Integration available for various Back-Office Systems Confirmations: (MT 300, 305/306, 320/330, 340/341,360, 361,362,392, MT 600) Copies of confirmations SWIFT Accord Real-time Confirmation Matching Service Availability of >99.97% last 5 years 100K msgs/hour observed matching capacity Common matching rules + user-defined rules Financial Liability for Matching results Accord subscriber or non- subscriber Copies of non-swift data: fax, e-mail, e-fx portals, feeds, Reuters, etc. SWIFT Operations Forum - Americas 2012 15

Accord from the customer s perspective Accord for Treasury Exception Handling, using Graphical Interface, installed on Web Platform GB All sites accessing their own data, or dividing the work between them Long Term Archival: 11 year online archive US DE Archive Access (e.g. auditor) Connectivity: direct or via Service Bureau SWIFT Accord Central Server Accord Central Server Back Office Integration using XML-based API Live DB: confirmations, matching results, operator actions, history, audit trail SWIFT Operations Forum - Americas 2012 16

Usage Updates; where are the 500 customers? Accord for Treasury Total number of users in key countries AE 8 GB - 47 RU - 10 AU 8 HK - 19 SG - 17 CH 8 IT - 28 US - 34 CN 18 JP - 19 ES 14 LU - 17 FR 42 PL - 8 >30 top 500 Corporate users (often multi-site usage) SWIFT Operations Forum - Americas 2012 17

First extreme case of integration + indirect sales Accord/FIN fully embedded in Bloomberg AIM Msg SWIFT inviato Customer creates/monitors on AIM Bloomberg generates, Sends/receives confirmations Accord performs matching Bloomberg displays matching results Bloomberg generates and sends settlement messages Fast growing...several important fund managers LIVE! SWIFT Operations Forum - Americas 2012 18

SWIFT Services supporting your business needs SWIFT Operations Forum - Americas 2012 19

Accord Consultancy: What is available? New customers joining Accord Accord Business Training for New Users Accord for Securities Certification Assistance Refresher consultancies Accord refresher (staff rotation, new functionality...) Accord for Supervisors (workflow, control, team optimisation) Making the most of Accord (less known, advanced features...) Usage optimisation: Accord for Treasury Health Check Rich usage statistics generated & explained by Accord expert Peer comparison + own evolution Pinpointing root causes + action plan to address problems SWIFT Operations Forum - Americas 2012 20

Project Amigos SWIFT Operations Forum - Americas 2012 21

Overview 1. Defining the Problem 2. The Solution 3. Partnership between SWIFT and Middle Office Solutions 4. Features 5. Value Proposition Summary 6. Current Status SWIFT Operations Forum - Americas 2012 22

Industry problem: lack of automation Project Amigos 3,500 Investment Managers only 1,000 on SWIFT Investment Manager Investment Manager GETC SWIFT GETC Global ETC messages (allocations confirmations over SWIFT) costs Settlement fails Oasys migration Investment Manager 100m+ nonautomated allocations per year 1,000+ s Investment Manager Custodian 750 Investment Managers OMGEO Oasys or CTM FIX Oasys 20m CTM 60m msg per year Not known MT515 /MT514 on SWIFT Message flow not on SWIFT SWIFT Operations Forum - Americas 2012 23 Investment Manager 23

SWIFT Solution: Integrated & Flexible Project Amigos Investment Manager GETC Increase use of SWIFT Global ETC messages Any-to-Any Single portal to see/ receive instructions Investment Manager Investment Manager Investment Manager Project Amigos ACCORD s receive normalised automated allocations. Link to Accord matching Normalised Data Transaction status Workflow Accord link Custodian 750 Investment Managers SWIFT Operations Forum - Americas 2012 Investment Manager OMGEO Oasys or CTM FIX Industry has a choice 24

Investment Manager Project Amigos Initial Trade Allocation Confirm Settlement instructions over SWIFT Manage settlement fails The Post Trade Cycle SWIFT to partner with a specialist vendor Project Amigos integrated with FailStation Custodian SWIFT Operations Forum - Americas 2012 Middle Office Solutions «FailStation» CSDs Settlement Agent Multiple formats FailStation a cloud service to manage settlement fails at end of Post 25 Trade cycle

Value Add Static Data Feature Overview Project Amigos Inbound in any format Validation & exceptions ISO15022, csv, e-mail, xls, doc, SQL, ODBC, pdf 1000+ maps FIN, FileAct, SOAP, https, FTP, SFTP, MIME, S/MIME Outbound in standardised format Master Securities File (ISIN, CUSIP..) Normalised Data Dictionary (ISO compliant) Account Name Static 7 Year Archive Integrated e- Mail / Instant Message case management GUI integrated with FailStation ScoreCard Report Writer User customisable screens Workflow Internet access SuperSort matching SWIFT Operations Forum - Americas 2012 26

Proposal in Summary Project Amigos Value Proposition Transforms non-standard trade, allocation, confirmation and affirmation business. Insources the data handling and transformation process Project Amigos to be integrated as a component of SWIFT s Post Trade Architecture Cost-Effective solution with minimal in-house IT development for the community SWIFT solution global support and presence, user owned & governed Key Features: Workflow and transaction management Cloud delivery model - Accessible to all parties with zero footprint Potential front end to the SWIFT Accord matching service Delivery Model SWIFT to partner with Middle Office Solutions MOS has in-house expertise in multi-syntax data normalisation (1000+ maps ready) Integrate with MOS existing post trade applications, including Benchmark Reports ScoreCard and Failstation Leverage MOS existing operations infrastructure for quick start Reduces - Time - Cost - Risk SWIFT Operations Forum - Americas 2012 27

Value Add Static Data Project Amigos + Example Client Flow options IM 1.Allocation in csv file Project Amigos 2.SWIFT MT514 Inbound in any format Validation & exceptions ISO15022, csv, e-mail, xls, doc, SQL, ODBC 1000+ maps FIN, FileAct, SOAP, https, FTP, SFTP, MIME, S/MIME Outbound in standardised format Master Securities File (ISIN, CUSIP..) Normalised Data Dictionary (ISO compliant) Account Name Static 7 Year Archive Integrated e- Mail / Instant Message case management GUI integrated with FailStation ScoreCard Report Writer User customisable screens Workflow Internet access SuperSort matching Custodian 4.Settlement Instruction 3.Confirmation in csv file SWIFT Operations Forum - Americas 2012 28

Commercial Model 1. Pricing is based on # of counterparties 2. Early adoptor offer for those willing to participate in the pilot SWIFT Operations Forum - Americas 2012 29

Q&A? SWIFT Operations Forum - Americas 2012 30

Please provide us with your feedback! Kindly complete the survey form and hand it to your presenter SWIFT Operations Forum - Americas 2012 31

Upcoming Events: SWIFT and Industry Business Forums Toronto, 4 April 2012 Regional Forum Rio de Janeiro, 25-26 June 2012 Upcoming Webinars 3SKey Lite2 (English, Spanish, Portuguese) Business Intelligence (Portuguese) Sanctions (Spanish, Portuguese) www.swift.com/events Sibos: 29 October 1 November Registration will open Monday, 5 March 2012 Industry Events ACSDA, Colombia ISITC, Massachusetts NACHA Payments, Maryland BAFT-IFSA, Florida EuroFinance, Florida SWIFT Operations Forum - Americas 2012 32

Lunch What s in next the Exhibition today s Hall agenda SWIFT Operations Forum - Americas 2012 33

What s next next on on the today s agenda agenda SWIFT Operations Forum - Americas 2012 34