Mapping local market practice to ISO The role

Mapping local market practice to ISO The role of SMPG AMEDA Leadership Forum – 29 th April 2009 John Falk

Three major trends affecting Securities Market Infrastructures (SMI) 1. Focus on core business to develop addedvalue services for their user-community 2. Internationalisation of their landscape – participants and new competitors 3. Drive towards full Straight Through Processing to decrease risk and processing costs Growing importance of international market practices and standards (ISO 15022, ISO 20022) in a domestic market AMEDA Leadership Forum 29 th April 2009 2

SMI participants have to deal with different Standards, Messaging & Connectivity SMI Participant Securities Market Infrastructures Increases Costs Increases Risk AMEDA Leadership Forum 29 th April 2009 3

Single Window from SWIFT, same Standards, Messaging and Connectivity SMI Participant AMEDA Leadership Forum 29 th April 2009 Securities Market Infrastructures 4

Why Standardize? Increased cost Missed opportunity

SMPG AMEDA Leadership Forum 29 th April 2009 6

Standards at Work: SMPG Securities Market Practice Group Create globally agreed harmonized market practices which, integrated with standards, will bring the securities industry closer to achieving STP. Standards STP Market Practice AMEDA Leadership Forum 29 th April 2009 7

SMPG Activities • Organize national market practice groups • Collate national market practice rules • Define cross-border market practice rules • Harmonize market practice differences • Publish market practice rules • Identify conformance mechanisms AMEDA Leadership Forum 29 th April 2009 8

SMPG Countries • Representatives from National Market Practice Groups (NMPGs), now established in 39 markets, represent their countries at the Global SMPG level – Americas: AR*, BR, CA, CL*, CO*, EC*, MX, PE*, UR*, US, VE* – EMEA: AT, BE, CH, DE, DK, EG, ES, FI, FR, GB, IS, IE, IL, IT, LU, NL, NO, PL, PT, RU, SE, TR, UA, ZA, Euroclear, Clearstream – Asia/Pacific: AU, CN, HK, IN, JP, KR, NZ, SG, TH, TW * Countries where SMPG is working on the creation of a NMPG AMEDA Leadership Forum 29 th April 2009 9

SMPG Organization Steering Committee National Market Practice Groups and Convenors Broker/dealers, investment managers, custodians, depositories, regulators, and vendors The goal: To standardize market practices and message formats AMEDA Leadership Forum 29 th April 2009 10

Securities Market: Equities and Fixed Income Pre-trade / Trade Post-trade Buyer Presettlement Corporate actions Seller Presettlement Proxy voting Corporate actions Reconciliation Settlement Reconciliation Custodian AMEDA Leadership Forum 29 th April 2009 CSD Clearing agent 11

SMPG process www. smpg. info Securities Market Practice Group (SMPG) Administration National Market Practice National. Market. Practice National Groups (NMPG) Groups(NMPG) Groups AMEDA Leadership Forum 29 th April 2009 Publication Review, discussion & refinement Collate common elements, specify additional country requirements, identify further opportunities for harmonization Analyze & document local practices 12

Prerequisites for sharing • Shared vision • Common understanding • Perceived benefit • Champion/s AMEDA Leadership Forum 29 th April 2009 13

Mapping examples / Access Comments AMEDA Leadership Forum 29 th April 2009 14

Today Broker-dealers 62 Brokers

Tomorrow - STP Broker-dealers Corporate Insurance companies Government institutions Banks Investment managers Settlement systems Stock Exchanges Clearing systems Depositories Trustees Payment systems

Securities Settlement flows (Phase 1) AMEDA Leadership Forum 29 th. MCDR April 2009 MT 012(RTGS) 43 5 MT Central Bank MT 202 (RTGS) Seller’s Custodian Seller’s Broker’s Clearing Agent Buyer’s Broker’s Clearing Agent 54 7 54 3 MT 5 41 MT 54 5 MT MT 545 MT 547 MT 543 Buyer’s Custodian Seller’s Investment Manager MT 545 MT MT 541 MT 543 MT 547 545 MT 541 MT 543 MT 47 5 MT 541 MT 543 MT 547 MT 545 MT 541 MT Seller’s Broker Buyer’s Investment Manager 17

Zoom: barrières #1 & #3 B 1 B 3 Les barrières 1 et 3 ont aussi été positionnées en haut du classement en termes des coûts qu’elles génèrent pour l’industrie. : First Giovannini Report on EU Clearing & Settlement Arrangements AMEDA Leadership Source Forum 29 th 18 April 2009

AMEDA Leadership Forum 29 th April 2009

Mapping local market practice to ISO The role of SMPG AMEDA Leadership Forum – 29 th April 2009 John Falk