© Copyright 2010, The NASDAQ OMX Group, Inc. All rights reserved.STRICTLY PRIVATE AND CONFIDENTIAL

GLOBAL TRENDS IN POST TRADEIMPLICATIONS TO CIS AND CEE REGION

YEREVAN, OCTOBER 2011

CONTENTS

2

Post trade capabilities

Product offering

Key initiatives

NASDAQ OMX CLEARING AND CSD TODAY AND IN THE FUTURE

Regulatory changes

Increasing importance of clearing, CCP

Introduction of variety of new products

Interoperability, cross-margining

Technology playing a key role

TRENDS IN POST TRADE INDUSTRY

LATEST DEVELOPMENT IN ARMENIAN CSD

Pension System

Settlement model

CSD technology

IMPLICATIONS TO CIS AND CEE

Internationalization and standardization

Derivatives and clearing

Technology requirements

WHAT DRIVES THE FUTURE ?

Algorithmic / High Frequency Trading- High performance position handling - DMA / Sponsored access- Advanced risk monitoring and control- Netting across clearing venues- Collaborative environment

Financial Crises – Infrastructure challenges- Focus on Counterparty risk- OTC Derivatives being cleared- Need for prudent environment

• Regulatory supervision• Transparent risk management• Controlled processing

- Expansion of FI products

Increased focus on technology– Functional requirements – Cost efficiency

Competition / Desire to grow business- Unbundling of services- OTC Trading service- Underlying cash/spot market cleared with

derivatives- Serving Multiple markets- Product Innovation

Competition / Globalization- International Investor Community- Foreign products and currencies- Multi time-zone operation- Cross-boarder settlement- “Level playing field” / Interoperability

Regulatory- T2S- OTC Derivatives- Repository (exchange traded and OTC)- Compliance and surveillance- ESMA, EMIR, IOSCO, G20

4

EUROPEAN LANDSCAPE FOR EXCHANGE TRADED EQUITY CASH AND DERIVATIVES

Luxem-bourg

Cash Der Cash Cash Der Cash Der Cash Der Cash Der Cash Der Cash Der Cash Der Cash

TradingNASDAQ OMX

NASDAQ OMX

NASDAQ OMX

NASDAQ OMX

Eurex (Deutche Börse&SWX)

NASDAQ OMX

NASDAQ OMX

Borsa Italiana (LSE)*

Italian Derivatives Market IDEM (Borsa Italiana) LSE

Liffe (Euronext)

Euronext (NYSE)

Liffe (Euronext)

Euronext (NYSE)

Liffe (Euronext)

Euronext (NYSE)

Liffe (Euronext)

Euronext (NYSE)

Euronext.Liffe (Euronext)

Luxembourg Stock Exchange

Clearing EMCFNASDAQ OMX EMCF

NASDAQ OMX

Eurex clearing (Eurex) EMCF

NASDAQ OMX

Cassa di Compensazione e Garanzia (Borsa Italiana)

Cassa di Compensazione e Garanzia (Borsa Italiana)

LCH.Clearnet

LCH.Clearnet

LCH. Clearnet LCH.Clearnet

LCH.Clearnet

LCH.Clearnet

LCH.Clearnet

LCH.Clearnet

LCH.Clearnet

LCH.Clearnet

LCH.Clearnet S.A

CSD

Monte Titoli (Borsa Italiana) N/A

Clearstream and Euroclear

Italy NetherlandsFinlandDer

UKDenmark PortugalBelgium France

Euroclear France

Sweden

Euroclear Sweden Euroclear Finland VP InterbolsaEuroclear UK and Ireland Ltd (former Crest)

Euroclear Belgium

Chi-X Turq BATS NEUROCash Der Cash Der Cash Der Cash Der Cash Der Cash Der Cash Der Cash Cash Cash Cash

TradingDeutche Börse

Eurex (Deutche Börse&SWX) SWX

Eurex (Deutche Börse&SWX)

The Irish Stock Exchange (ISE) LSE

Borsas y Mercados Espanoles (BME)

MEFF (BME)

Wiener Börse (WB)

Wiener Börse

Warsaw Stock Exchange (WSE)

Warsaw Stock Exchange (WSE)

Athens Exchange (Hellenec Exchanges (banks))

Athens Exchange (Hellenec Exchanges (banks))

Oslo Börs

Oslo Börs Chi-X

Turqouise BATS NEURO

Clearing

Eurex clearing (Eurex)

Eurex clearing (Eurex)

X-clear (SWX)

Eurex clearing (Eurex)

Eurex clearing (Eurex)

LCH.Clearnet None

MEFFCLEAR (MEFF)

CCP Austria (ÖKB+WB)

CCP Austria (ÖKB+WB)

