How Euroclear manages the interoperability with the different markets

Agenda

The Euroclear group Creating a “European Domestic Market”, an exemple of

cooperation and consolidation among the CSD’s of the Euroclear group

Euroclear Bank’s links with the different markets

Euroclear Group structure

As of Jan 2005

219 User Shareholders Euroclear Plc Sicovam Holding

Euroclear SA/NVAmsterdam branch

Paris branchLondon branch

Euroclear Nederland

Euroclear France SA CRESTCo Ltd Euroclear

Bank SA/NV

Q2 2005Turnover

Euroclear BankCRESTCo Euroclear FranceST005

€ trillion0

50

100

200

250

350

150

300

6 months2002

241.9

2003

256.2

2004

307.1

2005

171.4

61

36.3

74.1

85.4

53

103.5

85.5

52.6

118.1

114.4

60.1

132.6

Value of securities held

Euroclear BankCRESTCoEuroclear FranceEuroclear Nederland

ST006

Q2 2005

14.6

€ trillion0

2

4

6

8

10

12

14

30 June2002 2003 2004

10.911.9

13.1

2005

0.7

2.2

3.2

4.8

0.7

2.4

3.5

5.35.9

3.8

4.1

2.6

30.8

0.8

6.7

Agenda

The Euroclear group Creating a “European Domestic Market”, an exemple

of cooperation and consolidation among the CSD’s of the Euroclear group

Euroclear Bank’s links with the different markets

Consolidation of settlement is necessary to make European capital markets competitive

for issuers and investors

European capital markets infrastructureThe problem of fragmentation Settlement is a key component of capital markets efficiency

– National markets not a European market– At least one CSD per country– fragmentation has a major impact on efficiency, cost and risk

Both Harmonisation and Consolidation enable efficiency gains, and reduction of costs and risks

Our vision is full consolidation of markets within Euroclear Group

Full integration of legacy systems and functionality

Single Settlement Engine

Common User Interface

CREST EuroclearFrance

EuroclearNetherlands CIK Euroclear

Bank

Customer

Domestic Service Full Service

Agent

Central Banks

&Payment systems

From today’s fragmentation towards consolidation

CIK E NL E F CREST E B

Current situation

Positioning & booking

Legal record

Core Processing

Client Communication Interface

Legacy

Country boundary

Step 1 SSE (2006)

CIK E NL E F CREST E B

SSE

ESES-CCI – e-RGV - E2A

ESES - SP component

ESES - RGV upgrade

SSE

CIK E NL E F CREST E B

Step 2 ESES (2007)

Step 3 Single Platform

(in phases from 2008)

SSE

CIK E NL E F CREST E B

CCI

Single ApplicationPlatform

Legend

ConclusionEuroclear’s business model meets the challenges facing the European markets Creating efficiency (e.g. reduce costs) and reduce risks while retaining

choice and competition Eliminating differences in technology – both standards and processes Harmonising market practices and legal/regulatory framework Offering a settlement model that allows choice of service levels to

meet the needs of all issuers investors, and intermediaries

Agenda

The Euroclear group Creating a “European Domestic Market”, an exemple of

cooperation and consolidation among the CSD’s of the Euroclear group

Euroclear Bank’s links with the different markets

GE014B

Euroclear Bank’s services

Money Transfer

Settlement

servicesCustodyservices

Credit and Banking ServicesTri-

Partyservices

Lending &

Borrowing

FundSettle Co

mm

unic

ati o

ns

Clie

nt S

erv i

ces

and

Supp

ort.

