Notes from Vivien Levy-Garboua, Senior Advisor at the Directorate General of BNP Paribas

1. EPFSF Lunch discussion on « Clearing and Settlement » at the European Parliament in Brussels on 13th October 2010________________________________________________ Notes from Vivien Levy-Garboua, Senior Advisor at the Directorate General of BNP Paribas

2. EPFSF Lunch discussion on « Clearing and Settlement » at the European Parliament in Brussels on 13th October 2010________________________________________________ • Exchanges are much more competitive than they used to be need for a stable ground on which to rely. We cannot have complexity at all levels. Hence the importance of a stable framework for post trade infrastructures. • Post trade = CCP’s(+TR) EMIR • CSD’s New directive « announced » for 2011 There is a need for such a directive on CSD’s

3. EMIR / CCP’s – EMIR goes in the right direction • CCP’s are of a systemic nature • Safety /efficiency trade off. There is no trade off – The risk part is not negociable, it can not be a « risk return » type of choice. • The Risk Management tool of a CCP is crucial. CCP’s take counterparty risk. • CCP’s should be regulated • Access to CB money intra-day / over night CCP’s should be banks CCP’s should be linked to their monetary zone • Interoperability must not be done at the expense of the risk taken A CCP must be able to refuse to deal with another CCP n>2 is very different from n=2 when you speak of interoperability • There will be a need for consolidation, on a regional basis • Intragroup transactions should not be obliged to go through a CCP : when my AM works with FI its BNP vs BNP EPFSF Lunch discussion on « Clearing and Settlement » at the European Parliament in Brussels on 13th October 2010_____________________________________________________

4. CSD’s EPFSF Lunch discussion on « Clearing and Settlement » at the European Parliament in Brussels on 13th October 2010_____________________________________________________ Role n°1 : Notarial vote / Regalian Role / Central Banks for Securities. • Relation with issuers • Creation of dematerialized securities in its systems • Registration of the Securities • Control of the integrity : Supply = Demand in number of shares+ Sometimes : • Information on the life of the share (elementary Corporate Action)

5. CSD’s Role n°2 : Settlement / DVP EPFSF Lunch discussion on « Clearing and Settlement » at the European Parliament in Brussels on 13th October 2010_____________________________________________________ • DVP in CB money – Guarantee this process • Enable the circulation of securities • Guarantee the existence of securities and cash • + Sometimes : • A technical role in the lending / borrowing of securities without taking any counterparty risk. Only operational risk A CSD should not take any liquidity risk / counterparty risk – Only operational risk. The new Directive (i) should regulate this part which is « Public utility » / not for profit / Central Bank for Securities (ii) should define the conditions under which a CSD can develop other « non regalian » activities.