KDPW Clearing House (Treasury, WSE, National bank)

KDPW Clearing House None

Hellenec Exchanges SA (banks) N/A

VPS Clearing (VPS) EMCF

Euro CCP EMCF EMCF

CSD Local CSDs

Cash

Euroclear UK and Ireland Ltd (former

Crest)

Spain AustriaGermany Switzerland Ireland Poland Greece Norway

VPS (Oslo Börs)Clearstream (Deutche Börse) SIS Segasettle (SWX) Iberclear (BME)

Oesterreichische Kontrollbank (ÖKB)

National Depository of Securities (KDPW)

Hellenec Exchanges SA (banks)

NASDAQ OMX POST TRADE TODAY

NASDAQ OMX Post-Trade capabilities today cover the whole post-trade chain• Central Counterparty Clearing (CCP)• Central Security Depository (CSD)

CCP Capability• Derivatives on cash market and commodities• Plan to implement Cash CCP in 2012• Integrated with NASDAQ OMX trading systems

– Genium INET Trading– X-Stream INET

• Product coverage today– Genium INET Clearing– X-Stream INET Clering– Genium INET Risk Manager

CSD Capability• Both equities and bonds• Integrated with NASDAQ OMX clearing systems• Product coverage today

– Genium INET CSD

5

FOCUS AREA

Clearing and CSD business and technology development is one of the key focus areas in NASDAQ OMX

NASDAQ OMX operates 4 clearing houses and 4 CSD’s.

NASDAQ OMX Nordic Derivatives Markets Clearing, Europe’s 3rd largest derivatives clearinghouse

Nordic, Baltic and Russian Equities (Standardized and Flex/Tailor Made)Futures, Forwards and Options on Single Stocks and Depository ReceiptsFutures, Forwards and Options on Tradable IndexesFutures, Forwards and Options on Custom Made Indexes

Nordic Fixed Income (Standardized and Flex/Tailor Made)Forward Rate AgreementsBond Forwards and FuturesPolicy Rate Futures Options on Bond ForwardsIRS

Clearing for NASDAQ OMX Commodities Europe, the world’s largest power derivative exchange

Nordic, German, Dutch and UK Commodities (Standardized)Futures, Forwards and Options on Electricity

Contracts for Difference (CfDs) on Electricity

Futures, Forwards, Options and Spot Contracts on Carbon Allowances

NASDAQ OMX CLEARING CURRENT PRODUCT SCOPE

6

KEY INITIATIVES

7

• EMIR will require mandatory member sponsored default funds

• New business will require increased safeguard requirements

• To be introduced in Q1 2012

• Introduce new in-house Collateral Management solution and replace current custodian institution model

• Solution based on International standard

• Deliver enhanced risk management procedures and services

• Launch in Q3 2012 in parallel with existing solution

COLLATERAL MANAGEMENT SYSTEM

• Provide clearing of all Nordic derivatives and selected non-Nordic derivatives that are mandated for clearing by EMIR/ESMA

• This includes trades created on NASDAQ OMX exchanges as well as trades coming from external trading venues and trades created outside organized trading facilities (OTC trades)

OTC CLEARING

DEFAULT FUND

• Migrate commodities to same technical platform as financials markets

• Will enable all members to trade and clear commodities using their existing memberships

• Common collateral management, common settlement flows etc.

INTEGRATION COMMODITIES/FINANCIALS

IMPLICATIONS OF GLOBAL TRENDS TO CIS AND CEE REGION

DMA and remote access require standardized and easy access to post trade services

• CCP a preferred solution but only if its cost efficient

• Globally accepted DvP model for settlement

• High standard risk management functionalities

• Post trade interoperability or linkages

OTC Clearing

• Important especially on fixed income and FX derivatives

• Typically complicated due the nature of OTC market

Technology

• Multi-instrument, multi-currency, multi-market, multi-time-zone

• Rich in risk management functionalities and interfacing capabilities

• Compliant with best practices

8

Globalization requires standardization

IOSCO, G30, EMIR etc. set the standards.

Efficient use of collateral.

Cross-border capabilities are needed.

Product variety and serviced currencies will increase.

LATEST DEVELOPMENT IN ARMENIA

Armenian Pension System

• Three pillar system. Second pillar to be centrally operated by NASDAQ OMX Armenia

• Launch in 2014

Central Depository Infrastructure

• Changes to settlement model

• Improved registry functionalities

• Guarantee fund to be established

New services

• Credit Resource market

• Product development initiatives together with CBA covering tradable monetary policy and government issued securities

9

Building infrastructure and services

Financial literacy is still one of the main development barrier in Armenia.

Pension system forces investors, market participants and media to educate themselves.

CBA in a key role to realize the goals.