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Exhibit 1 Overview

CPSS Report New Developments in Clearing and Settlement Arrangements for OTC Derivatives (www.bis.org/publ/cpss77.pdf) Joint Bank of England/ECB Conference ECB, Frankfurt 13 November 2007. Exhibit 1 Overview. 1998 Report Progress Since 1998 Areas Where Further Progress is Needed

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Exhibit 1 Overview

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  1. CPSS ReportNew Developments in Clearing and Settlement Arrangements for OTC Derivatives(www.bis.org/publ/cpss77.pdf)Joint Bank of England/ECB ConferenceECB, Frankfurt13 November 2007

  2. Exhibit 1Overview • 1998 Report • Progress Since 1998 • Areas Where Further Progress is Needed • Issues Associated with Evolution Toward a More Centralized Infrastructure

  3. Exhibit 21998 Report • Settlement Arrangements and Risk Management Practices • Largely decentralized processing • Bilateral risk management • Master agreements (including netting provisions) • Collateral agreements • Documentation Backlogs • Unsigned master agreements • Outstanding confirmations • Risks Associated with Expanding Use of Collateral • Legal risks • Operational risks • Funding liquidity risks • Potential Benefits and Risks of CCP Clearing • Risk management challenges associated with relatively illiquid products

  4. Exhibit 3Progress Since 1998 • Documentation Backlogs • Unsigned masters greatly reduced • Variety of electronic confirmation services now available (SWIFT, SwapsWire, DerivServ, eConfirm) • Credit derivatives backlogs have declined markedly since September 2005 • Collateral Usage and Risks • Usage has expanded greatly • Legal and operational risks have been mitigated • Funding liquidity risks better understood • CCP Clearing • SwapClear now clears 40 percent of interdealer interest rate swaps • Participants emphasize that SwapClear reduces operational risks as well as counterparty risk • In September 2006 SwapClear modified its default procedures to recognize relative illiquidity of swaps • Other Significant Enhancements to Infrastructure • Prime brokerage • Multilateral termination services (TriOptima) • DTCC’s trade information warehouse

  5. Exhibit 4Areas Where Further Progress is Necessary • Confirmation Backlogs for Instruments Other than Credit Derivatives • Equity derivatives • Interest rate and commodity derivatives • Report recommends broader use of economic affirmations and portfolio reconciliations • Potential Market Impact of Closeouts • Of significant concern to market participants and to policy makers • Report concludes that risks can be reduced through more systematic portfolio reconciliations and voluntary terminations • Report recommends that market participants should explore further steps to mitigate market impact

  6. Exhibit 5Issues Associated with a More Centralized Infrastructure • Interoperability and Open Access to Essential Services • Interoperability defined as the ability of a system or product to be used in conjunction with other systems and products without imposing unnecessary costs on users • CPSS and CPSS-IOSCO standards for payment and settlement systems require “fair and open access” • Operational Reliability of Providers of Essential Services • Application of CPSS or CPSS-IOSCO standards for operational reliability may be appropriate • Safety and Efficiency of Centralized Payment Arrangements • CPSS standards for systemically important payment systems or CPSS-IOSCO standards may be relevant • Plans for CLS to offer payments services to DTCC’s trade information warehouse is an example of more centralized arrangements

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