CLS Impact on the Market & IndustryPaul Gleeson, CIO GM Cash & Commodities Operations

Thurs 21 April, 2005

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Contents:

• Overview

• Impact

• Concerns

• Considerations

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Overview

CLS has been successful

Volumes have increased, but so has the market

Stable Platform; Only one major issue in March 2003

2003 2004MarchYTD

2005

Daily Average Settlement Volume (no of Sides)

79,471 133,187 174,454

Currencies7 11 15

Members56 58 58

Third Parties109 254 400

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Impact

Clearly a reduction in settlement risk, but it is hard to quantify the tangible

benefit

Operational efficiencies potentially gained through increased automation of:

– Confirmation

– Settlement

– Nostro

– Fails / Compensation

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Concerns

CLS cost associated with clearing is substantial

Reduced settlement risk versus introduction of liquidity risk

Increased Membership

Time to market of new deliverables

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Considerations

Do we as members want to fund additional development?

What are the development priorities of the industry?

Netting is again being discussed – Do you feel this is something we need?

Should CLS become a confirmation system as well as clearing?

Do we believe that building NDF and Options capability will provide benefits?

Should we open up membership to CLS?