Steven Palstermans

5th Annual AECSD Meeting - Almaty

1 – 4 October 2008

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Agenda

• AECSD objectives

• Corporate actions

• Initiatives in other CSD associations

• Proxy voting

• How can SWIFT support you

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AECSD Objectives

• Harmonization of the regulatory framework

• Establishment of depository links among the members to

support cross-border securities transactions

• Standardization of the technologies for the depository operation,

procedures for depository transaction processing, and rules and

regulations governing the depositories' activities

• Adoption of international messaging standards for depository

transactions and their use in the national practice

• Development of Electronic Document Interchange

• Supporting a coordinated process to enable the Association

members to integrate into the global depository system  

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Common Standards?

Central Depository of Armenia

The National Depository Center (Azerbaijan)

Republican Central Securities Depository (Republic of Belarus)

Georgian Central Securities Depository

National Securities Depository of Moldova

Central Securities Depository (Kazakhstan)

Central Depository (Kyrgyzstan)

State CSD of the Republic of Uzbekistan

Interregional Stock Union (Ukraine)The National Depository of Ukraine

Depository Clearing Company (Russian Federation)The National Depository Center (Russian Federation)

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Agenda

• AECSD objectives

• Corporate actions

• Initiatives in other CSD associations

• Proxy voting

• How can SWIFT support you

Beyond the standard: improving Corporate Actions data quality

5th Annual AECSD Meeting - Almaty

1 – 4 October 2008

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A real prospectus:

Exchange offer

• 531 pages• 7 classes of stock• 3 month timetable• Extraordinary meeting

Your challenge: find the right 40 pages with thethe right data for a notification message –or - verify which of your three sources is correct!

Complex and difficult

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Market Need – Manual data entry problem

CSD

Issuer Issuer Issuer

Registrar

Investor

Custodian

On-Line(very few markets)

ISO 15022

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INVESTOR

ISSUER

Co / Lead-Manager/Exchange Agent/Conversion Agent

FUND MANAGERAppointed by investor

CUSTODIANAppointed by investor

REGISTRAR / AGENTAppointed by issuerto maintain register

BROKER / DEALERExecution of trades

where necessary

CSDWhere shares are

Ultimately held

CUSTODIAN’S NOMINEE

Name on register

Do corporate actions affect you?

ISITC Corporate Actions Diamond- the lifecycle of corporate actions

“…notes in red where non-usage of industry standard messaging occurs.”

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Market need – Corporate Actions

Challenges Significant shortfall in

message quality and market practice compliance

Limitations of software vendor solutions

Difficult business case – management buy-in for improvement projects

Drivers Losses / risk mitigation Operational efficiency Reducing costs Regulatory compliance Customer Service Maximise portfolio

performance Achieve scalability

The Drive for STP Standards Market practice and tools Best practices

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Agenda

• AECSD objectives

• Corporate actions

• Initiatives in other CSD associations

• Proxy voting

• How can SWIFT support you

Corporate Actions andStandards

• Provide input to the next generation of ISO messages - ISO20022

• Create a 'Corporate Actions Best Practice Guide' for ACSDA members

• Create National Market Practice Groups in markets where this kind of a group does not exist

• Continue participation at SMPG• Share ACSDA Corporate Actions

survey results, now covering 17 countries, with interested members of ACG

• Expand Agenda to Include Issuer Services, extending ECSDA work

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Elimination of the Giovannini barriersBarrier 1 : Diversity of IT platforms / interfaces (SWIFT) Final Protocol recommendation Gap analysis Full implementation of the Protocol (March 2011)

Barrier 3 : Corporate actions (in cooperation with other European industry associations : Corp. Action Joint Working group) Distributions Reorganisations Transaction management General meetings

Barrier 4 and 7 : intraday settlement finality / op. hours and settlement deadlines Ten standards for issuer CSDs Under way : cross-border issue (investor CSDs / banks)

►Monitoring : European Commission (CESAME Group)

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Existing standards working groups for CSDs

Giovannini working groups

Global CSD working group•Consolidate CSD views

on standards

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National Market Practice Groups

www.smpg.info

NMPG countriesNMPG countries specified on EIG

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…regarding Corporate Actions

“There are two kinds of securities messaging: high maintenance and low maintenance....”

“Which one am I?”

“You're the worst kind. You're high maintenance, but you think you're low maintenance.”

With apologies to the writers of “When Harry Met Sally”

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Folks! We’ve got a situation here!