M

igra

tion

Tea

m

Domestic debtAustria

Belgium

Denmark

Finland

France

Germany

Ireland

Greece

Italy

Luxembourgthe

NetherlandsNorway

South AfricaSpain

Portugal

Sweden

the United Kingdom

Russia

Switzerland

CS205

Australia

Indonesia

Malaysia

the Philippines

Hong Kong

Thailand

Japan

Singapore

Against paymentFree of payment

Argentina

USA

Canada

MexicoNew Zealand

Equities

CS206

AustriaBelgium

Denmark

Finland

France

Germany

Greece

ItalyIreland

Hong Kong

Malaysia

Singapore

JapanNorway

Spain

theNetherlands

Portugal

Sweden

Switzerland

Luxembourg

the United Kingdom

Argentina

USA

Canada

Mexico

SE Settlement

Borrowers

Lenders

Seller

Purchaser

52 %

10 %

Broker/dealers8 %

Other participants4 %

26 %

“No client sector stands by itself”

Fixed income

Equities

Derivatives

Activity breakdown by market segment

Accessing new markets1. Issuance of eurobonds

-> acceptance of denomination currency-> acceptance of settlement currency

SETTLEMENT CURRENCI ES I N EB DENOMI NATI ON CURRENCI ES I N EBCURRENCY ISO CODE CURRENCY I SO CODEARGENTINE PESO ARS UAE DIRHAM AEDAUSTRALIAN DOLLAR AUD BULGARIAN LEV (replaced by BGN) BGLCANADIAN DOLLAR CAD BULGARIAN NEW LEV BGNSWISS FRANC CHF BAHRAINI DINAR BHDCZECH KORUNA CZK BERMUDIAN DOLLAR BMDDANISH KRONA DKK BRAZILIAN REAL BRLESTONIAN KROON EEK BOTSWANA PULA BWPEURO EUR CHILEAN PESO CLPBRITISH POUND GBP CHINESE YUAN RENMINBI CNYHONG KONG DOLLAR HKD COLOMBIAN PESO COPHUNGARIAN FORINT HUF CYPRUS POUND CYPCROATIAN KUNA HRK EGYPTIAN POUND EGPINDONESIAN RUPIAH IDR INDIAN RUPEE INRISRAELI NEW SHEKEL ILS KAZAKSTAN TENGE (10/10/2005) KZTICELANDIC KRONA ISK KOREAN WON KRWJAPANESE YEN JPY LEBANESE POUND LBPKUWAITI DINAR KWD MOROCCAN DIRHAM MADLITHUANIAN LITAS LTL MALTESE LIRA MTLLATVIAN LATS LVL MADEDONIA DENAR (10/10/2005) MKDMEXICAN NUEVO PESO MXN NICARAGUAN CORDOBA NIOMALAYSIAN RINGGIT MYR PERUVIAN NUEVO SOL PENNORWEGIAN KRONA NOK ROMANIAN LEU (will cease to exist end Dec '06) ROLNEW ZEALAND DOLLAR NZD RUSSIAN RUBLE (replaced by RUB) RURPHILIPPINE PESO PHP RUSSIAN RUBLE (RUB=RUR/1000) RUBPOLISH ZLOTY PLN SAUDI RIYAL SARROMANIAN NEW LEU RON TURKISH LIRA (will cease to exist end Dec '05) TRLSWEDISH KRONA SEK TAIWAN DOLLAR TWDSINGAPORE DOLLAR SGD UKRANIAN HRYVNIA UAHSLOVAK KORUNA SKK URUGUAYAN PESO UYUSLOVENIAN TOLAR SIT VENEZUELIAN BOLIVAR VEBTHAI BAHT THB VANUATU VATU VUVTURKISH NEW LIRA (TURKISH LIRA as of 01/01/06) TRY CFA FRANC BEAC (Cameroon) XAFUNITED STATES DOLLAR USD GOLD XAUSOUTH AFRICAN RAND ZAR SDR INTERNATIONAL MONETRARY FUND XDR

CFA FRANC BCEAO (Sénégal, Côte D'ivoire) XOFLast update: 23 August 2005 ZAMBIAN KWACHA ZMK

2. Access to the national domestic securities marketsMajor determining factors guiding the decision toservice a market

International flowsOperational Risk

Reputation Risk

Liquidity Risk

Legal Risk

Sufficient international demand from international investors justifying a link

Operational procedure Service level agreements Contractual relationship external agents

Choice of agents – depositories (settlement + payments, asset servicing)

Free access to the currency Credit Lines with cash correspondents (settlements + payments)

Asset protection Enforceability of contracts