• Risk of significant claims

• Manual processing dependency

• Difficult business case for improvement

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• Simulation Testing and Qualification Service (STaQS)

• Test MT 564 Notification and MT 566 Confirmation messages for compliance to market practice

… a health check for Corporate Actions messages

• What can you do with this service?– Measure conformance– Identify improvement areas– Benchmark progress– Improve counterparty automation

STaQS for Corporate Actions

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Agenda

• AECSD objectives

• Corporate actions

• Initiatives in other CSD associations

• Proxy voting

• How can SWIFT support you

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Shareholders’ Meetings and Proxy Voting

• The problems:– corporate actions standards are inadequate– process transparency – confirmation of vote lodged – communication of results– seasonal concentration of meetings– compressed deadlines

• The result . . . Shareholders are being disenfranchised by the process!

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What can we do about theseProxy Voting problems?

• Automation and standardisation– A new solution and standard – Tailor-made for Proxy Voting– Industry agreement– Supports EU Shareholders’ Rights Directive– Auditable process– Confirmation of votes lodged– Results reporting

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The asset servicing solutions

• Automation and harmonisation

• Market practice conformance

• Streamlining your data providers

• Improve proxy voting services

• Corporate Actions solution

• STaQS for Corporate Actions

• Data Distribution solution

• Proxy Voting solution

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Agenda

• AECSD objectives

• Corporate actions

• Initiatives in other CSD associations

• Proxy voting

• How can SWIFT support you

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• Get buy-in from regulators, professional associations.

• Use ISO standards for domestic and international operations.

• Offer the use of the SWIFT network to MIs for the domestic business.

• Gain the critical mass of Broker/Dealers and Investment Management Institutions (Top 15).

• Set up and open the Moscow office.

Strategic goals for Eastern Europe

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Securities Market Infrastructures on SWIFT>80 institutions from 50 countries

Hong Kong Exchanges and Clearing

Hong Kong Monetary Authority (CMU)

Hong Kong

Estonian Securities Depository

OMX

Estonia

MCSD MISR for Clearing, Settlement and Depository

Egypt

Central Securities DepositoryBank of Greece

Greece

Eurex ClearingClearstream Banking AGMTS

Germany

Caja de ValoresArgentina

France

Finland

Czech Republic

Croatia

Canada

Brazil

Belgium

Austria

Australia

Euroclear FranceEuronext Paris – MATIFMTS

NCSD Finland – APKOMX

UNIVYC

Sredisnja Depositarrna Agencija

CDS

CBLC

Euroclear Belgium

Euroclear BankMTSNational Bank of Belgium

OeKB

Australian Securities Exchange

Austraclear

Keler

KSEI

Euroclear UK & Ireland

Hungary

Indonesia

Ireland

Euroclear NederlandMTS

Netherlands

RBNZ Austraclear

NZX Ltd

New Zealand

Depository Clearing CompanyThe National Depository Center

Russian Federation

National Depository for Securities – KDPW

Poland

Banco de Portugal – SITEMEMTS

Portugal

VPSNorway

S.D. IndevalMexico

Clearstream Banking SALuxemburg

OMXLithuania

Midclear

Central Depository

Lebanon

Bank of LatviaCentral DepositoryOMX

Latvia

Korea Securities DepositoryKorea

Central Securities Depository

Kazakhstan Stock ExchangeKazakhstan

Bank of JapanJasdec

Japan

CCGMonte Titoli

Italy

Tel Aviv Stock ExchangeIsrael

Central Bank of Sri Lanka (LankaSecure)Sri Lanka

DIFXUAE - Dubai

Reserve Bank of ZimbabweZimbabwe

ISE Settlement and Custody Bank INCTurkey

The Central Depository (Pte) Ltd

Monetary Authority of Singapore

Bank of Slovakia

CDCP

Singapore

Slovakia

Chicago Mercantile ExchangeClearing CorporationDTCCFederal Reserve BanksOmgeoOptions Clearing Corporation

USA

Euroclear UK & IrelandLCH.ClearnetLondon Stock Exchange

United Kingdom

Thailand Securities Depository Co. Ltd.Thailand

Taiwan Depository & Clearing Corporation

Taiwan

SISSIS x-clear

Switzerland

NCSD Sweden – VPCOMX

Sweden

IberclearMEFFMTS

Spain

STRATEJSE Ltd

South Africa

Central Securities Clearing Corporation – KDD

Slovenia

DenmarkOMX

VP

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Common Standards?

Central Depository of Armenia

The National Depository Center (Azerbaijan)

Republican Central Securities Depository (Republic of Belarus)

Georgian Central Securities Depository

National Securities Depository of Moldova

Central Securities Depository (Kazakhstan)

Central Depository (Kyrgyzstan)

State CSD of the Republic of Uzbekistan

Interregional Stock Union (Ukraine)The National Depository of Ukraine

Depository Clearing Company (Russian Federation)The National Depository Center (Russian Federation)

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Questions?

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Thank you